A firm deletes emails about a major investment recommendation to avoid compliance oversight. Which Standard is violated?

• A. Standard V.C Record Retention
• B. Standard IV.A Loyalty, Prudence, and Care
• C. Standard V.B Communication with Clients and Prospective Clients
• D. Standard I.C Misrepresentation

Answer: (C)

The issue being tested is the obligation to communicate with clients and prospective clients in a truthful, complete, and non-misleading way. Deleting emails about a major investment recommendation is a deliberate attempt to conceal information that underpins the firm’s advice. This undermines transparency and can mislead clients about the basis, support, and history of the recommendation. By suppressing records that would inform clients or prospective clients, the firm is not presenting information in a fair and accurate manner, which violates the standards governing communications with clients and prospective clients. While record-keeping and oversight concerns are related in practice, the behavior directly breaches how the firm communicates and discloses information to those it serves.