An investment firm presents performance data selectively, omitting unfavorable periods and risks. Violation?

• A. Standard I.C Misrepresentation
• B. Standard IV.D (GIPS)
• C. Standard VI.B Priority of Transactions
• D. Standard IV.D Performance Presentation

Answer: (D)

Presenting performance data selectively, by omitting unfavorable periods and risks, distorts what investors see and can lead to biased decisions. This is addressed by the Standard IV.D Performance Presentation, which requires performance information to be fair, accurate, and not misleading. When a firm cherry-picks periods or downplays risk, it fails to provide a complete and transparent view of performance, violating how performance results should be presented. Even if the firm claims GIPS compliance, the core duty is to present performance fairly and fully. The other options don’t target the reporting of performance data as directly: misrepresentation is a broader prohibition, priority of transactions relates to trading and conflicts, and the GIPS reference falls under how performance is presented but the specific standard concerned is the Performance Presentation one.