CFA Ethics

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  1. Four ways inquiries by the Professional Conduct staff can be prompted
    • Self-disclosure
    • Written complaints received by the institute
    • Evidence received through public sources, like the media
    • Report by an exam proctor
  2. LOS 1a. Describe the structure of the CFA Institute Professional Conduct Program and the process for the enforcement of the Code of Standards
    • Disciplinary Review Committee of the CFA Institute Board of Directors has overall responsibility for the Professional Conduct Program and enforcement of the Code and Standards
    • Once an inquiry is made, the professional conduct staff will gather evidence about the case
    • The disciplinary officer may decide no action, to issue a warning, or to discipline the member or candidate
    • If member rejects the sanction, there is a hearing conducted by members of the CFA Institute
    • Punishment may include condemnation by member's peers or suspension of candidate's participation in the CFA program
  3. LOS 1b. State the six components of the Code of Ethics
    • Act with integrity, competence, diligence, respect, and in an ethical manner with the public, events, 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 judgement 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 of, and uphold the rules governing, capital markets
    • Maintain and improve their competence and strive to maintain and improve the competence of other investment professionals
  4. LOS 1b. State the seven Standards of Professional Conduct
    • I. Professionalism
    • II. Integrity of Capital Markets
    • III. Duties to Clients
    • IV. Duties to Employers
    • V. Investment Analysis, Recommendations, and Actions
    • VI. Conflicts of Interest
    • VII. Responsibilities as a CFA Institute Member or CFA Candidate
  5. Four Professionalism Sub-Standards
    • Knowledge of the Law
    • Independence and Objectivity
    • Misrepresentation
    • Misconduct
  6. Two Integrity of Capital Markets Sub-Standards
    • Material Nonpublic Information
    • Market Manipulation
  7. Five Duties to Clients Sub-Standards
    • Loyalty, Prudence, and Care
    • Fair Dealing
    • Suitability
    • Performance Presentation
    • Preservation of Confidentiality
  8. Three Duties to Employers Sub-Standards
    • Loyalty
    • Additional Compensation Arrangements
    • Responsibilities of Supervisors
  9. Three Investment Analysis, Recommendations, and Actions Sub-Standards
    • Diligence and Reasonable Basis
    • Communication with Clients and Prospective Clients
    • Record Retention
  10. Three Conflicts of Interest Sub-Standards
    • Disclosure of Conflicts
    • Priority of Transactions
    • Referral Fees
  11. Two Responsibilities as a CFA Member or Candidate
    • Conduct as Members and Candidates in the CFA Program
    • Reference to CFA Institute, the CFA Designation, and the CFA Program
  12. What is "material" information
    Information whose disclosure would impact the price of a security or if reasonable investors would want the information before making an investment decision
  13. Mosaic Theory
    There is no violation when an analyst combines nonpublic nonmaterial information with public information to reach investment conclusions
  14. LOS 3a. Explain why the GIPS standards were created, what parties the GIPS standards apply to, and who is served by the standards
    • GIPS standards were created because of the varying and misleading ways in which fund performance could be reported. GIPS standardized this reporting.
    • GIPS applies to investment management firms, and their participation is voluntary
    • GIPS serves to protect potential and current clients of investment firms
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CFA Ethics
2012-01-30 06:23:34
CFA Ethics

CFA Ethics
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