What characterizes an unsolicited order?

• A. An order recommended by the dealer
• B. An order initiated by the client without a recommendation
• C. An order that requires regulatory approval
• D. An order that must be logged by the investment advisor

Answer: (B)

An unsolicited order is characterized as an order that is initiated by the client without any recommendation or influence from the dealer or advisor. This means the client independently decides to place the trade based on their personal judgment or strategy rather than relying on guidance from the dealer. This concept is important in the context of compliance and regulatory practices since it signifies that the client's decision is made without external suggestion, reducing the dealer's liability for the suitability of the transaction.

In contrast, an order recommended by the dealer reflects an advisor's influence, hence does not qualify as unsolicited. Regulatory approval is not inherently required for unsolicited orders unless other factors come into play, such as unusual transaction sizes or patterns that might raise compliance concerns. Additionally, while logging orders might be a practice involved in tracking and enhancing transparency, it is not a defining characteristic of what qualifies an order as unsolicited.