CFA Practice Question
Noah Williams, CFA has started his own investment advisory firm. He distributes marketing material to prospective clients which includes the statement 'Over the past 9 years, I have consistently beaten my benchmark market index by at least 5%'. At the bottom of a page, in small print, he adds the disclaimer 'past performance does not guarantee future returns'. Has Williams violated the standards?
A. No.
B. Yes, Communication with Clients And Prospective Clients.
C. Yes, Duties to Clients.
Explanation: Use of small print in marketing materials for disclaimers such as 'past performance does not guarantee future returns' is not a violation of the Standards.
User Contributed Comments 2
| User | Comment |
|---|---|
| chantal | I thought the question was did he contraveen by representing that he is beating a benchmarck without disclosing what it is ? it could be benchmanrk= 0 returns. !!! Insnt this misrepresentation ? His benchmark could just be 5% less than what he actually gets, so it's impossible to not beat it. Benchmark should be clearly stipulated. |
| reganbaha | It says "benchmark market index", so it should be the market. Don't overthink it. |