Who bears the costs related to trade errors according to compliance guidelines?

In the context of compliance guidelines related to trade errors, the responsibility of absorbing the costs typically falls on the advisor. This principle stems from the understanding that the advisor must act in the best interest of their clients and ensure that clients are not negatively impacted by mistakes made in the execution of transactions.

When trade errors occur—such as incorrect buy/sell orders or miscalculations—the associated costs are often viewed as a part of the advisor's operational responsibility. Absorbing these costs demonstrates accountability and commitment to client services. It is essential for maintaining trust and integrity in the adviser-client relationship, aligning with fiduciary duties.

Additionally, the other options suggest a shift of financial responsibility away from the advisor, which might undermine the confidence clients have in their advisor's ability to manage their investments effectively. By adhering to the guideline that the advisor should handle these costs, it reinforces the expectation that the advisor is fully responsible for transactions and their consequences.