Performance Guarantees Prohibition

What this video covers

• Why a broker-dealer, agent, investment adviser, or investment adviser representative (IAR) may never guarantee a customer against loss or promise a specific return, with zero exceptions
• How an implicit guarantee (e.g., "I'll make up any losses") carries identical legal weight to an explicit guarantee, and why both trigger the same NASAA enforcement
• The dual written authorization requirement for an agent to share in a customer's account: one from the customer, one from the employing broker-dealer, and why proportionality is a Financial Industry Regulatory Authority (FINRA) add-on not tested on the Series 63
• Why stating a bond's coupon rate is a permitted factual statement about the issuer's contractual obligation, while "I guarantee you'll make 5%" is a prohibited personal performance guarantee
• The distinction between a prohibited performance guarantee (forward-looking promise) and a permitted performance-based fee (backward-looking compensation for results already achieved)
• The two qualified client thresholds for performance-based fees: $1.4 million under management with the adviser, or net worth over $2.7 million
• How to dissect combo scenarios where an agent simultaneously violates multiple rules (e.g., missing firm authorization for sharing plus guaranteeing past results will repeat)