Ethics Flashcards
List the recommended procedures to comply with the Independence and Objectivity standard.
Identify the components of Integrity of Capital Markets.
Explain the standard for Responsibilities of Supervisors.
List some examples of attributes to consider while forming the basis for a recommendation.
Identify recommendations on how to handle client assets as part of regular account information.
Name the criteria that can be used in forming an opinion on whether research is sound.
Describe plagiarism.
Plagiarism involves copying or using materials prepared by others without acknowledging:
1) the source of the material, or
2) identifying the author and publisher. List references and sources for your conclusions.
Sourcing brings responsibility back to the author. You may distribute appropriate third-party reports but do not represent yourself as the author.
Explain the Priority of Transactions standard.
Investment transactions for clients and employers must have priority over investment transactions in which a member or candidate is the beneficial owner.
A beneficial owner may derive direct or indirect benefit from the investment position.
Describe the compliance procedures for the Additional Compensation Arrangements standards.
List the recommended compliance procedures for the Fair Dealing standard.
Disclose trade allocation procedures
Establish systematic account review
Disclose levels of service
Suggest fair-dealing compliance procedures.
Explain the mosaic theory.
Financial analysts may act on a collection, or mosaic, of material public information or nonmaterial nonpublic information without risking violation, even when the conclusion they reach would have been material had the company communicated the same.
Identify the components of Investment Analysis, Recommendations, and Actions.
Identify activities that might constitute a violation when leaving an employer.
Give examples of conduct that undermines the public’s confidence that the CFA charter represents a level of achievement based on merit and ethical conduct
Explain the prohibition against using Material Nonpublic Information.
Define “adequate” procedures.
List the recommended compliance procedures for the Loyalty, Prudence, and Care standard.
Explain the standard for Communication with Clients and Prospective Clients.
Define knowingly in the context of the Misrepresentation standard.
Identify the components of Conflicts of Interest.
Disclosure of Conflicts
Priority of Transactions
Referral Fees
Explain the Knowledge of the Law standard.
Explain the compliance procedure recommendation for the Record Retention standard.
The responsibility to maintain records that support investment action generally falls with the firm rather than individuals. Because firms are not subject to the Standards, however, members and candidates should archive research notes and other documents, either electronically or in hard copy, that support their current investment-related communications.
Describe the Standard of Misrepresentation.
Explain the standard for Reference to CFA Institute, the CFA Designation, and the CFA Program.
Explain the standard for Loyalty, Prudence, and Care.
Identify the criteria to use for reviewing selected external advisers and managers.
List the three basic conflicts of an investment advisor who also serves on another company’s board of directors.
Explain the standard for Fair Dealing.
Identify the components of Duties to Clients.
Describe directed brokerage.
Describe due diligence in financial research and analysis.
List the recommended procedures for compliance of the Independence and Objectivity standard.
Protect the integrity of opinions
Create a restricted list
Restrict special cost arrangements
Limit gifts
Restrict investments
Review procedures
Independence policy
Appoint officer to review compliance issues
Explain the standard for Diligence and Reasonable Basis.
Identify the components of Responsibilities as a CFA Institute Member or CFA Candidate.
Conduct as members and candidates in the CFA program
Reference to CFA Institute, the CFA Designation, and the CFA Program
Explain the standard for 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.
Define best execution.
Best execution refers to a trading process that seeks to maximize the value of the client’s portfolio within the client’s stated investment objectives and constraints.
Identify the components of Duties to Employers.
Explain the recommended procedures for compliance with the Referral Fees standard.
Describe standard for 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.
Identify the intermediate steps to dissociate from ethical violations of others when direct discussions with the person or persons committing the violation are unsuccessful.
Give examples of information that cannot be shared by members involved in developing, administering, or grading the exams
Explain the standard for Record Retention.
Identify the goals of adequate compliance procedures.
Explain the standard for Additional Compensation Arrangements.
Name the suggested methods by which members and candidates can acquire and maintain understanding of applicable laws, rules, and regulations.
List the recommended compliance procedures for the Material Nonpublic Information standard.
Describe the seven components of the Standards of Professional Conduct.
Explain the recommended procedures for compliance of the Misconduct standard.
Define applicable law.
Applicable law governs the member’s or candidate’s conduct. The facts and circumstances of each case determine which law applies.
Define ethics and ethical conduct.
Describe the Standard of Misconduct.
Explain the standard for Loyalty.
Explain the standard for Disclosure of Conflicts.
Describe the Standard of Independence and Objectivity.
Describe the Record Retention standard position on local retention requirements.
Fulfilling regulatory and firm requirements satisfies Standard V(C).
In the absence of regulatory guidance or firm policies, CFA Institute recommends maintaining records for at least seven years.
Explain the steps to avoid plagiarism in preparing reports of analysis.
Explain recommended disclosure of different service levels.
Describe how members and candidates should encourage their firms to support the principles behind the Knowledge of Law standard.
Identify the guidance principles of the Knowledge of Law standard.
Understand applicable laws and regulations in locales where professional activity takes place.
Comply with laws and regulations that directly govern professional activities and resulting outcomes.
When questions arise, know firm policies and procedures for accessing compliance guidance.
Maintain knowledge required for professional activities, especially during times of change.
Explain the standard for Referral Fees.
Upon discovery of a violation, what should a supervisor do?
Describe requirements to maintain status as a CFA charterholder.
Remit a completed Professional Conduct Statement and pay applicable CFA Institute membership dues on an annual basis.
Describe recommended compliance procedures for the Priority of Transactions standard.
Identify the key elements of an enhanced firewall.
Identify aspects of the Loyalty standard.
Identify the components of Professionalism.
Distinguish between information-based manipulation and transaction-based manipulation.
Describe the six components of the Code of Ethics.
Integrity, competence, diligence, respect
Profession and clients before self
Reasonable care and independent judgment
Practice in professional and ethical manner
Promote capital market integrity and viability
Maintain/improve professional competence
Identify the recommended compliance procedures for the Disclosure of Conflicts standard.
Disclose special compensation arrangements with the employer that might conflict with client interests, such as bonuses based on short-term performance criteria, commissions, incentive fees, performance fees, and referral fees. Note that disclosure of all matters reasonably expected to impair independence and objectivity is required under Standard VI(A).
