A marketing piece claims guaranteed returns with no risk. Which Standard is violated?

• A. Standard VI.B Priority of Transactions
• B. Standard IV.D (GIPS)
• C. Standard I.C Misrepresentation
• D. Standard V.B Communication with Clients and Prospective Clients

Answer: (A)

The key idea is that communications to clients must be truthful and not misleading. A marketing claim of guaranteed returns with no risk tries to present an impossible certainty about investment outcomes. In reality, all investments carry some level of risk, and performance can vary. Saying there are guaranteed returns and no risk misstates a material fact about the investment, which can mislead investors.

This falls under not misrepresenting information to clients or prospects. The standard prohibits making statements that are false or misleading about investments, performance, or risks. Even if the piece were accompanied by fine print, the bold claim itself creates a misleading impression about risk and return, which is not permissible.

The other options don’t fit as directly. Priority of Transactions deals with the fair handling of orders and allocating investment opportunities, not the truthfulness of marketing claims. GIPS-related standards concern how performance is presented and verified, not the blanket issue of guaranteeing returns. Communications with clients and prospective clients can relate to disclosures, but the central violation here is misrepresentation of investment risk and return.