Ethics Flashcards
(114 cards)
1
Q
What are the six components of the Code of Ethics?
A
- Act with integrity competence diligence and respect 2. Place the integrity of the investment profession and clients’ interests above personal interests 3. Use reasonable care and exercise independent professional judgment 4. Practice and encourage others to practice in a professional and ethical manner 5. Promote the integrity and viability of the global capital markets 6. Maintain and improve professional competence.
2
Q
What are the seven high-level Standards of Professional Conduct?
A
I. Professionalism II. Integrity of Capital Markets III. Duties to Clients IV. Duties to Employers V. Investment Analysis Recommendations and Actions VI. Conflicts of Interest VII. Responsibilities as a CFA Institute Member or CFA Candidate.
3
Q
What is the primary purpose of the Standards of Practice Handbook (Handbook)?
A
The Handbook provides guidance to people in the investment profession on real ethical dilemmas addressing where theory meets practice and where ethical behavior moves from abstract to concrete.
4
Q
According to Standard I(A) Knowledge of the Law if there is a conflict between applicable law and the Code and Standards which must a Member or Candidate follow?
A
In the event of conflict Members and Candidates must comply with the more strict law rule or regulation.
5
Q
What must a Member or Candidate do if they have reasonable grounds to believe that imminent or ongoing client or employer activities are illegal or unethical?
A
The Member or Candidate must dissociate or separate from the activity. This may involve attempting to stop the behavior by bringing it to the attention of the employer supervisor or compliance and if unsuccessful stepping away from the activity e.g. removing name from reports asking for different assignment or even leaving employment in extreme cases.
6
Q
What does Standard I(B) Independence and Objectivity require Members and Candidates to do?
A
Members and Candidates must use reasonable care and judgment to achieve and maintain independence and objectivity in their professional activities. They must not offer solicit or accept any gift benefit compensation or consideration that reasonably could be expected to compromise their own or another’s independence and objectivity.
7
Q
Is it acceptable for a Member or Candidate to accept a gift from a client?
A
Receiving a gift from a client can be distinguished from gifts given by entities seeking influence. If considered supplementary compensation it may be acceptable but members and candidates should disclose such benefits to their employers before acceptance if possible or promptly after.
8
Q
What is a misrepresentation according to Standard I(C) Misrepresentation?
A
A misrepresentation is any untrue statement or omission of a fact or any statement that is otherwise false or misleading. Members must not knowingly make misrepresentations related to investment analysis recommendations actions or other professional activities.
9
Q
Does Standard I(C) Misrepresentation prohibit guaranteeing a specific return on volatile investments?
A
Yes Standard I(C) prohibits members and candidates from guaranteeing clients any specific return on volatile investments.
10
Q
What does Standard I(D) Misconduct state regarding professional conduct?
A
Members and Candidates must not engage in any professional conduct involving dishonesty fraud or deceit or commit any act that reflects adversely on their professional reputation integrity or competence.
11
Q
What is the core requirement of the new Standard I(E) Competence?
A
Members and Candidates must act with and maintain the competence necessary to fulfill their professional responsibilities.
12
Q
What must a Member or Candidate do if they possess material nonpublic information that could affect the value of an investment according to Standard II(A)?
A
Members and Candidates who possess material nonpublic information that could affect the value of an investment must not act or cause others to act on the information.
13
Q
What constitutes ‘material’ information?
A
Information is ‘material’ if its disclosure would probably have an impact on the price of a security or if reasonable investors would want to know the information before making an investment decision.
14
Q
What is the ‘mosaic theory’ in the context of material nonpublic information?
A
Under the ‘mosaic theory’ financial analysts are free to act on a collection or mosaic of public and nonmaterial nonpublic information without risking violation. The analyst’s conclusions would have been material inside information if communicated directly by a company.
15
Q
What does Standard II(B) Market Manipulation prohibit?
A
Members and Candidates must not engage in practices that distort prices or artificially inflate trading volume with the intent to mislead market participants.
16
Q
What are the two general types of market manipulation?
A
- Information-based manipulation e.g. spreading false rumors. 2. Transaction-based manipulation e.g. trades that artificially affect prices or volume.
17
Q
What is the fundamental duty of Members and Candidates under Standard III(A) Loyalty Prudence and Care?
A
Members and Candidates have a duty of loyalty to their clients and must act with reasonable care and exercise prudent judgment. They must act for the benefit of their clients and place their clients’ interests before their employer’s or their own interests.
18
Q
When managing pension plans or trusts who is the ‘client’ to whom the duty of loyalty is owed?
A
The client is the beneficiaries of the plan or trust not the person or entity who hires the manager.
19
Q
What should a Member or Candidate do regarding ‘soft commissions’ or ‘soft dollars’?
A
A Member or Candidate who pays a higher brokerage commission than normal to allow for the purchase of goods or services without corresponding benefit to the client violates the duty of loyalty. Brokerage is an asset of the client.
20
Q
What is required under Standard III(B) Fair Dealing regarding investment recommendations and actions?
A
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.
21
Q
If an IPO is oversubscribed how should shares be allocated to clients?
A
The issue should be prorated to all subscribers for whom the investment is appropriate. Members and Candidates should forgo any sales to themselves or their immediate families to free up additional shares for clients unless family accounts are managed similarly to other client accounts.
22
Q
What is the first step when an advisory relationship exists according to Standard III(C) Suitability?
A
Gather client information at the inception of the relationship including financial circumstances personal data relevant to investment decisions attitudes toward risk and investment objectives. This should be incorporated into a written investment policy statement IPS.
23
Q
What should an Investment Policy Statement (IPS) address?
A
An IPS should address the client’s risk tolerance return requirements and all investment constraints including time horizon liquidity needs tax concerns legal regulatory factors and unique circumstances. It should also identify roles responsibilities and review schedules.
24
Q
If a client makes an unsolicited trade request that is unsuitable what should the Member or Candidate do?
A
The member or candidate should refrain from making the trade until discussing the concerns with the client. The focus should be on educating the investor on how the request deviates from the current policy statement.
25
What is the core requirement of Standard III(D) Performance Presentation?
When communicating investment performance information Members and Candidates must make reasonable efforts to ensure that it is fair accurate and complete.
26
What is the best method for members managing assets to meet their obligations under Standard III(D) Performance Presentation?
Compliance with the Global Investment Performance Standards GIPS is the best method.
27
Under what circumstances can a Member or Candidate disclose confidential client information according to Standard III(E) Preservation of Confidentiality?
1. The information concerns illegal activities on the part of the client or prospective client 2. Disclosure is required by law or 3. The client or prospective client permits disclosure of the information.
28
Does Standard III(E) Preservation of Confidentiality apply to former clients?
Yes this standard protects the confidentiality of client information even if the person or entity is no longer a client.
29
What is the core duty under Standard IV(A) Loyalty (to Employer)?
In matters related to their employment Members and Candidates 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.
30
If planning to engage in independent practice for compensation while still employed what must a Member or Candidate do?
They must notify their employer describe the services expected duration and compensation and should not render services until receiving consent from their employer.
31
What are some activities that might constitute a violation of loyalty when planning to leave an employer?
Misappropriation of trade secrets misuse of confidential information solicitation of employer's clients prior to cessation of employment self-dealing and misappropriation of client lists.
32
Can a departing employee take records or files to a new employer?
No not without the written permission of the previous employer. This includes items stored in hard copy or electronically.
33
What is required by Standard IV(B) Additional Compensation Arrangements?
Members and Candidates must not accept gifts benefits compensation or consideration that competes with or might reasonably be expected to create a conflict of interest with their employer’s interest unless they obtain written consent from all parties involved.
34
What should a Member or Candidate do if they propose to receive additional compensation for services?
Make an immediate written report to their supervisor and compliance officer specifying the proposed compensation its terms nature approximate amount duration confirmed by the party offering it.
35
What is the responsibility of a supervisor under Standard IV(C) Responsibilities of Supervisors?
Members and Candidates must make reasonable efforts to ensure that anyone subject to their supervision or authority complies with applicable laws rules regulations and the Code and Standards.
36
What should a supervisor do if they learn an employee has violated or may have violated rules?
The supervisor must promptly initiate an assessment to determine the extent of the wrongdoing. Relying on the employee's statements or assurances is not enough.
37
What are the two main obligations under Standard V(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 basis supported by appropriate research and investigation for any investment analysis recommendation or action.
38
If relying on secondary (internal firm research) or third-party research what must a Member or Candidate do?
They must make reasonable and diligent efforts to determine whether such research is sound. If there's reason to suspect it lacks a sound basis they must not rely on it.
39
What are the five key obligations under Standard V(B) Communication with Clients and Prospective Clients?
1. Disclose nature of services and associated costs 2. Disclose basic format principles of investment processes and material changes 3. Disclose significant limitations and risks 4. Use reasonable judgment to include important factors in communications 5. Distinguish between fact and opinion.
40
What is the requirement under Standard V(C) Record Retention?
Members and Candidates must develop and maintain appropriate records to support their investment analyses recommendations actions and other investment-related communications with clients and prospective clients.
41
Are records created as part of a member's professional activity the property of the firm or the individual?
They are generally the property of the firm. A departing member cannot take them without express consent of the previous employer.
42
What is the CFA Institute recommended minimum record retention period in the absence of regulatory guidance or firm policies?
At least seven years.
43
What is the core requirement of Standard VI(A) Avoid or Disclose Conflicts?
Members and Candidates must avoid or 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. Disclosures must be prominent in plain language and communicate relevant information effectively.
44
What must members disclose regarding ownership of stock they recommend or that clients hold?
Members must disclose any beneficial ownership interest in such securities.
45
What is the main principle of Standard VI(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.
46
Should family accounts that are also client accounts receive different treatment regarding transaction priority?
No family accounts that are client accounts should be treated like any other firm account and should neither be given special treatment nor be disadvantaged. However if the member has beneficial ownership preclearance reporting may apply.
47
What is required under Standard VI(C) Referral Fees?
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 the recommendation of products or services.
48
When must disclosure of referral fees be made to a client or prospective client?
Before entry into any formal agreement for services.
49
What does Standard VII(A) Conduct as Participants in CFA Institute Programs prohibit?
Members and Candidates must not engage in any conduct that compromises the reputation or integrity of CFA Institute or the CFA designation or the integrity validity or security of CFA Institute programs.
50
Can candidates disclose specific details of questions from a CFA exam or broad topical areas tested?
No these are considered confidential information and cannot be disclosed.
51
How should a CFA charterholder refer to their designation?
They should use it in a manner that does not misrepresent or exaggerate its meaning or implications. For example stating "CFA charterholders achieve better performance results" is improper.
52
Can a candidate imply they have a partial designation after passing one or more levels of the CFA Program?
No candidates must not imply achievement of any partial designation. For example 'CFA Level II' is an improper reference.
53
What are the recommended procedures for Members and Candidates under Standard I(A) Knowledge of the Law to stay informed about applicable laws and regulations?
Stay informed e.g. through employer updates continuing education review procedures firm's written compliance procedures and maintain current files copies of statutes rules regulations.
54
What should a firm's policies and procedures include to support Standard I(A) Knowledge of the Law regarding reporting violations?
Firms might provide written protocols for reporting suspected violations of laws regulations or company policies.
55
According to Example 1 (Notification of Known Violations) for Standard I(A) if a company official gives an analyst information indicating filed financial statements overstate earnings and legal counsel states it would be difficult for the regulator to prove wrongdoing what should the analyst do?
The analyst should report the situation to their supervisor seek an independent legal opinion and determine whether the regulator should be notified of the error. Reliance on legal counsel's advice about provability does not absolve the member from complying with the law.
56
Under Standard I(B) Independence and Objectivity what is best practice regarding travel funding from an outside company for events like property tours?
Best practice dictates that members and candidates always use commercial transportation at their expense or their firm's expense. If commercial transportation is unavailable they may accept modestly arranged travel.
57
What should a firm's policy be regarding employee purchases of equity or equity-related IPOs according to recommended procedures for Standard I(B) Independence and Objectivity?
Firms should require prior approval for employee participation in IPOs with prompt disclosure of investment actions taken following the offering.
58
Example: An analyst concludes a stock is overpriced but is concerned a negative report will hurt his firm's investment banking relationship with the company. What should the analyst do according to Standard I(B)?
The analyst's analysis must be objective and based solely on company fundamentals. Any pressure from other divisions is inappropriate. The firm could place the company on a restricted list.
59
What is plagiarism according to Standard I(C) Misrepresentation?
Plagiarism is defined as copying or using in substantially the same form materials prepared by others without acknowledging the source of the material or identifying the author and publisher.
60
Can a member use research or models developed by others within the same firm who may no longer be with the firm without it being plagiarism under Standard I(C)?
Yes research and models developed while employed by a firm are the property of the firm. The firm retains the right to continue using the work. However a member cannot reissue a previously released report solely under their own name.
61
Example: An analyst uses excerpts from an article with slight changes without acknowledgement. Is this a violation of Standard I(C) Misrepresentation?
Yes this is a form of plagiarism and violates Standard I(C).
62
What type of personal conduct even if not illegal might constitute a violation of Standard I(D) Misconduct?
Conduct that damages trustworthiness or competence such as abusing alcohol during business hours which could detrimentally affect professional responsibilities.
63
What is the fundamental requirement of Standard I(E) Competence regarding professional responsibilities?
Members and Candidates must act with and maintain the competence necessary to fulfill their professional responsibilities.
64
What are some ways members and candidates can achieve and maintain competence as per Standard I(E) recommended procedures?
Engaging in professional development studying for certifications attending conferences seminars participating in employer training self-study participating in expert groups becoming proficient with new skills as roles change.
65
If an analyst obtains material nonpublic information from a company insider about a significant new contract is this information likely material under Standard II(A)?
Yes factual information from a corporate insider regarding a significant new contract for a company is likely to be material.
66
When is information considered 'nonpublic' according to Standard II(A) Material Nonpublic Information?
Information is 'nonpublic' until it has been disseminated or is available to the marketplace in general as opposed to a select group of investors.
67
What is an example of 'information-based manipulation' prohibited by Standard II(B) Market Manipulation?
Spreading false rumors to induce trading by others such as 'pumping up' a price with misleading positive information only to 'dump' the investment later.
68
What is 'transaction-based manipulation' under Standard II(B) Market Manipulation?
Transactions that artificially affect prices or volume to give the impression of activity or price movement or securing a controlling position to exploit and manipulate the price of a related derivative and or the underlying asset.
69
What is the primary duty of members and candidates to clients under Standard III(A) Loyalty Prudence and Care?
They must act for the benefit of their clients and place their clients' interests before their employer's or their own interests acting with reasonable care and exercising prudent judgment.
70
If a manager uses client brokerage to purchase research services ('soft dollars') when does this violate Standard III(A)?
If the manager pays a higher brokerage commission than normal for goods or services without a corresponding benefit to the client.
71
What does Standard III(B) Fair Dealing require when disseminating investment recommendations to clients who may have different service levels?
Different service levels must not disadvantage or negatively affect clients should be disclosed and be available to everyone not offered selectively.
72
When making investments in new offerings e.g. IPOs how should members and candidates treat clients according to Standard III(B) Fair Dealing?
Distribute the issues to all customers for whom the investments are appropriate in a manner consistent with firm policies for allocating blocks. If oversubscribed prorate to all subscribers usually round-lot basis and forgo personal family sales.
73
What should a written Investment Policy Statement (IPS) include as per Standard III(C) Suitability guidance?
Client identification investor objectives return risk tolerance investor constraints liquidity time horizon tax legal unique needs and performance measurement benchmarks.
74
If a client makes an unsolicited trade request that a member knows is unsuitable and could have a material impact on the portfolio what should the member do?
The member should discuss the concerns with the client and use the opportunity to update the investment policy statement.
75
What is the requirement of Standard III(D) Performance Presentation regarding misrepresentation?
It prohibits misrepresentations of past performance or reasonably expected performance and requires fair and complete presentation of performance information.
76
If a performance presentation is brief what should a member or candidate do according to Standard III(D)?
Make available to clients and prospects on request the detailed information supporting that communication. Best practice is to include a reference to the limited nature of the information.
77
Does Standard III(E) Preservation of Confidentiality prevent members from cooperating with a CFA Institute Professional Conduct Program (PCP) investigation?
No when permissible under applicable law members shall consider the PCP an extension of themselves when requested to provide information about a client in support of a PCP investigation.
78
If an employer's policies conflict with applicable laws rules regulations or the Code and Standards what is the member's obligation under Standard IV(A) Loyalty to Employer?
The policies and procedures that conflict with applicable laws rules regulations or the Code and Standards are not to be followed.
79
Can a departing employee generally use simple knowledge of the names and existence of former clients after leaving an employer?
Yes generally unless deemed confidential by an agreement or by law. Experience or knowledge gained at one employer can be used at another.
80
What is 'whistleblowing' in the context of Standard IV(A) Loyalty to Employer?
Circumstances may arise e.g. employer engaged in illegal unethical activity where members must act contrary to employer's interests to protect clients or market integrity. Such action is permitted if the intent is clearly to protect clients market integrity not for personal gain.
81
What should a member do before accepting compensation or benefits from third parties that might create a conflict with their employer's interest (Standard IV(B) Additional Compensation Arrangements)?
Obtain written consent from all parties involved including their employer.
82
If a supervisor cannot discharge supervisory responsibilities due to an inadequate compliance system what should they do under Standard IV(C) Responsibilities of Supervisors?
Decline in writing to accept supervisory responsibility until the firm adopts reasonable procedures.
83
What are the minimum elements of an information barrier or 'firewall' to prevent misuse of material nonpublic information (Standard II(A) recommended procedures)?
Control of interdepartmental communications review of employee trading watch restricted lists documentation of procedures and heightened review restriction of proprietary trading when in possession of MNPI.
84
When using quantitatively oriented research e.g. models what must members understand according to Standard V(A) Diligence and Reasonable Basis?
They must understand the parameters assumptions and limitations inherent in any model and how the results were used in the decision-making process.
85
According to Standard V(B) Communication with Clients what must be disclosed about the use of external advisers or subadvisers?
Clients should be informed about the specialization or diversification expertise provided by the external adviser s to understand the full mix of products and strategies affecting their objectives.
86
What are examples of non-print media formats that should be retained as records under Standard V(C) Record Retention?
E-mails text messages blog posts and social media posts.
87
What is a key consideration regarding disclosure of conflicts under Standard VI(A) Avoid or Disclose Conflicts to ensure effectiveness?
Disclosures must be prominent delivered in plain language and communicate the relevant information effectively.
88
What does Standard VI(B) Priority of Transactions state about personal transactions when a member has knowledge of pending client employer transactions or nonpublic information?
Personal transactions including for family accounts or accounts with beneficial interest may be undertaken only after clients and employers have had adequate opportunity to act on a recommendation.
89
When must referral fee arrangements be disclosed to a client or prospective client under Standard VI(C)?
Before entry into any formal agreement for services including the nature and estimated dollar value of the consideration.
90
What are examples of conduct that would compromise the integrity of CFA Institute programs under Standard VII(A)?
Cheating on exams violating testing policies providing confidential exam information improperly using CFA association for personal goals misrepresenting information on Professional Conduct Statements.
91
How can a candidate refer to their participation in the CFA Program according to Standard VII(B)?
References must clearly state the individual is a candidate and must not imply achievement of any partial designation. E.g. 'I am a 2025 Level III candidate in the CFA Program.' is proper. 'CFA Level II' is improper.
92
I. PROFESSIONALISM - A. Knowledge of the Law
Members and Candidates must understand and comply with all applicable laws rules and regulations (including the CFA Institute Code of Ethics and Standards of Professional Conduct) 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 more strict law rule or regulation. Members and Candidates must not knowingly participate or assist in and must dissociate from any violation of such laws rules or regulations.
93
I. PROFESSIONALISM - B. Independence and Objectivity
Members and Candidates must use reasonable care and judgment to achieve and maintain independence and objectivity in their professional activities. Members and Candidates must not offer solicit or accept any gift benefit compensation or consideration that reasonably could be expected to compromise their own or another's independence and objectivity.
94
I. PROFESSIONALISM - C. Misrepresentation
Members and Candidates must not knowingly make any misrepresentations relating to investment analysis recommendations actions or other professional activities.
95
I. PROFESSIONALISM - D. Misconduct
Members and Candidates must not engage in any professional conduct involving dishonesty fraud or deceit or commit any act that reflects adversely on their professional reputation integrity or competence.
96
I. PROFESSIONALISM - E. Competence
Members and Candidates must act with and maintain the competence necessary to fulfill their professional responsibilities.
97
II. INTEGRITY OF CAPITAL MARKETS - A. Material Nonpublic Information
Members and Candidates who possess material nonpublic information that could affect the value of an investment must not act or cause others to act on the information.
98
II. INTEGRITY OF CAPITAL MARKETS - 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.
99
III. DUTIES TO CLIENTS - A. Loyalty Prudence and Care
Members and Candidates have a duty of loyalty to their clients and must act with reasonable care and exercise prudent judgment. Members and Candidates must act for the benefit of their clients and place their clients' interests before their employer's or their own interests.
100
III. DUTIES TO CLIENTS - 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.
101
III. DUTIES TO CLIENTS - C. Suitability
1. When Members and Candidates are in an advisory relationship with a client they must: a. Make a reasonable inquiry into a client's or prospective client's investment experience risk and return objectives and financial 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 client's total portfolio. 2. When Members and Candidates are responsible for managing a portfolio to a specific mandate strategy or style they must make only investment recommendations or take only investment actions that are consistent with the stated objectives and constraints of the portfolio.
102
III. DUTIES TO CLIENTS - D. Performance Presentation
When communicating investment performance information Members and Candidates must make reasonable efforts to ensure that it is fair accurate and complete.
103
III. DUTIES TO CLIENTS - E. Preservation of Confidentiality
Members and Candidates must keep information about current former and prospective clients confidential unless: 1. The information concerns illegal activities on the part of the client or prospective client 2. Disclosure is required by law or 3. The client or prospective client permits disclosure of the information.
104
IV. DUTIES TO EMPLOYERS - A. Loyalty
In matters related to their employment Members and Candidates 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.
105
IV. DUTIES TO EMPLOYERS - B. Additional Compensation Arrangements
Members and Candidates must not accept gifts benefits compensation or consideration that competes with or might reasonably be expected to create a conflict of interest with their employer's interest unless they obtain written consent from all parties involved.
106
IV. DUTIES TO EMPLOYERS - C. Responsibilities of Supervisors
Members and Candidates must make reasonable efforts to ensure that anyone subject to their supervision or authority complies with applicable laws rules regulations and the Code and Standards.
107
V. INVESTMENT ANALYSIS RECOMMENDATIONS AND ACTIONS - A. Diligence and Reasonable Basis
Members and Candidates must: 1. Exercise diligence independence and thoroughness in analyzing investments making investment recommendations and taking investment actions. 2. Have a reasonable and adequate basis supported by appropriate research and investigation for any investment analysis recommendation or action.
108
V. INVESTMENT ANALYSIS RECOMMENDATIONS AND ACTIONS - B. Communication with Clients and Prospective Clients
Members and Candidates must: 1. Disclose to clients and prospective clients the nature of the services provided along with information about the costs to the client associated with those services. 2. Disclose to clients and prospective clients the basic format and general principles of the investment processes they use to analyze investments select securities and construct portfolios and must promptly disclose any changes that might materially affect those processes. 3. Disclose to clients and prospective clients significant limitations and risks associated with the investment process. 4. Use reasonable judgment in identifying which factors are important to their investment analyses recommendations or actions and include those factors in communications with clients and prospective clients. 5. Distinguish between fact and opinion in the presentation of investment analysis and recommendations.
109
V. INVESTMENT ANALYSIS RECOMMENDATIONS AND ACTIONS - C. Record Retention
Members and Candidates must develop and maintain appropriate records to support their investment analyses recommendations actions and other investment-related communications with clients and prospective clients.
110
VI. CONFLICTS OF INTEREST - A. Avoid or Disclose Conflicts
Members and Candidates must avoid or make full and fair disclosure of all matters that could reasonably be expected to impair their independence and objectivity and 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.
111
VI. CONFLICTS OF INTEREST - 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.
112
VI. CONFLICTS OF INTEREST - C. Referral Fees
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 the recommendation of products or services.
113
VII. RESPONSIBILITIES AS A CFA INSTITUTE MEMBER OR CFA CANDIDATE - A. Conduct as Participants in CFA Institute Programs
Members and Candidates must not engage in any conduct that compromises the reputation or integrity of CFA Institute or the CFA designation or the integrity validity or security of CFA Institute programs.
114
VII. RESPONSIBILITIES AS A CFA INSTITUTE MEMBER OR CFA CANDIDATE - B. Reference to CFA Institute the CFA Designation and the CFA Program
When referring to CFA Institute CFA Institute membership the CFA designation or candidacy in the CFA Program 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.
