A performance report omits material risks and cherry-picks periods to show favorable results. Violation?

A performance report omits material risks and cherry-picks periods to show favorable results. Violation?

• A. Standard IV.A Loyalty, Prudence, and Care
• B. Standard VI.A Disclosure of Conflicts
• C. Standard IV.D Performance Presentation
• D. Standard I.C Misrepresentation

Answer: (C)

The key idea is fair, complete, and accurate presentation of performance information. When a report omits material risks and cherry-picks only favorable periods, it presents a distorted view of results. This violates the obligation to provide a full and truthful picture of performance, including the risks involved and the full range of periods that affect overall performance. The standard expects performance reporting to be transparent, with appropriate context (such as benchmark comparisons and disclosure of any changes in measurement methodology) so clients can properly assess risk and return. The other options address different duties—loyalty and prudence, disclosure of conflicts, and misrepresentation—but the scenario specifically concerns how performance results are presented, which falls under performance presentation.

The key idea is fair, complete, and accurate presentation of performance information. When a report omits material risks and cherry-picks only favorable periods, it presents a distorted view of results. This violates the obligation to provide a full and truthful picture of performance, including the risks involved and the full range of periods that affect overall performance. The standard expects performance reporting to be transparent, with appropriate context (such as benchmark comparisons and disclosure of any changes in measurement methodology) so clients can properly assess risk and return. The other options address different duties—loyalty and prudence, disclosure of conflicts, and misrepresentation—but the scenario specifically concerns how performance results are presented, which falls under performance presentation.