5. Ethics Flashcards
Standard 1 (A) - Definition
Knowledge of the Law: M/Cs must understand and comply with all applicable laws, rules and regulations
Standard 1 (B) - Definition
Independence & Objectivity: M/Cs must use reasonable care and judgement to achieve and maintain I&O. M/Cs must not offer or solicit gifts, compensation, benefits that compromise
Standard 1 (C) - Definition
Misrepresentation: M/Cs must not KNOWINGLY make any misrepresentation related to investment analysis and actions
Standard 1 (D) - Definition
Misrepresentation: M/Cs must not ENGAGE in any professional activity involving fraud, dishonesty ou que pega mal na profissão
Standard 2 (A) - Definition
MNPI: M/Cs who POSSESS MNPI that could affect markets must not act or cause others to act
Standard 2 (B) - Definition
Market Manipulation: M/Cs must not ENGAGE in practices that distort prices or inflate volumes. To be a violation M/C tem que estar mal intencionado. Transaction or Information Based.
Standard 3 (A) - Definition
Loyalty, Prudence & Care: M/Cs have a duty of loyalty to clients and must act with reasonable care and judgment.
Standard 3 (B) - Definition
Fair Dealing: M/Cs must deal fairly and objectively with all clients
Standard 3 (C) - Definition
Suitability: WHEN in advisory relationship, M/Cs must (i) reasonable inquiry (ii) determine suitability and (iii) judge by context. Tactical deviations are allowed, but should stick to mandate (consistent).
Standard 3 (D) - Definition
Performance Presentation: M/Cs must make reasonable efforts to ensure that info is FAIR, ACCURATE AND COMPLETE. Additional info may be available upon request.
Standard 3 (E) - Definition
Preservation of Confidentiality: M/Cs must keep information on current, former, prospective clients confidential UNLESS required by law, CFA requests or client allows.
Standard 4 (A) - Definition
Loyalty to Employers: M/Cs must act for the benefit of employer. Do not deprive employer from your skills.
Standard 4 (B) - Definition
Additional Compensation: M/Cs must not accept gifts, compensation or consideration (monetary or not) that competes with current job UNLESS WRITTEN CONSENT FROM ALL PARTIES INVOLVED
Standard 4 (C) - Definition
Responsbility of Supervisors: M/Cs must make reasonable efforts to ensure anyone reporting to them complies with everything.
Standard 5 (A) - Definition
Diligence & Reasonable Basis: Exercise diligence, independence, thoroughness in analysis. Have reasonable and adequate basis.
Standard 5 (B) - Definition
Communication w/ Clients: M/Cs must (i) disclose format and general principles, (ii) significant limitations and (iii) use reasonable judgment and (iv) distinguish fact and opinion
Standard 5 (C) - Definition
Record Retention: M/Cs must develop and maintain records. Whatever if electronic or hard copies.
Standard 6 (A) - Definition
Disclosure of Conflicts: M/Cs must make FULL and FAIR disclosure BEFORE entering in arrangements with clients, prospective etc. Ensure plain language.
Standard 6 (B) - Definition
Priority of Transactions: Client > Employer > Me
Standard 6 (C) - Definition
Referral Fees: M/Cs must disclose to clients, prospective etc BEFORE entering in the arrangements
Standard 7 (A) - Definition
Conduct: M/Cs must not engage in conduct that compromises reputation and integrity of CFAI. Do not comment broader topics tested etc.
Standard 7 (B) - Definition
Reference to CFA designation: M/Cs must not misrepresent or exaggerate
Standard 1 (A) - Key Words
Knowledge of the Law: Comply with most strict law
Standard 1 (B) - Key Words
Independence & Objectivity: Gifts; Flat Fees
Standard 1 (C) - Key Words
Misrepresentation: Plágio; Lie; Misleading numbers; Guarantee returns; Deliver PPT knowing of an error
Standard 1 (D) - Key Words
Misconduct: Dishonesty; Fraud; Theft
Standard 2 (A) - Key Words
MNPI: Reliable source; Act based in rumour OK; Mosaic Theory
Standard 2 (B) - Key Words
Mkt Manipulation: Intent to mislead markets
Standard 3 (A) - Key Words
Loyalty, Prudence & Care: Act in the benefit of the client; soft dollars only to client (mixed software ok); proxy voting; seek best execution or notify if directed trading
Standard 3 (B) - Key Words
Fair Dealing: Different levels of service are OK; Agir igual discretionary or non-discretionary; Give everyone a fair chance to act
Standard 3 (C) - Key Words
Suitability: Reasonable inquiry; judge by context; stick to mandate; annual updates to IPS
Standard 3 (D) - Key Words
Performance Presentation: Fair, Accurate, Complete, Identify info from previous jobs and communicate limitations
Standard 3 (E) - Key Words
Preservation of Confidentiality: All current, former, prospective clients unless illegal, allowed by client or CFA requested
Standard 4 (A) - Key Words
Loyalty to Employers: Do not deprive from your skill, stay loyal, OK whistleblow if it is to protect market and clients
Standard 4 (B) - Key Words
Additional Compensation Arrangement: Get written consent from all parties
Standard 4 (C) - Key Words
Responsibility of Supervisors: Compliance systems are necessary prior to accepting the job. If suspect from someone, increase supervisory, place limitations but NOT OK to hold hearings.
Standard 5 (A) - Key Words
Diligence & Reasonable Basis: Diligence, independence, thoroughness
Standard 5 (B) - Key Words
Communication with Clients: Disclose investment principles; any changes to stock coverage that impacts recommendation; responsible for submanagers you hire
Standard 5 (C) - Key Words
Record Retention: Reg requirement or 7 years
Standard 6 (A) - Key Words
Disclosure of Conflicts: DISCLOSE
Standard 6 (B) - Key Words
Priority of Transactions: Clients > Employers > Me. Not unethical if client is not disadvantaged, professional does not benefit and professional is in compliance
Standard 6 (C) - Key Words
Referral Fees: Disclose employers, clients, prospective cleints of any consideration or benefit received for recommendations
Standard 7 (A) - Key Words
Conduct as CFA member: Do not cheat, comment topics tested, share exam content. Does NOT cover opinions. Do not use CFA volunteering to benefit yourself.
Standard 7 (B) - Key Words
Reference to CFAI: Superiors return guaranteed NOT ok; Do not overstate CFA designation. 4 years of work experience.
