Performance Guarantees Prohibition: Rapid Fire
Chapters in this video
- 0:00 The one absolute rule and who it binds
- 2:31 The repurchase-promise disguise
- 4:38 Guaranteeing versus profit-and-loss sharing
- 5:06 Facts are not guarantees: bond coupons and issuer obligations
- 6:24 The four big exam traps and disguises
- 7:04 One-breath recap and the insurance-policy trap
- 7:55 Rapid-fire exam recap
What this video covers
- Who the performance guarantee prohibition binds: broker-dealers, agents, investment advisers, and investment adviser representatives (IARs), with zero exceptions for client type or written consent
- Why a promise to repurchase a security at the customer's original cost is an illegal guarantee against loss, not customer service
- How the exam uses waivers, personal funds, and firm size as distractors that never cure the violation
- The critical distinction between guaranteeing an account (never allowed) and sharing in profits and losses (allowed only with two written authorizations)
- Why quoting a bond's stated coupon or a fixed annuity's rate is a factual statement about the issuer's or insurer's obligation, not a prohibited performance guarantee
- The four most tested exam traps: customer consent, profit-and-loss sharing confusion, the repurchase-promise disguise, and personal funds coverage
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