2016, Study Session # 1, Reading # 1

“CODE OF ETHICS AND STANDARDS OF PROFESSIONAL CONDUCT”

Los1.a

M&C = Members & Candidates
CFAI PCP ⇒ covered by CFAI Bylaws & Rules of Procedures for Proceeding CFAI = CFA Institute
COE = Code of Ethics Related to Professional Conduct. PCP = Professional Conduct
SOPC = Standards of
PCP is based on principles of fairness to M&C & confidentiality of Program
Professional conduct proceedings. DRC = Disciplinary Review
BOG=Board of Governors
DRC of CFAI BOG ⇒ responsible for PCP & enforcement of code & standards. Committee
PDP=Professional Development PCS = Professional Conduct
Program Statement
Circumstances Which Can Prompt Inquiry

Self disclosure by member/candidate on PCS which

comprehensively questions professional conduct such as
involvement in civil litigation, criminal investigation or any complaint
(written) against the member/candidate etc.

Written complaints about member/staff received by professional conduct

staff.

Evidence of misconduct by member/candidate received by professional
conduct staff through public source.

A report by CFA proctor of a possible violation during examinations.

CFAI designated officer conducts inquiries.

Professional conduct staff (in writing) may request explanation from subject
member/candidate & may:

Interview the subject member/candidate.

Interview the complainant / third party.

Collect relevant document & records.

Designated officer may decide:

Disciplinary sanctions are not required.

Issue a cautionary letter.

To discipline the member/candidate.

If disciplinary sanction is proposed, the subject member/candidate may
accept the sanction.

If sanction is rejected ⇒ matter may be referred to CFAI panel for hearing.

Sanctions may include.

Condemnation by member’s peers.

Suspension of candidate’s continued participation in CFAI program.

Los1.b

Act with integrity, competence, diligence, respect, and in an ethical manner with the public, clients, prospective clients,
employers, employees, colleagues’ in the investment profession, and other participants in the global capital markets.

Place the integrity of the investment profession and the interests of clients above their own personal interests.

Use reasonable care and exercise independent professional judgment when conducting investment analysis, making investment
recommendations, taking investment actions, and engaging in other professional activities.

Practice and encourage others to practice in a professional and ethical manner that will reflect credit on themselves and the
profession.

Promote the integrity of and uphold the rules governing capital markets.

Maintain and improve their professional competence and strive to maintain and improve the competence of other investment
professionals.

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 2016, Study Session # 1, Reading # 1

Standards of Professional Conduct

1. Professionalism 2. Integrity of Capital Markets 3. Duties to Clients 4. Duties to Employers 5. Investment Analysis,
Recommendations & Actions

6. Conflicts of Interest 7. Responsibilities as a CFAI Member or CFAI Candidate

Los1.c 1. Professionalism

A. Knowledge of Law B. Independence & Objectivity C. Misrepresentation D. Misconduct

2. Integrity of Capital Markets

A. Material Non-Public Information B. Market Manipulation

3. Duties to Clients

A. Loyalty, B. Fair Dealing C. Suitability D. Performance E. Preservation of

Prudence, and Care Presentation Confidentiality

4. Duties to Employers

A. Loyalty B. Additional Compensation C. Responsibility of

Arrangements Supervisors

5. Investment Analysis, Recommendations & Actions

A. Diligence & Reasonable B. Communication with C. Record Retention

Basis Clients & prospective
Clients

6. Conflicts of Interest

A. Disclosure of conflicts B. Priority of Transactions C. Referral Fees

7. Responsibilities as a CFAI Member or CFAI Candidate

A. Conduct as Members and Candidates in B. Reference to CFA Institute, the CFA

the CFA Program Designation, and the CFA Program

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