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CFA Level I · CFA Level I Exam · Guidance for Standard I: Professionalism

A portfolio manager promotes a growth strategy by showing only the three best-performing of his twelve client accounts and describing them as representative of the strategy. His action is most likely:

The action is most likely a violation of Standard I(C) because it distorts past performance. Cherry-picking the best accounts and presenting them as representative of the strategy omits facts that could alter investment decisions, so the impression given is misleading even if the accounts are genuine.

  1. Aacceptable if the three accounts are described as real
  2. Ba violation of Standard I(C) because it distorts past performanceCorrect
  3. Cacceptable if the strategy has a long track record

Explanation

The guidance on omissions says members must not distort past performance, such as cherry-picking the highest-performing accounts and presenting them as representative. Being real or long-running does not cure the misleading impression.

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