Session 1: Ethical and Professional Standards
Reading 2-III: Standards of Professional Conduct & Guidance: Duties to Clients and Prospective Clients
LOS D.: Performance Presentation.
A money manager is meeting with a prospect. She gives the client a list of stocks and says, “These are the winners I picked this past year for my clients. Their double-digit returns indicate the type of returns I can earn for you.” The list includes stocks the manager had picked for her clients, and each stock has listed with it an accurately measured return that exceeds 10%. Is this a violation of Standard III(D), Performance Presentation?
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A) |
Yes, unless the positions listed constitute a complete presentation (i.e., there were no stocks omitted that did not perform in the double digits). | |
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B) |
No, because the manager had the historical information in writing. | |
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C) |
Yes, because the manager cannot reveal historical returns of recent stock picks. | |
Standard III(D) requires fair representations concerning past and potential future performance. Unless the list of the “winners” includes all the positions that the firm held, the manager is misrepresenting past performance. The following statement is questionable: “Their double-digit returns indicate the type of returns I can earn for you,” but the action of submitting a partial list is clearly a violation. The manager should have information on past performance in writing. | 
发表于 2010-4-1 14:11
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