An investment advisor begins discussing new ideas with a prospective client without knowing their needs. This situation is likely a violation of:

The scenario presented highlights an important aspect of ethical conduct in investment advising. When an investment advisor engages in discussions about new ideas with a prospective client without first understanding their specific financial needs, circumstances, and objectives, it aligns with a violation of the suitability standard. This is because providing advice or recommendations that are not tailored to a client's unique situation can lead to inappropriate or unsuitable investment decisions.

Standard III(C), Suitability, specifically emphasizes the necessity for advisors to ensure that any investment recommendations are suitable for the client based on their individual situation, which includes their financial needs, investment objectives, and risk tolerance. By not assessing these requirements before presenting investment ideas, the advisor fails to uphold this key ethical standard.

Furthermore, while Standard III(B), Fair Dealing, is concerned with ensuring that all clients are treated fairly and that no client receives preferential treatment, the primary violation in this case revolves around the suitability of the advice given. Therefore, the advisor’s lack of knowledge about the prospective client’s needs not only breaches the suitability standard but also relates to fair dealing, since the advisor is not conducting the interaction in a fair manner by failing to consider the client’s specific requirements.

Thus, the most comprehensive response to the violation in this situation encompasses both standards, making the