| Description |
Michelieu tells a prospective client, “I may not have a long-term track record yet,
but I’m sure that you’ll be very pleased with my recommendations and service.
In the three years that I’ve been in the business , my equity-oriented clients
have averaged a total return of more than 26% a year.” The statement is true, but
Michelieu only has a few clients , and one of his clients took a large position in a
penny stock (against Michelieu’s advice) and realized a huge gain. This large return caused the average of all of Michelieu’s clients to exceed 26% a year. Without
this one investment, the average gain would have been 8% a year. Has Michelieu
violated the Standards? |