How should a dealer treat yield-based performance claims in advertising?

• A. They should be included without caveats
• B. Ensure accuracy, clarity, and that any demonstrated performance is representative and properly tested
• C. They are not allowed under any circumstances
• D. They can be exaggerated if the advertiser discloses assumptions

Answer: (B)

Yield-based performance claims in advertising must be accurate, clear, and grounded in data that truly reflects what investors can reasonably expect. The best answer emphasizes presenting results that are representative of the dealer’s actual investment approach and that are obtained through a properly tested methodology. This means the claim should be based on data that is not cherry-picked or inflated, come from a disciplined calculation process, and be accompanied by appropriate disclosures about the time period, the securities involved, and any assumptions or limitations. Importantly, it should be understood that past performance is not indicative of future results, and any benchmarks or comparisons used should be disclosed and appropriate. By requiring accuracy, clarity, and representative, properly tested performance, the advertising remains fair and not misleading.