Know Your Customer/Client Rule
A concept both stated and implied by various securities
regulatory bodies regarding suitability of investments for customers.
Article 3 of the Rules of Fair Practice of the National Association of
Securities Dealers is typical: "In recommending to a customer the
purchase, sale or exchange of any security, a member shall have reasonable
grounds for believing that the recommendation is suitable for such customer
upon the basis of the facts, if any, disclosed by such customer as to his
other security holdings and as to his financial situation and needs.
"Customers must supply enough financial and level of sophistication
information to a brokerage firm upon application for an account to satisfy
the "know your customer" rules.