Question #21
Reading: Reading 42.3 Standards of Professional Conduct Guidance for Standards III
PDF File: Reading 42.3 Standards of Professional Conduct Guidance for Standards III.pdf
Page: 9
Status: Correct
Correct Answer: B
Question
Ned Brenan manages two dozen pension accounts, one of which earned over 25% during the past two years. Brenan tells prospective clients that based on past experience they can expect a 25% return on their funds. Which of the following statements is CORRECT?
Answer Choices:
A. Brenan has not violated Standard of Professional Conduct III(D), Performance Presentation, but Brenan has violated Standard I(C), Misrepresentation
B. Brenan has violated Standard of Professional Conduct III(D), Performance Presentation, but Brenan has not violated Standard I(C), Misrepresentation
C. Brenan has violated both Standard of Professional Conduct III(D), Performance Presentation, and Standard I(C), Misrepresentation
Explanation
Brenan violated Standard of Professional Conduct III(D) by using only one portfolio's
results to create a false impression of all the portfolios, and Brenan violated Standard of
Professional Conduct I(C) by creating the impression that a certain return was assured (he
should have used the words "might" or "could" instead of "can").