Lessons
- Seven Standards of Professional Conduct
- Standard I (A) Professionalism - Knowledge of the Law
- Standard I (B) Professionalism - Independence and Objectivity
- Standard I (C) Professionalism - Misrepresentation
- Standard I (D) Professionalism - Misconduct
- Standard II (A) - Material Non-public Information
- Standard II (B) - Market Manipulation
- Standard III (A) - Loyalty, Prudence, and Care
- Standard III (B) - Fair Dealing
- Standard III (C) - Suitability
- Standard III (D) - Performance Presentation
- Standard III (E) - Preservation of Confidentiality
- Standard IV (A) - Loyalty
- Standard IV (B) - Additional Compensation Arrangements
- Standard IV (C) - Responsibilities of Supervisors
- Standard V (A) - Diligence and Reasonable Basis
- Standard V (B) - Communication with Clients and Prospective Clients
- Standard V (C) - Record Retention
- Standard VI (A) - Disclosure of Conflicts
- Standard VI (B) - Priority of Transactions
- Standard VI (C) - Referral Fees
- Guidance for Standard VII – Responsibilities of a CFA Institute Member or CFA Candidate
Standard VI (B) - Priority of Transactions
This standard states that for a member the investment transactions for his clients and employers should take priority over his personal investment transactions.
Examples of Violation
- Example 1: An analyst has come across a shining stock. Before making a purchase recommendation for the stock to his clients, he purchases the stock in his personal account. This is a violation of the standard.
- Example 2: A portfolio manager, who manages funds for several of his clients and also his own parents, first allocates any new IPOs to other clients, and any remaining shares to his parents account. He actually does so to avoid any blame for favouring his parents. However, he is violating the standard because his parents are also paying clients like others to his firm.
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