Mean, Variance, Standard Deviation and CorrelationWhile making an investment decision, it is important to assess the risk/return profile of any invest...
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 (C) - Referral Fees
This standard states that if a member receives any referral fees (compensation or benefit) for recommending a product or service, he must disclose it to the concerned people such as employer and clients.
Examples of Violation
- Example 1: A manager working for a bank has an arrangement with a brokerage firm, where the brokerage firm gives him a referral fee for every person to open an account with the brokerage firm. The manager refers several of his bank clients to the brokerage firm. However, he does not disclose this arrangement to his bank. This is a violation of the standard.
- Example 2: An investment firm’s trading desk conducts its business with a variety of brokers. The portfolio manager in that firm tells the trading desk to direct a large portion of its trades to one of his friend’s brokerage firm. The brokerage firm in return of this favour, recommends the investment firm’s advisory services to its own clients. This arrangement is not disclosed to the portfolio manager’s firm or to the clients of the brokerage house. This is a violation of the law.
You may find these interesting
Study Session 1 - Ethical and Professional Standar...The readings in this study session present a framework for ethical conduct in the investment profess...
What You Must Study – Ethical and Professional Sta...**Certification:** [CFA Exam Level 1](https://financetrain.com/certification-guides/cfa-level-1/) **...
Statistical Foundations: Mean and Standard Deviati...Many financial calculations and estimations require a statistical analysis of the variability of pas...
Dodd-Frank Act - Title VI: Improvements to Regulat...This title is also known as the Bank and Savings Association Holding Company and Depository Institut...
Introduction to International Financial Reporting ..."The world is coming together in an accounting & finance arena and speaking a similar language" expl...
Preparing Your Clients for Higher IRS Due Diligenc...Under the revised Circular 230 requirements that govern a CPA's and Enrolled Agent's practice before...
Structure of Hedge Funds and the FeesThis video provides an introduction of how hedge funds are structured, the typical fees charged by t...
Types of Credit Events in a Standard ISDA Credit D...The default payment in a credit derivative is triggered by the occurrence of a credit event. We saw ...
CFA Seven Standards of Professional ConductThe CFA members and candidates are expected to know and adhere by the following standards of profess...
Related Downloads
Finance Train Premium
Accelerate your finance career with cutting-edge data skills.
Join Finance Train Premium for unlimited access to a growing library of ebooks, projects and code examples covering financial modeling, data analysis, data science, machine learning, algorithmic trading strategies, and more applied to real-world finance scenarios.
I WANT TO JOINJOIN 30,000 DATA PROFESSIONALS
Free Guides - Getting Started with R and Python
Enter your name and email address below and we will email you the guides for R programming and Python.
