Seven Standards of Professional Conduct

In this section we will study the seven standards of professional conduct in detail. The CFA members and candidates are expected to know and adhere by these standards of professional conduct.

We will take different situations involving the professional integrity of a member and demonstrate how to apply the standards in those situations. We will also demonstrate examples of behaviour that adheres to and behaviour that violates the Code and Standards.

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. Loyalty
  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 Institute, the CFA Designation & the CFA Program

Note that in our examples, we will use the term ‘members’ but we are referring to both members and candidates.

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