What are the 6 CFA standards of Professional Conduct
- Professionalism
- Integrity of capital markets
- Duties to clients.
- Duties to employers
- Investment analysis, Recommendations and actions
- Conflicts of Interests
Under professionalism
- have knowledge of the law understand and comply with all acceptable laws
- maintain independence and objectivity don’t accept bribes/gifts that can be interpreted as bribes to compromise independence/objectivity. Use reasonable care and judgement
- avoid misrepresenting don’t knowingly misrepresent recommendations, investment analysis or other professional activities
- avoid misconduct no dishonesty, fraud, deceit, or crime that reflects adversely to professional reputation, integrity or competence.
Integrity of capital markets
Material non public information: don’t use any information that isn’t public and could change the value of an investment.
market manipulation: must not engage in practices that change prices or artificially inflate trading volumes with the intent to mislead market participants.
Duties to employers
Loyalty: be loyal to your employers
Additional compensation arrangements: do not accept any gifts or compensation that can make your interests conflict with the interests of your employer
Supervisor responsibility: it’s the supervisors responsibility to ensure their employees know the acceptable practices and abide by the codes of conduct
Duties to clients
- Loyalty, prudence, and care: use reasonable care and exercise prudence when judging
- Fair dealing: deal fairly and objectively with all clients
- Suitability: have written down the clients investment experience, constraints, risk and return objectives.
- Performance presentation: make reasonable effort to ensure investment performance information is fair, accurate and complete when communicating it
- Preservation of confidentiality:keep info confidential for past, current and prospective clients unless law requires it, client gives permission or info is about illegal activities
Investment analysis, recommendations, actions
- Diligence and reasonable basis: be diligent in analyzing investments and making the right decisions. Have a reasonable research basis for any decision, recommendation or analysis
- Communication with clients and prospective clients: disclose basics of investments process and any material changes to the process. Distinguish between fact and opinion. Disclose significant risks.
- record retention: make and keep appropriate records to support investment analyses, actions and comms with clients
Conflicts of interest
- disclose conflicts
- priority of transactions
- referral fees
