Past Performance

An adviser publishes an advertisement showing fabricated past performance. This is:

1. A.Fine if hypotheticalHypothetical performance is a genuine category with its own strict conditions on presentation and audience, which gives this real pull. Fabricated results are something else entirely: they are false statements about what the adviser actually achieved.
2. B.Acceptable marketingAdvertising by an adviser must not be misleading, and inventing a track record is the most direct violation of that principle imaginable. No marketing latitude extends to fiction.
3. C.Required disclosureNothing obliges an adviser to publish performance figures at all. An adviser that shows performance takes on the duty to present it accurately, which is the reverse of a requirement to invent it.
4. D.Fraud (prohibited)Correct - false performance claims are fraud.

Why: Fabricating performance in advertising is fraud and prohibited.

An adviser publishes an advertisement showing fabricated past performance. This is:

1. A.Required disclosureNothing requires an adviser to publish performance figures, and no disclosure obligation is satisfied by inventing them. Advertising is voluntary; accuracy in it is not.
2. B.Acceptable marketingTreating advertising as beyond the antifraud rules is the error here. Materially false statements about performance in an advertisement are fraudulent regardless of the marketing label attached to them.
3. C.Fine if hypotheticalHypothetical or model results can sometimes be shown when they are clearly identified as such and accompanied by the disclosures needed to keep them from misleading. The stem describes fabricated past performance presented as real, which no disclosure can cure.
4. D.Fraud (prohibited)Correct - false performance is fraud.

Why: Fabricating performance in advertising is fraud and prohibited.