On his first day at Karibe, the firm asks Somer to approve marketing materials that present the

following performance disclosures.

$$ Text which states: $$Somer has generated average annual returns of $11\%$

$$ The $3-$year performance of a composite of Karibe client accounts that follow a similar

small$-$cap value strategy

$$ A disclosure that the assumptions and calculations underlying the returns presented are

publicly available on Karibe$$s public website

To maintain relationships with clients and to attract prospective clients, Somer is active on

social media. He posts a link to a news story about a famous athlete who recently paid

substantial tax penalties after failing to properly report investment gains. In addition to the link

Somer writes the comment: $$A client of mine had similar gains, but because I kept proper

records he faced no penalties. #HireAProfessional$.$ Some responses to the post suggest that

readers mistakenly believe the athlete is Somer$$s client. Somer does not post a clarifying

comment.

Somer develops a new quantitative investment strategy that he describes in marketing

materials. The description states that $$the strategy is based on eight proven fundamental and

technical factors, including well$-$known factors such as value and momentum as well as certain

proprietary factors that have been back$-$tested. The strategy includes a dynamic weighting

component to adjust the amount allocated to each factor based on prevailing market

conditions.$$ The materials also highlight risks such as $$the possibility that the model or its

underlying factors may not work out of sample,$$ and $$because the weight placed on various

factors is dynamic, it may not be suitable for clients who seek steady exposure to certain

factors.$$ One of Somer$$s clients agrees to use this strategy. When preparing the first

performance report for this client, Somer discovers a coding error that reversed the client$$s

weightings assigned to the value and momentum factors.

Prior to joining Karibe, Somer purchased shares in a small$-$cap technology firm for his personal

portfolio. When he started his new role Somers disclosed the position, which had quadrupled in

value since the initial purchase and represented more than $5\%$ of his personal holdings. He had

no intention to sell the shares and he recommended them to clients at Karibe, to whom he

disclosed his ownership. After the successful launch of a new product resulted in additional

large gains in the shares, Somer now recommends that clients place limit orders when

purchasing the shares. Though he remains bullish on the stock he is concerned about the size of

his personal position, which is now more than $15\%$ of his portfolio. One of his clients recently

placed a limit order at $$50$ per share, which represents the highest bid in the market. The

lowest offer is $$52.$ Somer considers filling the client$$s order with some of his own shares at the

$$50$ bid price. To best comply with the CFA Institute Standards of Professional Conduct $($the Standards$)$

related to performance presentation, Somer should modify the:

A$.$ text regarding Somer$$s investment returns.

B$.$ presentation of the performance for Karibe$$s representative composite.

C$.$ content of the disclosure statement related to assumptions and calculations