{"id":834,"date":"2019-07-12T17:36:00","date_gmt":"2019-07-12T17:36:00","guid":{"rendered":"https:\/\/analystprep.com\/cfa-level-1-exam\/?p=834"},"modified":"2025-05-21T06:28:41","modified_gmt":"2025-05-21T06:28:41","slug":"standard-1c-misrepresentation","status":"publish","type":"post","link":"https:\/\/analystprep.com\/cfa-level-1-exam\/ethical-and-professional-standards\/standard-1c-misrepresentation\/","title":{"rendered":"Standard I(C) \u2013 Misrepresentation"},"content":{"rendered":"\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"VideoObject\",\n  \"name\": \"Standard I \u2013 Professionalism (2024\/2025 Level I CFA\u00ae Exam \u2013 Ethics \u2013 Module 3)\",\n  \"description\": \"This video lesson covers Standard I of the CFA Institute Code of Ethics and Standards of Professional Conduct, focusing on professionalism. It explains key areas such as knowledge of the law, independence and objectivity, misrepresentation, and misconduct. Real-world examples and exam-style questions help candidates apply the standards correctly.\",\n  \"uploadDate\": \"2022-08-22T00:00:00+00:00\",\n  \"thumbnailUrl\": \"https:\/\/img.youtube.com\/vi\/AKNjkuCMcUU\/maxresdefault.jpg\",\n  \"contentUrl\": \"https:\/\/www.youtube.com\/watch?v=AKNjkuCMcUU\",\n  \"embedUrl\": \"https:\/\/www.youtube.com\/embed\/AKNjkuCMcUU\",\n  \"duration\": \"PT31M45S\"\n}\n<\/script>\n\n\n\n<p>[vsw id=&#8221;AKNjkuCMcUU&#8221; source=&#8221;youtube&#8221; width=&#8221;611&#8243; height=&#8221;344&#8243; autoplay=&#8221;no&#8221;]<\/p>\n<p>Standard I(C) \u2013 Misrepresentation indicates that CFA members must not knowingly misrepresent information related to investment analysis, recommendations, or professional actions.<\/p>\n<p><!--more--><\/p>\n<h2>Compliance<\/h2>\n<p>Misrepresentation can be defined as omissions of information, or manipulating facts related to securities, or giving false impressions of a firm.\u00a0 This relates to oral communication advertisements, electronic communication, and written communication.<\/p>\n<p>Members are prohibited from guaranteeing returns on unstable investments. Exceptions to this are cases in which the investment itself has guarantees built into the product&#8217;s structure or if a firm has committed to covering any loss by the client.<\/p>\n<p>As it relates to representing a firm\u2019s reputation, it is unethical to misrepresent professional credentials, the performance of a firm, or experiences with a category of investment. Likewise, individual investment professionals may not falsify their records of performance.<\/p>\n<p>A special mention of social media is made within Standard I(C) \u2013 Misrepresentation.\u00a0 The CFA Institute recognizes that in some cases, the anonymous nature of communication on social media platforms may entice members to communicate differently than one would on more traditional platforms. In all cases, investment professionals are urged to provide as much truthful information as is appropriate in a public setting. It may be tempting to bolster one\u2019s achievements or qualifications within online chat rooms, even between other investment professionals.\u00a0 This is strictly prohibited regardless of the purported anonymity of the forum.<\/p>\n<p>All analysis and statistical data used in written communication created outside a member\u2019s firm must be sourced.\u00a0 Failure to do so will result in plagiarism, which misrepresents the author of said work. The exception to these are cases in which agents have developed data within the same firm.<\/p>\n<h2>Violation<\/h2>\n<p>Knowing misrepresentation indicates that a member knew or should have known that information was being distorted and could well have impacted investment outcomes.<\/p>\n<p>To prevent violation of Standard I(C) \u2013 Misrepresentation, all professionals within a firm should know the limits of an employer\u2019s qualifications and services. Additionally, a firm may choose to restrict the agents who are permitted to speak for the organization.<\/p>\n<p>Related to external communications, one should verify information credited to outside sources.\u00a0 Additionally, a firm is obligated to update its web pages on time.<\/p>\n<p>Finally, a formal plagiarism policy should be established to ensure that data is credited to its appropriate source in all forms of communication.<\/p>\n<blockquote>\n<h2>Question<\/h2>\n<p>Anna Roy, a CFA member and investment analyst, attends a client lunch where a portfolio manager professes, \u201cYou can be sure we\u2019ll outperform the Real Estate index this year due to our fine research analysts.\u201d Roy recognizes this statement as:<\/p>\n<ol style=\"list-style-type: upper-alpha;\">\n<li>A violation of plagiarism policy under Standard I(C) \u2013 Misrepresentation.<\/li>\n<li>A violation concerning the prohibition of guaranteeing returns under Standard I(C) \u2013 Misrepresentation.<\/li>\n<li>Flattering and appropriate as a marketing technique.<\/li>\n<\/ol>\n<p><strong>Solution<\/strong><\/p>\n<p>The correct answer is B.<\/p>\n<p>CFA members are forbidden from guaranteeing a specific rate of return on investments. Therefore, the statement is in violation of Standard I(C) \u2013 Misrepresentation.<\/p>\n<\/blockquote>\n\n","protected":false},"excerpt":{"rendered":"<p>[vsw id=&#8221;AKNjkuCMcUU&#8221; source=&#8221;youtube&#8221; width=&#8221;611&#8243; height=&#8221;344&#8243; autoplay=&#8221;no&#8221;] Standard I(C) \u2013 Misrepresentation indicates that CFA members must not knowingly misrepresent information related to investment analysis, recommendations, or professional actions.<\/p>\n","protected":false},"author":18,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3],"tags":[],"class_list":["post-834","post","type-post","status-publish","format-standard","hentry","category-ethical-and-professional-standards","blog-post","no-post-thumbnail","animate"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - 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