Did Lon misrepresent performance or not disclose risk? I thought it was a little tricky. First I put misrepresentation, but then I changed it. The performance was what it was, you can’t prove that it wasn’t, even if the trading policy sucked. However, he said the same returns will continue. That is not disclosing the true risk of the investment. Thoughts?
i said it was a mispreprentation, not because of the trading issue, but because he said something like “you will experience similar returns in the future”. I viewed that as a failure to distinguish between fact and opinion, which is a representation violation.
Buckhead Wrote: ------------------------------------------------------- > i said it was a mispreprentation, not because of > the trading issue, but because he said something > like “you will experience similar returns in the > future”. I viewed that as a failure to > distinguish between fact and opinion, which is a > representation violation. Agree.
Misrep. You can’t claim investors will earn that kind of return. Outright lie.
Yup - I overanalyzed it. Rookie mistake.
I thought he didn’t misrep past returns.
he didn’t, he misrepped the certainty of future returns.
^ That’s what I thought, he didn’t misrepresent PAST returns. His comments that the returns would be EXPECTED to continue did not disclose the full risks.
did not disclose the full risks - wasnt that one of the options? sounds familiar. I think I chose that.
nailit Wrote: ------------------------------------------------------- > did not disclose the full risks - wasnt that one > of the options? sounds familiar. I think I chose > that. Yeah, this is why I thought it was one of CFAI’s traps. Nothing there to tell you he misrepresented the PAST returns. But, misrepresentation is the standard that’s involved here. I think the way they worded it, they wanted you to choose the performance answer. I’ll just go on thinking I got this right!
I was pretty confusing too. It says, “the fund IS the best performing fund” It doens’t say anything about the future, does it? However, the tricky part is, the client THINKS they’ll get the same performance - the last statement.
misrepresent keyword is “will”