Ethics, Standards, Guidance Flashcards
Ethics
Described as a set of shared beliefs about what is good or acceptable and what is bad and unacceptable behaviour
Ethical Conduct
Behaviour that follows moral principles and is consistent with society’s ethical expectations
Code of Ethics
Written set of moral principles that can guide behaviour by describing what is considered acceptable behaviour
Profession
Group of people with specialized skills and knowledge who serve others and agree to behave in accordance with a code of ethics
Profession Characteristics
- A code of standards for professional behaviour
- A regulatory body to enforce the rules concerning professional behaviour and monitor ethical behaviour
- A focus on the needs of their clients
- A focus on service to society
- A requirement to put clients interests first
- A focus on or requirement for continuing education
Ways professions establish trust
- Requiring high standards of expertise, knowledge and skill
- Establishing standards of ethical behaviour
- Monitoring professional conduct
- Encouraging continuing education to maintain and increase competence
- Being focused on clients’ needs
- Mentoring and inspiring others in the profession
Suitability standard
Refers to match between client return requirements and the risk tolerances and the characteristics of the securities recommended
Fiduciary standard
Stronger standard. Requires professionals to use their knowledge and expertise to act in the best interest of the client
Situational Influences
A more important determinant of the ethical quality of behaviour than internal traits that influence behaviour. An example is social pressure from peers
Framework of Ethical Decision Making
- Identify: Relevant facts, stakeholders and duties owed, ethical principles, conflicts of interest
- Consider: Situational influences, additional guidance, alternative actions
- Decide and act
- Reflect: Was the outcome as anticipated? Why or why not?
Circumstances that prompt CFA Professional conduct staff to inquire
- Self-disclosure by members or candidates on their annual professional conduct statements
- Written complaints about a member or candidate’s professional conduct
- Evidence of misconduct by a member or candidate
- A report by a CFA exam proctor of possible violation
- Analysis of exam materials and monitoring of social media
Professional Conduct Staff may request
- An interview with the member/candidate
- Interview complainant or other third parties
- Collect documents and records relevant to the investigation
Disciplinary Actions
- No disciplinary action
- To issue a cautionary letter
- to discipline the member or candidate
Code of Ethics: CFA Members and Candidates must
- Act with integrity, competence, diligence, respect and in an ethical manner with the public, clients, prospective clients, employers, colleagues, etc.
- Place the integrity of the investment profession and the interests of the clients above their own personal interests
- Use reasonable care and exercise independent professional judgement when conducting investment analysis, making investment recommendations, etc.
- Practice and encourage others to practice in a professional and ethical manner
- Promote integrity and viability of the global capital markets for benefit of society
- maintain and improve professional competence and strive to maintain and improve the competence of other investment professionals
Standards of Professional Conduct
Refer to book for details on each
- Professionalism
- integrity of capital markets
- Duties to clients
- Duties to employers
- Investment analysis, recommendations and actions
- Conflicts of interest
- Responsibilities as CFA member/candidate
