Standard 1 Professionalism Flashcards
(17 cards)
What five subjects are housed in the first standard Professionalism?
Knowledge of the law
Independence and Objectivity
Misrepresentation
Misconduct
Competence
Considering the relationship between the Applicable Law and the Code & Standards of Professional Conduct, which one should a CFA member choose?
The most strict one
If a CFA member recognizes illegal or unethical behavior, what should he or she do?
Dissociate/separate themselves from the illegal activities, and in the best case, document the violation and urge their firms to attempt to persuade the perpetrators to cease such conduct.
CFA recognizes the fact that it is difficult for CFA members to know every law, therefore, a CFA member is only in breach of the law, codes, if the member does it knowingly!
What are three methods to acquire and maintain understanding of applicable laws?
Stay informed
Review procedures
Maintain current files
If uncertain, seek legal counsel!
What three things can firms do to support the principles of Standard 1A?
- Develop/adopt a code of ethics themselves.
- Provide information on applicable laws.
- Establish procedures for reporting violations.
If an applicable law permits the sharing of confidential client information for a CFA investigation, the CFA member cannot do this! He must follow the most strict law.
What are types of pressure sources that can influence independence and objectivity?
Buy-side clients (Institutional investors)
Custodial relationships
Investment banking relationships
Performance measurement
Public companies
Credit ratings
Manager selection process
Issuer paid research
Travel funding
What are recommended procedures for firms to avoid a breach of independence and objectivity?
Protect the integrity of opinions.
Create a restricted list.
Restrict special cost arrangements.
Limit gifts.
Restrict investments.
Review procedures.
Independence policy.
Appointed officer.
What is the misrepresentation as stated by Standard 1 (C)?
Members must not knowingly make any misrepresentations relating to investment analysis, recommendations, and actions.
What are six forms of misrepresentations?
Impact on investment practice
Performance reporting
Social media
Omissions
Plagiarism
Work completed for employer
What are recommended procedures for firms to avoid misrepresentations?
Factual presentations
Qualification summary
Verify outside information
Maintain webpages
Plagiarism policy
- Maintain copies
- Attribute quotations
- Attribute summaries
Describe the fourth Standard 1 Misconduct.
Members must not engage in any professional conduct involving dishonesty, fraud, deceit, or commit any act that reflects adversely on their professional reputation, integrity and competence.
What are recommended procedures for firms to avoid misconduct?
Code of Ethics
List of Violations
Employee References
What is the fifth Standard of Professionalism?
Competence - members must act with and maintain the competence necessary to fulfill their professional responsibilities.
What are recommended procedures for a firm to maintain competence?
Regularly engaging in a professional development or continuing education program.
Studying for or earning professional certifications.
Attending conferences, seminars, or webinars.
Regularly participating in training offered by their employer.
Diligently engaging in informal continuing education or self-study, such as through outside reading of subject matter articles, treatises, and publications.
Participating in expert groups or organizations.
Becoming proficient with any new skill or knowledge, as necessary, when their professional responsibilities change.
