The code of ethics must be followed by both the members of CFA Institute and the candidates seeking the CFA designation. Act with integrity and in an ethical manner Place the profession and interest of clients over personal interest. Conduct all professional activities (such as investment analysis, recommendations, etc) with reasonable care and independent judgement. […]
Code of Ethics and Standards of Professional Conduct
CFA Seven Standards of Professional Conduct
The CFA members and candidates are expected to know and adhere by the following standards of professional conduct: I. Professionalism Knowledge of the law Independence & objectivity Misrepresentation Misconduct II. Integrity of capital market Material nonpublic information Market manipulation III. Duties to clients Loyalty, prudence & care Fair dealing Suitability Performance Presentation Preservation of Confidentiality […]
Standard I – Professionalism (Standards of Professional Conduct)
The first standard, professionalism, has four sub-parts: A. Knowledge of the Law The members and candidates must know, understand, and comply with any law, or regulation governing their professional activities. In case of a conflict the member/candidate must comply with the stricter law. They should not knowingly participate in any activity that is in violation […]
Standard II – Integrity of Capital Markets
The second standard, integrity, has two sub-parts: I-A. Material Nonpublic Information As per this standard, the 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. The main purpose of this standard to restrict members from indulging in […]
Standard III – Duties of Clients
This standard has 5 parts: A. Loyalty, prudence, and Care Members 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’ interest before their employer’s or their own interest. Examples of Violation: […]
Standard IV – Duties to Employers
This standard has three parts: A. Loyalty This standard states that the members must always act in favor of their employer, and works towards benefiting their employers. They should not indulge in activity that could harm their employer. There may be situations where the employee has to act against his employer in order to protect […]
Standard V – Investment Analysis, Recommendations, and Actions
This standard has two parts: A. Diligence and Reasonable Basis This standard states that the member must exercise diligence, independence, and thoroughness while analyzing investments, making recommendations, and taking investment actions. The member must also have a reasonable basis supported by research and investigation for investment analysis, recommendations, and actions. Example of Violation Example 1: […]
Standard VI – Conflicts of Interest
This standard has three parts: A. Disclosure of Conflicts This standard states that the members must make full and fair disclosures of all matter that could give rise to a conflicting situation with clients or employers, for example, any act that could interfere with the member’s duties towards its employer. The member should also ensure […]
Standard VII – Responsibilities of a CFA Institute Member or CFA Candidate
Note: For the purpose of this article, a member refers to both members and candidates. This standard has two parts: A. Conduct as Members and Candidates in the CFA Program This standard states that the members must not engage in activity that affects the reputation of the CFA institute, designation, or exam. The activities include […]