Answer: have their performance records verified by an independent third party

## Explanation **Correct Answer: A** **Why Option A is NOT a requirement:** - GIPS (Global Investment Performance Standards) do **not** require firms to have their performance records verified by an independent third party. - Verification is **recommended** but not **required** under GIPS standards. - Firms can claim compliance with GIPS without undergoing third-party verification. **Why Options B and C ARE requirements:** **Option B:** Firms **must** include all discretionary, fee-paying portfolios in at least one composite. This is a fundamental requirement to ensure complete representation of a firm's performance. **Option C:** Firms **must** present a minimum of five years of annual investment performance compliant with GIPS standards (or since inception if the firm has been in existence for less than five years). After presenting five years of compliant performance, firms must add annual performance each subsequent year up to a minimum of ten years. **Key GIPS Requirements:** 1. **Composite Construction:** All discretionary, fee-paying portfolios must be included in at least one composite 2. **Performance Presentation:** Minimum five years of GIPS-compliant performance (or since inception if less than five years) 3. **Disclosure:** Required disclosures about composites, benchmarks, and policies 4. **Calculation Methodology:** Specific rules for calculating returns 5. **Documentation:** Policies and procedures must be documented **Verification Status:** - Verification is a **voluntary** process where an independent third party tests whether a firm has complied with all GIPS requirements - While highly recommended for credibility, it is not mandatory for claiming GIPS compliance

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