When is client consent especially required in dealing with conflicts of interest?

• A. Never, if the client is unsophisticated.
• B. Always in all transactions.
• C. When required by policy, regulation, or the relationship, and before proceeding with the transaction.
• D. Only for issuer-approved transactions.

Answer: (C)

The essential idea is that when a conflict of interest could influence the broker-dealer’s judgment, the client must be informed and give consent before any action is taken, and this consent is required when policy, regulation, or the nature of the relationship calls for it. In practice, that means disclosing the conflict and obtaining the client’s informed (often written) consent prior to proceeding with the transaction. For example, if the firm has a financial incentive tied to the trade or a related relationship that could bias advice, the client should be told about the conflict and consent to the transaction before it happens. This is why the best answer is that consent is required when mandated by policy, regulation, or the relationship, and before proceeding. The other options aren’t correct because consent isn’t never required for unsophisticated clients, isn’t always required in every transaction, and isn’t limited only to issuer-approved transactions.