If a company just went through a 3rd party GIPS verification and it failed the verification. The company is in the midst of challenging the verification findings. In the meantime, a client wants to know if the company is GIPS compliant. Is the firm violating ethics (say misrep) by declaring to client that it is GIPS compliant, while it continues to challenge the verification party. - BN
Since CFAI likes everything squeaky clean, I would say - yeah, it’s a violation
yes - the firm cannot claim GIPS compliance when it has failed verification even if it is appealing. right? I’m pretty sure that’s correct…but lets see what others say now that i’ve anchored any uncertainty on this board.
I would think so. Just disclose the fact.
It would be in violation. Although it is not required to have Verification, if you underwent verification and got denied it means you are not calculating returns correctly or something else, so you are not in compliance, hence no claim…
I am not sure. Verification is voluntary. If you are verified then you can state that your compliance was independently verified. If you are not verified, then you can’t say you are independently verified. But I think you can still claim compliance
Yes, BUT you went for Verification and FAILED, so hence you are NOT following the GIPS standards in one way or another. If you claim verification or claim that your in compliance you are in violation of MISREPRESENTATION unless you have fixed what was wrong.
Investment Firm XYZ contracted with a verification firm to have its claim of compliance verified. After performing their work, the verifiers concluded that they could not issue a verification report to Firm XYZ, as they do not believe that Firm XYZ is in compliance with the GIPS standards firmwide. The verifiers issued a statement to Firm XYZ confirming why they would not issue a verification report. What does Firm XYZ need to do? Firm XYZ must consider whether its claim of compliance is proper. The firm should carefully consider the issues presented by the verification firm and determine how to resolve them, as necessary, to assure its claim of compliance is appropriate. http://www.gipsstandards.org/programs/faqs/gipsresults.asp
Correct, if they resolve the issues they can claim compliance as I stated above, thats just my take on it.
If you claim GIPS compliance then you need to have evidence to support that. Is there no common sense left in this world? The fact that the company failed a verification makes it even more decitful/unethical/etc should you then go forth and claim compliance. bigwilly is right. resolve all issues, then claim compliance.