Identifying Misrepresentation in Financial Reporting

Medium Cfa Institute Code And Standards Professionalism - Misrepresentation

Emily is a financial analyst at a reputable investment firm. In a recent client presentation, she included a graph that depicted the historical performance of a mutual fund. However, in the graph, Emily omitted the periods of negative returns and only showcased the positive returns to make the mutual fund appear more appealing.

After the presentation, a colleague points out that her actions may constitute a violation of the CFA Institute Code of Ethics and Standards of Professional Conduct. Which of the following statements correctly identifies the ethical breach in Emily's actions?

Emily's presentation is compliant because she only highlighted the successful aspects of the fund's performance.

Emily misrepresented the mutual fund's historical performance by omitting significant periods of negative returns.

Emily's actions were unethical, but they do not fall under the misrepresentation standard.

Hint

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