R E A DIN G

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Ethics and Trust in the
Investment Profession
by Bidhan L. Parmar, PhD, Dorothy C. Kelly, CFA, and
David B. Stevens, CFA
Bidhan L. Parmar, PhD (USA). Dorothy C. Kelly, CFA, is at McIntire School of Commerce,
University of Virginia (USA). David B. Stevens, CFA (USA).

LEARNING OUTCOMES
Mastery The candidate should be able to:

a. explain ethics;
b. describe the role of a code of ethics in defining a profession;
c. identify challenges to ethical behavior;
d. describe the need for high ethical standards in the investment
industry;
e. distinguish between ethical and legal standards;
f. describe and apply a framework for ethical decision making.

INTRODUCTION
As a candidate in the CFA Program, you are both expected and required to meet
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high ethical standards. This reading introduces ideas and concepts that will help you
understand the importance of ethical behavior in the investment industry. You will
be introduced to various types of ethical issues within the investment profession and
learn about the CFA Institute Code of Ethics. Subsequently, you will be introduced
to a framework as a way to approach ethical decision making.
Imagine that you are employed in the research department of a large financial
services firm. You and your colleagues spend your days researching, analyzing, and
valuing the shares of publicly traded companies and sharing your investment recom-
mendations with clients. You love your work and take great satisfaction in knowing
that your recommendations can help the firm’s investing clients make informed invest-
ment decisions that will help them meet their financial goals and improve their lives.

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