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NEW QUESTION: 1
NewWave Investments, a family of mutual funds, hires the star of a new motion picture about the workings of Wall Street to provide a testimonial as part of NewWave's new television ad campaign. The actor's financial adviser has, in fact, invested some of the actor's monies in NewWave's funds. NewWave provides the actor with a script in which the actor explains the concept of dollar cost averaging to the viewers. At the conclusion of the actor's explanation, the viewers are informed that the actor has been paid for his testimonial, that his experience may not be representative of that of other clients, and that past performance is no guarantee of future performance. Based on these facts:
A. NewWave has violated a FINRA rule stipulating that testimonial providers can receive no payment for their testimonies.
B. NewWave has violated a FINRA rule requiring that any testimonial that contains a technical aspect related to investing must be given by someone who has both the knowledge and experience to hold a valid opinion on the topic.
C. NewWave has violated no rules; it has complied with all of FINRA's disclosure requirements.
D. NewWave has violated a FINRA rule that prohibits testimonials of public figures from being used advertisements.
Explanation: When NewWave hires an actor who is unlikely to have the knowledge to understand fully the concept of dollar cost averaging to explain it, it has violated a FINRA rule requiring that any testimonial that contains a technical aspect related to investing must be given by someone who has both the knowledge and experience to hold a valid opinion on the topic. The use of testimonials is not prohibited by FINRA, and providers are allowed be paid for their services.