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Ethical & Professional StandardsModule 2 of 5

Code of Ethics and Standards of Professional Conduct

6

Concepts

0

Formulas

1

Decisions

3

Quiz Questions

Key Concepts

6 concepts covered in this module.

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

1 decision frameworks to guide your analysis.

When laws conflict with the Code and Standards?

  • 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

Mind Map

Visual overview of how concepts connect in this module.

Code & Standards
Code of Ethics
Integrity & competence
Client interests first
Independent judgment
Promote market integrity
Std I: Professionalism
Knowledge of Law
Independence & Objectivity
Misrepresentation
Misconduct
Competence
Std II: Capital Markets
Material Nonpublic Info
Market Manipulation
Std III-VII
Duties to Clients
Duties to Employers
Investment Analysis
Conflicts of Interest
CFA Member Conduct
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Code of Ethics (6 Components)

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Answer
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.
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Ethics and Trust in the Investment Profession

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Guidance for Standards I–VII