Code of Ethics and Standards of Professional Conduct Flashcards
What are the Code of Ethics for CFA members?
Members of the CFA must…
- Act with integrity, competence, respect and in an ethical manner with the public and stakeholders.
- Place integrity of the investment profession and client interests first.
- Exercise reasonable care and independent professional judgement.
- Practice and encourage others to practice in a professional and ethical manner.
- Promote the integrity and viability of the global capital markets.
- Maintain and improve professional competence.
What are the 7 Standards of Professional Conduct?
- Professionalism
- Integrity of Capital Markets
- Duties to Clients
- Duties to Employees
- Investment Analysis, Recommendations and Actions
- Conflicts of Interest
- Responsibilities as a CFA Institute Member / Candidate
Information relating to the CFA Institute Professional Conduct Program
Covered by CFA Institute Bylaws and the Rules and Proceedings Related to Professional Conduct.
CFA Institute Board of Governors has overall responsibility for the program.
Disciplinary Review Committee enforces the Code of Standards.
What can cause Professional Conduct inquiries?
- Self-disclosure by members relating to civil litigation, criminal investigation, or of a written complaint.
- Written copings received by Professional Conduct Staff.
- Public sourced evidence of mis-conduct.
- Exam violation / Cheating with exam materials.
What can happen in Professional Conduct inquiries?
- Request extra information (in writing) and may ask for an interview with candidate, third party, etc…
- Decision could involve no action, issue cautionary letter, or give disciplinary action.
Disciplinary action can be rejected resulting in a hearing with with the Disciplinary Review Panel.
Standards of Professional Conduct - Professionalism
- Must understand and comply with all applicable laws, rules and regulations.
- Must achieve and maintain independence and objectivity in their professional activities.
- Must not mis-represent.
- No mis-conduct (fraud, dishonestly, deceit etc…)
Standards of Professional Conduct - Integrity of Capital Markets
- Must not act / allow others to act on know non-public information.
- Must not engage in market manipulation.
Standards of Professional Conduct - Duties to Clients
- Act with loyalty, prudence and care putting clients before employers and yourself.
- Must deal fairly and objectively with all clients.
- Ensure sustainability between what the client requires and what you offer to the client (consider objective, risk and returns, constraints etc…).
- Must give fair, accurate and complete information.
- Preservation of confidentiality (unless illegal activity, required by law or client grants permission).
Standards of Professional Conduct - Duties to Employers
- Must be loyal to employer.
- Must not except ‘gifts’ that may create conflict of interest (without written consent).
- Ensure that anyone understands their supervision complies with laws, rules and regulations.
Standards of Professional Conduct - Investment Analysts, Recommendations, and Actions
- Must exercise diligence, independence and thoroughness with their work.
- Must disclosure all relevant information with clients / prospective clients.
- Must retain evidence to support investment decisions.
Standards of Professional Conduct - Conflicts of Interest
- Must disclosure conflicts of interest.
- Priorities client / company transactions over your own.
- Must disclosure all referral fees (benefits received) from clients to their employer.
Standards of Professional Conduct - Responsibilities as a CFA Institute Member / Candidate
- Must comply with CFA rules and regulations.
2. Must correctly reference the CFA Institute.
