Six Components of Code of Ethics

A CFA's in-depth technical knowledge about finance and financial markets is intertwined into a code of ethics which the CFA Institute considers sacrosanct. They enshrine the mission and values of the CFA Institute. CFA members are expected to practice this code of ethics in their daily professional duties. This Code of Ethics and Standard of Professional behavior was drawn out in the 1960s and has since then applied to CFA members the world over.

Professionals found violating this code can be sanctioned by the CFA Institute. They can have their membership suspended, revoked, and their designation revoked.

Trust between the client and the CFA professional is one of the important values in a client-analyst relationship. The CFA professional is expected to help put investor interest first and help navigate tricky gray areas in rules that present themselves. The Code of Ethics and Professional Conduct helps CFA practitioners by providing them with a clear guide on ethical and professional conduct. Let's take a look at the six points in the Code of Ethics.

The Code of Ethics

1. Act with integrity, competence, respect and in an ethical manner with all stakeholders. (investors, public, colleagues).

2. Place client and professional interests above personal interests.

3. Exercise care and professional judgment when dispensing professional advice, analysis, actions and other professional activities.

4. Practice and encourage fellow professionals to maintain ethical standards and thus bring credit to the analyst community.

5. Promote the integrity and feasibility of the global capital markets.

6. Improve and maintain professional competence of themselves and their association.

Violations of the Code of Ethics can present themselves in a variety of forms. This is a summary of such violations.

A professional's improper conduct makes their competence and intentions look suspect. Excessive fraternization, drinking during the day or any behavior that impairs professional decision-making ability is considered a violation.

Defrauding the employer with deceit and fraud is considered a clear violation of the code of ethics. This raises questions about the integrity of the professional, which in turn diminishes trust.

Withholding information regarding the scope of the assignment and making wrongful financial claims is seen as a violation of professional conduct.