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

An analyst's firm shows prospective clients the returns of only the three best-performing accounts managed under its small-cap strategy and presents them as typical of the strategy. This action most likely:

The action violates Standard I(C). Presenting only the best-performing accounts as representative of a strategy is cherry-picking, which distorts the performance record and gives a false impression. That the accounts genuinely exist does not remove the misleading omission of the other accounts.

  1. Ais acceptable if the accounts are real.
  2. Bviolates Standard I(C) by distorting past performance.Correct
  3. Cis acceptable if clients are told the accounts are good.

Explanation

The guidance on omissions says members must not distort past performance by cherry-picking the highest-performing accounts and presenting them as representative. The accounts being real does not cure the misleading impression of the strategy's record.

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