GIPS Verification

Suppose that Scorpio Investments acquires Coburn & Associates. If so, which of the following statements is _most accurate_ in regards to linking performance?

Incorrect. Under GIPS portability standards, there is to be no break in the track record between the past firm and the current firm. If there is a break, but the other requirements are met, then the past performance may be used to represent historical performance, but *the performance records must not be linked*.

Incorrect. One of the GIPS standards linking requirements is that *all* the investment decision makers are employed by the new firm.

Correct! This is one of the four GIPS standard requirements for portability. 1) Substantially all the decision makers are employed by the new or acquiring firm. 2) The decision-making process remains substantially intact and independent with the new or acquiring firm. 3) The firm has records that document and support the historical performance. 4) There is no break in the track record between the past firm and the new firm. If the first three requirements are met, then the performance from the past firm or affiliation may be used to represent the historical performance of the new or acquiring firm, but the two performance records may not be linked.

The historical performance can be linked after a grace period

Only the head portfolio manager is employed by Scorpio Investments

The decision making process remains independent of Scorpio Investments