Hi, can anyone help me? “Standard I(C) prohibits members and candidates from guaranteeing clients any specific return on volatile investments” and Standard III (D) states: “Members and candidates should not state or imply that clients will obtain or benefit from a rate of return that was generated in the past.” Does anyone know what is the difference between these two situations? Could you give an example? Thanks.
You can’t promise returns like this: “…invest in our fund to get 30% annual return, we use a revolutionary stock picking system.”
Also you say: “In the last year the fund yielded 30% return, so this year we expect the same return. Our team is aligned with this objective, 30% return annualy for the next 10 years.”
As you see, both cases are the same. Promising returns and promising returns based on past performance are both unethical. The correct way is to provide risk and return measures asociated with a specific investment strategy and also to be suitable to the investor.
So,
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"invest in our fund to get 30% annual return, we use a revolutionary stock picking system.” should be a violation of Standard I(C)
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“In the last year the fund yielded 30% return, so this year we expect the same return. Our team is aligned with this objective, 30% return annualy for the next 10 years.” should be a violation of Standard III(D)
Correct me if I’m wrong, thanks.
I think this one would lay over I(C) as you say.
This one would lay over both III(D) and I(C). I mean, you would be violating both standards.