An investment advisor registered with CIRO discovers a clerical error in a client's last quarterly statement that resulted in an overstatement of the client's portfolio performance by 0.5% for that quarter. The error is financially immaterial to the client's overall wealth but could slightly impact performance-based fees. The advisor's manager instructs them to correct the error in the internal records but not to re-issue the statement, believing it would confuse the client unnecessarily. What must the advisor do, according to CIRO Conduct Rules?

Question: An investment advisor registered with CIRO discovers a clerical error in a client's last quarterly statement that resulted in an overstatement of the client's portfolio performance by 0.5% for that quarter. The error is financially immaterial to the client's overall wealth but could slightly impact performance-based fees. The advisor's manager instructs them to correct the error in the internal records but not to re-issue the statement, believing it would confuse the client unnecessarily. What must the advisor do, according to CIRO Conduct Rules?

Answer options:

• Correct the error internally and document the manager's instruction, as the financial impact is immaterial to the client's overall wealth. ✅ Re-issue the corrected statement to the client immediately, regardless of the manager's instruction, and explain the error transparently.
• Discuss the materiality of the error with the compliance department before deciding whether to re-issue the statement.
• Only correct the error if the client specifically enquires about the performance figures in the statement.

Correct answer: Re-issue the corrected statement to the client immediately, regardless of the manager's instruction, and explain the error transparently.

Explanation: CIRO Conduct Rules require accurate reporting to clients. Even if an error is considered financially immaterial or could cause confusion, statements must be accurate. The advisor has a duty to correct and re-issue the statement, maintaining transparency and fulfilling their ethical obligations.