Michelieu tells a prospective client, "I may not have a long-term track record yet, but I'm sure that you'll be very ple
Posted: Sun Aug 07, 2022 5:58 pm
Michelieu tells a prospective client, "I may not have a long-term track record yet, but I'm sure that you'll be very pleased with my recommendations and service. In the three years that I've been in the business, my equity-oriented clients have averaged a total return of more than 26 percent a year." The statement is true, butMichelieu only has a few clients and one of his clients took a large position in a penny stock (against Michelieu's advice) and realized a huge gain. This large return caused the average of all of Michelieu's clients to exceed 26 percent a year. Without this one investment, the average gain would have been 8 percent a year. Has Michelieu violated the Standards?
A. Yes, because the statement misrepresents Michelieu's track record.
B. Yes, because the statement about return ignores the risk preferences of his clients.
C. No, because the statement is a true and accurate description of Michelieu's track record.
D. No, because Michelieu is not promising that he can earn a 26 percent return in the future.
A. Yes, because the statement misrepresents Michelieu's track record.
B. Yes, because the statement about return ignores the risk preferences of his clients.
C. No, because the statement is a true and accurate description of Michelieu's track record.
D. No, because Michelieu is not promising that he can earn a 26 percent return in the future.