CFA Standards of practice - Professionalism

Question 1

Name the 4 elements presented in the section Professionalism

Answer 1

A. Knowledge of the law
B. Independence and objectivity
C. Misrepresentation
D. Misconduct

Question 2

Explain how CFA Members and Candidates should deal with “knowledge of the law”

Answer 2

Members and candidates (MaC) must understand and comply with all applicable laws, rules and regulations of any government, regulatory organisation, … governing their activities

Question 3

Give the 7 ways to compliance regarding “knowledge of the law”

Answer 3

1. Stay informed
2. Review procedure
3. Maintain current files of law
4. Go to areas where investment products are developed and distributed
5. Go to a legal counsel when in doubt
6. Document the violation, rule the firm to cease, resign….
7. For the firm : develop a code of ethics, provide information on laws, establish procedures for reporting violations

Question 4

Explain how CFA Members and Candidates should deal with “Independence and objectivity”

Answer 4

Members and candidates (MaC) must not offer, solicit or accept any gift, benefit, compensation or consideration that reasonably could be expected to compromise their own independence and objectivity

Question 5

Give the 8 ways to compliance regarding “independence and objectivity”

Answer 5

1. Protect the integrity of opinions
2. Create a restricted list
3. Restrict special cost arrangements
4. Limit gifts
5. Restrict investments (employee purchases)
6. Implement review procedures
7. Create an independence policy
8. Take an appointed officer

Question 6

Explain how CFA Members and Candidates should deal with “Misrepresentation”

Answer 6

MaC must not knowingly make any misrepresentation relating to investment analysis, recommendations, actions or other professional activities

Question 7

Define “Misrepresentation”

Answer 7

A misrepresentation is any untrue statement or omission of a fact or any statement that is otherwise false or misleading

Question 8

Give the 5 ways to compliance regarding “Misrepresentation”

Answer 8

1. Use factual presentations
2. Qualification summary of the staff
3. Verify outside information
4. Maintain webpages ensuring the site remains current
5. Create a plagiarism policy

Question 9

How could misrepresentation have an impact on investment practices ?

Answer 9

Misrepresentation resulting from the use of credit ratings, research, testimonials or marketing materials of outside parties become the responsibility of the investment professional when it affects that professional’s business practices

Question 10

Explain how CFA Members and Candidates should deal with “Misconduct”

Answer 10

MaC must not engage in any professional conduct involving dishonesty, fraud or deceit or commit any act that reflect adversely on their professional reputation, integrity or competence

Question 11

MaC should encourage their firm to do 3 things about “Misconduct”

Answer 11

1. Develop a code of ethics
2. Disseminate a list of violations and associated disciplinary sanctions
3. Check the employee references