Level I - Ethical and Professional Standards

Reading 1: Code of Ethics and

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Standards of Professional Conduct

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 Contents

• CFA Institute Professional Conduct Program

• Code of Ethics

• Standards of Professional Conduct

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 CFA Institute Professional Conduct Program
• All CFA Institute members and candidates enrolled in the CFA Program are required
to comply with the Code and Standards.

• Professional Conduct Program (PCP), in conjunction with the Disciplinary Review

Committee (DRC), is responsible for enforcement of the Code and Standards.

• The DRC is a volunteer committee of CFA charterholders who serve on panels to

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review conduct and partner with Professional Conduct staff to establish and review
eview
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professional conduct policies.

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• The CFA Institute Bylaws and Rules of Procedure for Professional Conduct (Rules
ules of
nduct (Ru

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Procedure) form the basic structure for enforcing the Code and Stand
Standards.
dards.

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 CFA Institute Professional Conduct Program
Inquiry can be prompted by: 1) self-disclosure, 2) written complaints, 3) evidence of misconduct, 4)
report by a CFA exam proctor. CFA Institute may conduct analyses of scores and exam materials after
the exam, as well as monitor online and social media to detect disclosure of confidential exam
information.

Investigation: If the Professional Conduct staff believes a violation of the Code and Standards or
testing policies has occurred, the member or candidate has the opportunity to reject or accept any
charges and the proposed sanctions.

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Member/candidate does not accept Member/candidate accepts

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Matter referred to DRC which review materials and Sanctions include: public censure,
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presentations from Professional Conduct staff and suspension of membership p and use
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revocation
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Violation

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determine whether a violation of the Code and the CFA charter. Candidates
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Standards or testing policies occurred and, if so, what hibited from
suspended or prohibited from further
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 Code of Ethics
Members of CFA Institute (including CFA charterholders) and candidates for the CFA designation
(“Members and Candidates”) must:
• Act with integrity, competence, diligence, and 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

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professional activities.

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• Practice and encourage others to practice in a professional and ethical manner that will reflect

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credit on themselves and the profession.

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• Promote the integrity and viability of the global capital markets for the ultimate benefit
efit of so
society.
ociety.

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• Maintain and improve their professional competence and strive to maintain and improve ove the
mpro the

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competence of other investment professionals.

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 Standards of Professional Conduct

I. Professionalism
II. Integrity of Capital Markets
III. Duties to Clients
IV. Duties to Employers
V. Investment Analysis, Recommendations and Actions

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VI. Conflicts of Interest

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VII. Responsibilities as a CFA Institute Member or CFA Candidate

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 I. PROFESSIONALISM

A. Knowledge of the Law

B. Independence and Objectivity

C. Misrepresentation

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D. Misconduct

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 II. INTEGRITY OF CAPITAL MARKETS

A. Material Nonpublic Information

B. Market Manipulation

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 III. DUTIES TO CLIENTS
A. Loyalty, Prudence, and Care

B. Fair Dealing

C. Suitability

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D. Performance Presentation

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E. Preservation of Confidentiality

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 IV. DUTIES TO EMPLOYERS
A. Loyalty

B. Additional Compensation Arrangements

C. Responsibilities of Supervisors

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 V. INVESTMENT ANALYSIS,
RECOMMENDATIONS, AND ACTIONS
A. Diligence and Reasonable Basis

B. Communication with Clients and Prospective Clients

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C. Record Retention

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 VI. CONFLICTS OF INTEREST

A. Disclosure of Conflicts

B. Priority of Transactions

C. Referral Fees

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 VII. RESPONSIBILITIES AS A CFA INSTITUTE
MEMBER OR CFA CANDIDATE

A. Conduct as Participants in CFA Institute Programs

B. Reference to CFA Institute, the CFA Designation, and the CFA Program

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 End

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