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Ebooks / Code of Ethics and Standards of Professional Conduct / Chapter 2 of 9

CFA Seven Standards of Professional Conduct

📊Investment ManagementDecember 25, 2011 · 1 min read

The CFA members and candidates are expected to know and adhere by the following standards of professional conduct:

I. Professionalism

  1. Knowledge of the law
  2. Independence & objectivity
  3. Misrepresentation
  4. Misconduct

II. Integrity of capital market

  1. Material nonpublic information
  2. Market manipulation

III. Duties to clients

  1. Loyalty, prudence & care
  2. Fair dealing
  3. Suitability
  4. Performance Presentation
  5. Preservation of Confidentiality

IV. Duties to employers

  1. Loyality
  2. Additional compensation arrangement
  3. Responsibilities of supervisors

V. Investment analysis, recommendations & actions

  1. Diligence & reasonable basis
  2. Communication with clients & prospective clients
  3. Record retention

VI. Conflicts of interest

  1. Disclosure of conflicts
  2. Priority of transaction
  3. Referral fees

VII. Responsibilities as a CFA Institute member or CFA candidate

  1. Conduct as member & candidate in the CFA program
  2. Reference to CFA I, the CFA Designation & the CFA Program

Check your understanding

6 questions

    1. Which of the following CFA Standards of Professional Conduct is concerned with material nonpublic information and market manipulation?
    1. A CFA member receives a referral fee from a third party for recommending a client to that firm. Under which standard is the member required to disclose this arrangement?
    1. Which of the following sub-standards falls under Standard III: Duties to Clients?
    1. Under which CFA Standard would a supervisor's failure to detect and prevent a subordinate's fraudulent trading activity most likely be evaluated?
    1. Which of the following pairs are BOTH sub-standards under Standard V: Investment Analysis, Recommendations & Actions?
    1. A CFA charterholder claims on their résumé that they are a "CFA Level III Candidate" even though they have already passed all three levels. Which standard is most directly violated?
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