The following is not meant to be legal advice.
When reviewing a liquidation report to determine trade suitability, a broker-dealer might look into the rules of the NASD. Usually the broker-dealer reviews trades over $5000 (gross) to see if there are any trends in the amount and the date of trade.
If the principals own the trades there may not be a need to review trades for liquidation.
A suitability report should contain information on the account type, investment objective, risk tolerance. Usually the broker-dealer considers the sales amount and compare it with the net worth and income of the client. The broker-dealer considers the liquid assets available and the client’s investment experience if large sales amounts are involved.
If a sales amount over $2000 for a trade occurs with no suitability information, there should be flag, and the trade set aside in order to make a telephone call to the representative to further review the trade.
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