The Standards (Underlying) Flashcards
Explain the ethical responsibilities required by the Code and Standards, including the sub-sections of each Standard
Professionalism
A. Knowledge of the Law: Understand and comply w/ all applicable laws, rules, and regulations 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 mosre strict law, rule, or regulation. Members and candidates must not knowingly participate or assist in any violation of laws, rules, or regulations and must disassociate themselves from any such violation.
B. Independence and Objectivity: Members and candidates must use reasonable care and judgement to achieve and maintain independence and objectivity in their professional activities. Don’t offer, solicit, or accept any gift, benefit, compensation, or consideration that reasonably could be expected to compromise their own or anothers independence and objectivity.
C.Misrepresentation: Members and candidates must not knowingly make an misrepresentations relating to investment analysis, recommendations, actions, or other profesional activities.
D. Misconduct: Don’t engage in any professional conduct involving dishonesty, fraud, or deceit or commit any act that reflects adversely on their professional reputation, integrity, or competence.
Integrity of Capital Markets
A. Material Nonpublic Information: Members and candidats who possess material non-public 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.
Duties to Clients
A. Loyalty, Prudence, Care: Members and candidates have a duty of loyalty to their clients and must act with reasonable care and exercise prudent judgement. Mems and Candids must act for the benefit of their clients and place their clients’ interests before their employers or their own interests.
B. Fair Dealing: 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.
C. Suitability: In an advisory relationship: a. Make reasonable inquiry into a clients or prospective clients investment experience, risk and return objectives, and dinancial 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 clients total portfolio. 2. When mems and candids are responsible for managing a portfolio to specific mandate, strategy, or style, they must make only investment recommendations or take investment actions that are consistent with the stated objectives and constraints of the portfolio. D. Performance Presentation: When communication investment performance information, mems and candids must make reasonable efforts to ensure that it is fair, accurate, and complete.
E. PReservation of Confidentiality: Mems and Candids must kep information about current, former, and prospective clients confidential unless: 1. The info concerns illegal activities on the part of the client or prospective client 2. Discloure is required by lw or, 3. The client or prospectice client permists discloure of the information.
Duties to Employers
A. Loyalty: In matters related to their employment, mems and candids 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 wompetes with or might reasonably be expected to create a conflict of interest with, their employers interest unless they obtain written consent from all parties involved.
C. Responsibilities of Supervisors. Make reasonable efforts to deter and prevent violatos of applicable laws, rules, regulations, and the Code and Standards by anyone subject to their supervision or authority.
Investment Analysis, Recommendations, and Actions
A. Diligence and Reasonable Basis
1. Exercise diligence, independence, and thoroughness in analyzing investments, making investment recommendations, and taking investment actions
2. Have a reasonable and adequate baissi, supported by appropriate research and investigation, for any investment analysis, recommendation, or action
B. Communication with Clients and Prospective Clients
1.Disclose to clients and prospective clients the basic format and general principles of the investment processes used to analyse investments, select securities, and construct portfolios and must promptly disclose any changes that might materially affect those processes.
2. Use reasonable judgement in identifying which factors are important to their investment analyses, recommendations, or actions and include those factors in communications w/ clients and prospective clients
3. Distinguish between fact and opinion in the presentation of investment analysis and recommendations
C. Record Retention: Dev. and maintain appropriate records to support their investment analysis, recommendations, actions, and other investment-related communications w/ clients and prospective clients.
Conflicts of Interest
A. Disclosure of Conflicts: 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.
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 Fee’s 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 recommendation of products or services.
Responsibilities as a CFA institute member or CFA candidate
A. Conduct as members and candidates in the CFA program: Members and candidates must not engage in any conduct that comporises the reputation of integrity of CFA institute or the CFA designation or the integrity, validity, or security of the CFA examinations
B. Reference to CFA institute, the CFA designation, and the CFA program: When referring to CFA institute, membership, or designation, or candidacy, 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
