Performance Guarantees Prohibition

What this video covers

• Why any guarantee against loss, explicit or implicit, is always a dishonest and unethical business practice under the North American Securities Administrators Association (NASAA) Statement of Policy
• The three mandatory conditions for an agent to legally share in a customer's account: written customer authorization, written broker-dealer authorization, and proportionality to the agent's own financial contribution
• Why verbal permission, unequal profit sharing, or skipping any one of the three conditions makes account sharing prohibited
• How stating a bond's stated coupon rate is a permitted factual statement about the issuer's contractual obligation, NOT a performance guarantee by the agent
• Why saying "I guarantee you'll make 5%" crosses the line even when describing the same bond, and why past performance can never imply guaranteed future results
• How investment advisers (IAs) and investment adviser representatives (IARs) are held to the identical prohibition, regardless of fee-based or commission-based compensation
• The exam's favorite trap pattern: distinguishing permitted factual statements from prohibited personal guarantees in identical-looking answer choices