⚖️ Ethical & Professional Standards

CFA Code of Ethics & Standards of Professional Conduct — Summary

Complete summary of the CFA Code of Ethics and Standards I-VII of Professional Conduct. Key guidance, common violations, and practice questions.

Key Concepts

Code of Ethics (6 Components)

1) Act with integrity, competence, diligence, respect. 2) Place client interests above own. 3) Use reasonable care, independent judgment. 4) Practice and encourage ethical behavior. 5) Promote integrity of capital markets. 6) Maintain and improve professional competence.

Standard I: Professionalism

I(A) Knowledge of the Law, I(B) Independence & Objectivity, I(C) Misrepresentation, I(D) Misconduct, I(E) Competence.

Standard II: Integrity of Capital Markets

II(A) Material Nonpublic Information (MNPI), II(B) Market Manipulation. Protect market fairness.

Standard III: Duties to Clients

III(A) Loyalty, Prudence, Care. III(B) Fair Dealing. III(C) Suitability. III(D) Performance Presentation. III(E) Preservation of Confidentiality.

Standard IV: Duties to Employers

IV(A) Loyalty. IV(B) Additional Compensation Arrangements. IV(C) Responsibilities of Supervisors.

Standards V-VII

V: Investment Analysis (diligence, communication, record retention). VI: Conflicts of Interest (disclosure, priority of transactions, referral fees). VII: Responsibilities as CFA Member (conduct, reference to CFA Institute).

Decision Frameworks

When laws conflict with the Code and Standards?

Use when:

  • Follow the STRICTER of the law or the Code and Standards
  • If local law is stricter, follow local law
  • If the Code is stricter, follow the Code

Avoid when:

  • Assuming local law always takes precedence
  • Ignoring the Code just because local law permits an action

Test Your Understanding

When local law and the CFA Code and Standards conflict, a member should:

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