Ethical and Professional Standards Flashcards

You may prefer our related Brainscape-certified flashcards:
1
Q

Ethics

A

Can be defined as a set of principles or rules of conduct that provide guidance for our behavior when it affects others.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Fundamental Ethical Principles Inc;lude

A
  • Honesty
  • Fairness
  • Diligence
  • Care and Respect for Others
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Competence

A

Members and Candidates must act with and maintain the competence necessary to fulfill their professional responsibilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Communication with Clients and Prospective Clients
Members and Candidates Must:

A

Disclose to clients and prospective clients the nature of the services provided, along with information about the costs to the client associated with those services.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Conflicts of Interest
Avoid or Disclose Conflicts

A

Members and Candidates must avoid or make full and fair
disclosure of all matters that could reasonably be expected
to impair their independence and objectivity or interfere with
respective duties to their clients, prospective clients, and
employer. Members and Candidates must ensure that such
disclosures are prominent, are delivered in plain language, and
communicate the relevant information effectively

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Knowledge of the Law

A

Members and Candidates must understand and comply with all applicable laws, rules, and regulations (including the CFA Institute Code of Ethics and Standards of Professional Conduct) of any government, regulatory organization, licensing agency, or professional association governing their professional activities.
In the event of conflict, Members and Candidates must comply with the more strict law, rule, or regulation. Members and Candidates must not knowingly participate or assist in and must dissociate from any violation of such laws, rules, or regulations.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Independence and Objectivity

A

Members and Candidates must use reasonable care and judgment to
achieve and maintain independence and objectivity in their professional activities. Members and Candidates must not offer, solicit, or accept any gift, benefit, compensation, or consideration that reasonably could be expected to compromise their own or another’s independence and objectivity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Misrepresentation

A

Members and Candidates must not knowingly make any
misrepresentations relating to investment analysis, recommendations, actions, or other professional activities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Misconduct

A

Members and Candidates must not engage in any professional conduct involving dishonesty, fraud, or deceit or commit any act that reflects adversely on their professional reputation, integrity, or competence.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Competence

A

Members and Candidates must act with and maintain the competence necessary to fulfill their professional responsibilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

INTEGRITY OF CAPITAL MARKETS

A

a. Material Nonpublic Information:
Members and Candidates who possess material nonpublic information that could affect the value of an investment must not act or cause others to act on the information
b. Market Manipulation:
Members and Candidates must not engage in practices that distort prices or artificially inflate trading volume with the intent to mislead market participants.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Duties to Clients

A

A. Loyalty, Prudence, and Care
B. Fair Dealing
C. Suitability
D. Performance Presentation
E. Preservation of Confidentiality

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Loyalty, Prudence, and Care

A

Members and Candidates have a duty of loyalty to their clients and must act with reasonable care and exercise prudent judgment. Members and Candidates must act for the benefit of their clients and place their clients’ interests before their employer’s or their own interests

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Fair Dealing

A

Members and Candidates must deal fairly and objectively with all
clients when providing investment analysis, making investment
recommendations, taking investment action, or engaging in other
professional activities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Suitability

A
  1. When Members and Candidates are in an advisory relationship with a client, they must:
    a. Make a reasonable inquiry into a client’s or prospective client’s
    investment experience, risk and return objectives, and financial
    constraints prior to making any investment recommendation
    or taking investment action and must reassess and update this
    information regularly.
    b. Determine that an investment is suitable to the client’s financial
    situation and consistent with the client’s written objectives,
    mandates, and constraints before making an investment
    recommendation or taking investment action.
    c. Judge the suitability of investments in the context of the client’s
    total portfolio.
  2. When Members and Candidates are responsible for managing a
    portfolio to a specific mandate, strategy, or style, they must make
    only investment recommendations or take only investment actions
    that are consistent with the stated objectives and constraints of the
    portfolio.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Performance Presentation

A

When communicating investment performance information, Members and Candidates must make reasonable efforts to ensure that it is fair, accurate, and complete.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Preservation of Confidentiality

A

Members and Candidates must keep information about current, former, and prospective clients confidential unless:
1. The information concerns illegal activities on the part of the
client or prospective client,
2. Disclosure is required by law, or
3. The client or prospective client permits disclosure of the
information.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

DUTIES TO EMPLOYERS

A

A. Loyalty
In matters related to their employment, Members and Candidates must act for the benefit of their employer and not deprive their employer of the advantage of their skills and abilities, divulge confidential information, or otherwise cause harm to their employer.

B. Additional Compensation Arrangements
Members and Candidates must not accept gifts, benefits,
compensation, or consideration that competes with or might reasonably be expected to create a conflict of interest with their employer’s interest unless they obtain written consent from all parties involved.

C. Responsibilities of Supervisors -
Members and Candidates must make reasonable efforts to ensure that anyone subject to their supervision or authority complies with applicable laws, rules, regulations, and the Code and Standards

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

INVESTMENT ANALYSIS, RECOMMENDATIONS, AND ACTIONS

A

A. Diligence and Reasonable Basis
B. Communication with Clients and Prospective Clients
C. Record Retention

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

A. Diligence and Reasonable Basis

A

Members and Candidates must:

  1. Exercise diligence, independence, and thoroughness in analyzing
    investments, making investment recommendations, and taking
    investment actions.
  2. Have a reasonable and adequate basis, supported by appropriate
    research and investigation, for any investment analysis,
    recommendation, or action.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

B. Communication with Clients and Prospective Clients

A

Members and Candidates must:

  1. Disclose to clients and prospective clients the nature of the services provided, along with information about the costs to the client associated with those services.
  2. Disclose to clients and prospective clients the basic format and
    general principles of the investment processes they use to analyze
    investments, select securities, and construct portfolios and must
    promptly disclose any changes that might materially affect those
    processes.
  3. Disclose to clients and prospective clients significant limitations and risks associated with the investment process.
  4. Use reasonable judgment in identifying which factors are important to their investment analyses, recommendations, or actions
    and include those factors in communications with clients and
    prospective clients.
  5. Distinguish between fact and opinion in the presentation of
    investment analysis and recommendations
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

CONFLICTS OF INTEREST

A

A. Avoid or Disclose Conflicts
Members and Candidates must avoid or make full and fair disclosure of all matters that could reasonably be expected to impair their independence and objectivity and interfere with respective duties to their clients, prospective clients, and employer. Members and Candidates must ensure that such disclosures are prominent, are delivered in plain language, and communicate the relevant information effectively.

B. Priority of Transactions
Investment transactions for clients and employers must have priority
over investment transactions in which a Member or Candidate is the
beneficial owner.

C. Referral Fees
Members and Candidates must disclose to their employer, clients, and prospective clients, as appropriate, any compensation, consideration, or benefit received from or paid to others for the recommendation of products or services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

RESPONSIBILITIES AS A CFA INSTITUTE MEMBER
OR CFA CANDIDATE

A

A. Conduct as Participants in CFA Institute Programs
Members and Candidates must not engage in any conduct that
compromises the reputation or integrity of CFA Institute or the CFA
designation or the integrity, validity, or security of CFA Institute programs.

B. Reference to CFA Institute, the CFA Designation, and the CFA Program
When referring to CFA Institute, CFA Institute membership, the CFA
designation, or candidacy in the CFA Program, Members and Candidates must not misrepresent or exaggerate the meaning or implications of membership in CFA Institute, holding the CFA designation, or candidacy in the CFA Program

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Appropriate

A

Suitable and proper for the circumstance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Beneficial Owner

A

A person or entity who ultimately owns, controls, has the power to direct, or has a material interest in a security or investment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Care

A

Acting in a prudent and judicious matter to avoid harm

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Client

A

A person or entity for whom the member or candidate performs a professional service that is of the type usually provided in return for compensation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Competence

A

Having sufficient knowledge, skills, and abilities to undertake an
activity successfully

29
Q

Complete:

A

Containing all facts and elements necessary to convey the
information.

30
Q

Conflict of Interest:

A

Any matter that could reasonably be expected to impair
independence and objectivity or raise a question about whether actions, judgment, or decision making is free from bias

31
Q

Diligence:

A

Careful, consistent, and thorough work or effort

32
Q

Full and Fair Disclosure:

A

The amount of disclosure necessary to provide accurate and complete information appropriate to the circumstances.

33
Q

Independence:

A

Free of bias; not influenced or controlled in matters of opinion or
conduct.

34
Q

Intent:

A

The state of mind to act with a desire, plan, and determination to achieve a particular purpose

35
Q

Investments:

A

Assets used to build wealth through earned income or
appreciation

36
Q

Knowingly:

A

Acting deliberately with awareness or consciousness

37
Q

Loyalty:

A

: Devotion, support for, or allegiance to a person or entity

38
Q

Material:

A

Having weight or meaning that is reasonably likely to influence making a decision or taking action.

39
Q

Misrepresentation

A

Any untrue statement or omission of fact or any statement
that is false or misleading

40
Q

More Strict

A

Laws, rules, regulations, or practices that place greater restraint on
conduct or provide greater protection of client interests

41
Q

Nonpublic

A
42
Q

Objectively

A
43
Q

Plain Language

A
44
Q

Professional Activities/Professional Conduct

A
45
Q

Professional Responsibilities

A
46
Q

Prominent Language

A
47
Q

Prospective Client

A
48
Q

Prudence

A
49
Q

Reasonable

A
50
Q

Relevant

A
51
Q

Securities

A
52
Q
A
53
Q
A
54
Q
A
55
Q
A
56
Q
A
57
Q
A
58
Q
A
59
Q
A
60
Q
A
61
Q
A
62
Q
A
63
Q
A
64
Q
A
65
Q
A
66
Q
A
67
Q
A
68
Q
A