Welcome to Performance Guarantees Prohibition, a short unit on one absolute rule: no securities professional may guarantee a customer against loss.
Exam Weight: Part of 20% (12 questions total for Chapter 7: Communication with Customers and Prospects)
What You'll Learn
In this unit, you'll cover:
- Performance Guarantees Prohibition: Who the prohibition binds, what counts as a guarantee, and why sharing a loss is a different violation
Why This Matters
NASAA gives this its own outline line because the prohibition has no exceptions for any professional. The exam usually tests it by disguising the guarantee: a promise to buy the security back at cost, a private agreement to cover a decline, or an assurance that the firm's own strength makes a loss impossible.
All of those are guarantees. Watch also for the neighboring rules, since a guarantee is not the same violation as sharing in a customer's profits and losses.
Let's start with Performance Guarantees Prohibition.