Ethics

Question 1

The Code of Ethics

Answer 1

Members of CFA Institute (including CFA charterholders) and candidates for the CFA designation must:

• Act with integrity, competence, diligence, and respect and in an ethical manner with the public, clients, prospective clients, employers, employees, colleagues in the investment profession, and other participants in the global capital markets.
• Place the integrity of the investment profession and the interests of clients above their own personal interests.
• Use reasonable care and exercise independent professional judgment when conducting investment analysis, making investment recommendations, taking investment actions, and engaging in other professional activities.
• Practice and encourage others to practice in a professional and ethical manner that will reflect credit on themselves and the profession.
• Promote the integrity and viability of the global capital markets for the ultimate benefit of society.
• Maintain and improve their professional competence and strive to maintain and improve the competence of other investment professionals.

Question 2

Standards of Professional Conduct

Answer 2

1. PROFESSIONALISM
2. INTEGRITY OF CAPITAL MARKETS
3. DUTIES TO CLIENTS
4. DUTIES TO EMPLOYERS
5. INVESTMENT ANALYSIS, RECOMMENDATIONS, AND ACTIONS
6. CONFLICTS OF INTEREST
7. RESPONSIBILITIES AS A CFA INSTITUTE MEMBER OR CFA CANDIDATE

Question 3

I. PROFESSIONALISM

Answer 3

• A. Knowledge of the Law
• B. Independence and Objectivity
• C. Misrepresentation
• D. Misconduct

Question 4

II. INTEGRITY OF CAPITAL MARKETS

Answer 4

• A. Material Nonpublic Information
• B. Market Manipulation

Question 5

III. DUTIES TO CLIENTS

Answer 5

• A. Loyalty, Prudence, and Care
• B. Fair Dealing
• C. Suitability
• D. Performance Presentation
• E. Preservation of Confidentiality

Question 6

IV. DUTIES TO EMPLOYERS

Answer 6

• A. Loyalty
• B. Additional Compensation Arrangements
• C. Responsibilities of Supervisors

Question 7

V. INVESTMENT ANALYSIS, RECOMMENDATIONS, AND ACTIONS

Answer 7

• A. Diligence and Reasonable Basis
• B. Communication with Clients and Prospective Clients
• C. Record Retention

Question 8

VI. CONFLICTS OF INTEREST

Answer 8

• A. Disclosure of Conflicts
• B. Priority of Transactions
• C. Referral Fees

Question 9

VII. RESPONSIBILITIES AS A CFA INSTITUTE MEMBER OR CFA CANDIDATE

Answer 9

• A. Conduct as Participants in CFA Institute Programs
• B. Reference to CFA Institute, the CFA Designation, and the CFA Program