CFA Level IEthical and Professional StandardsEasy
A CFA charterholder's marketing brochure states, "As a CFA charterholder, I guarantee market-beating returns for every client portfolio I manage." Which Standard, if any, does this statement most likely violate?
- AStandard VII(B), Reference to CFA Institute, the CFA Designation, and the CFA Program, because the statement implies the charter guarantees investment performance
- BNo violation, because he accurately discloses that he holds the CFA charter
- CStandard I(B), Independence and Objectivity, because the statement compromises his objectivity
- DStandard III(D), Performance Presentation, because it fails to disclose actual historical returns
Show answer & explanationAnswer & explanation
Correct answer: A. Standard VII(B), Reference to CFA Institute, the CFA Designation, and the CFA Program, because the statement implies the charter guarantees investment performance
Standard VII(B) prohibits members and candidates from overstating the meaning or significance of holding the CFA charter, including implying that it guarantees superior investment results. Simply holding the charter does not confer any assurance of performance.
Why the other options are wrong
- B. Disclosing charter status is fine, but claiming it guarantees performance is not.
- C. This is not an independence/objectivity issue; no third party is influencing him.
- D. No actual performance figures are being misrepresented here.
Reference to CFA Designation (VII(B))
Members and candidates must not misrepresent or overstate the meaning of the CFA charter, including implying it guarantees performance or ensures superior analytical ability.
- Charter denotes adherence to a rigorous curriculum and ethics, not guaranteed returns
- Cannot claim charter ensures superior investment results
- Proper references to candidacy must state exact status (e.g., 'Level II candidate')
Memory trick: The charter is a credential, not a crystal ball.