Is an Investment Advisor allowed to sell a security it owns to a client?

An investment advisor is indeed allowed to sell a security it owns to a client, but only under specific conditions that ensure transparency and protect the interests of the client. Obtaining consent from the client and providing full disclosure about the transaction are essential requirements. This process ensures that the client is fully informed about the nature of the security, its valuation, and any potential conflicts of interest that could arise from the advisor's dual role as both seller and advisor.

This regulatory allowance acknowledges that investment advisors may sometimes offer their own securities to clients, provided that the clients are made aware of all relevant information pertaining to the sale, thereby allowing them to make informed decisions. The requirement for consent and disclosure helps maintain ethical standards in the advisor-client relationship and promotes sound investment practices.

Other options present restrictions or conditions that are not aligned with the regulatory framework governing investment advisors. Such rules are put in place to guide advisors in their professional conduct and foster a trustworthy environment in the advisory relationship.