Lesson 3 of 9 · All lessons in this module
  1. Standard III(A)–(B): Loyalty, Prudence, Care and Fair DealingVideo lesson
  2. Standard III(A) cases: client identity, loyalty and brokerage
  3. Standard III(B) cases: dissemination, allocation and priority
  4. Standard III(C)–(E): Suitability, Performance Presentation and ConfidentialityVideo lesson
  5. Standard III(C) cases: IPS, total portfolio and mandates
  6. Standard III(D) cases: fair, accurate and complete performance
  7. Standard III(E) cases: exceptions, channels and firm limits
  8. Standard III(E) cases: vulnerable investors and cooperation
  9. Standard III(A) and (C) cases: ESG constraints and updated wording

This lesson is part of the 2027 curriculum. You are following the 2026 curriculum, where it is not taught in this form. Switch if you are sitting the exam under the 2027 curriculum.

Lesson 3 of 9 · 16 min

Standard III(B) cases: dissemination, allocation and priority

Fair means no client is disadvantaged by timing, priority or price: let everyone hear a recommendation together, and allocate trades by a rule fixed before you see the fills.

In short

  • A recommendation is any buy, sell or hold opinion: a report, a flash note, a list change, an oral comment or a post. Giving it to anyone outside the firm makes it general distribution.
  • The test is sequence: did every client get a fair chance to act before favoured clients did? Extra service after general release is fine; early access is not.
  • Premium service tiers are allowed when disclosed, open to all who pay, and harmless to other clients. Selective offers to favourites fail.
  • Allocation rule: decide before the order, or apply a fixed rule such as pro rata as soon as practical. Picking winners after seeing the fills is cherry-picking.
  • Block trades: same price and commission for every account; partial fills pro rata by order size, adjusted only for minimum lot sizes; oversubscribed issues prorated with the member and non-fee family accounts stepping aside.
  • Disclosure of an allocation policy is required, but disclosure never rescues a policy that is unfair in itself.

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