Complete Question:
When preparing an advertisement, an investment adviser whose principal business is rendering advice to customers about securities, is prohibited from:
Group of answer choices
A. showing past performance
B. using a paid testimonial
C. using illustrative performance charts
D. using the term "investment counsel"
Answer:
B. using a paid testimonial.
Explanation:
When preparing an advertisement, an investment adviser whose principal business is rendering advice to customers about securities, is prohibited from using a paid testimonial by the Securities and Exchange Commission Act.
A paid testimonial can be defined as a written or verbal statement made by an individual for the affirmation of good quality, performance and value of a product such as a stock.
Generally, a paid testimonial endorses an investment adviser but may not be a true reflection of his or her performance in stocks trading and that would negatively impact the customers.
