Code of Ethics and Standards

of Professional Conduct
 SIMPLE LIFE EXAMPLES - MORAL DILEMMA
I am Vedika I am Varun
VARUN’S FINAL RESULTS

I have to
score B
like every But if I give
exam him C grade,
s s he will get
I need scholarship.
to start
I have It will help
I am known him financially
work Family to Vedika
for being I m shocked
just & fair needs my study
financial with Varun’s
with all performance What
students support
He deserves should I
D give him..

Moral dilemma does not have right or wrong – a question of choosing between options of similar importance

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 What is Ethics?

STATE OF MORAL
DILEMMA
Moral principles that govern a person's behavior or the conducting of an activity.

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 ETHICS IN CHARTERED FINANCIAL ANALYST (CFA)

HOW A CFA SHOULD PERFORM HIS

WHAT ROLES A CFA CAN GET?
DUTIES IN ROLES HE GET?

Portfolio Financial
Private Co. Integrity Honesty
Manager Advisor

Pension
Research Fairness
Listed Co.. Fund
Manager Analyst Dignity
Knowledge-
Risk Consu
Manager ltant
Govt. -able
SUPERNOMICS INVESTMENT
& CO.

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 TO WHOM CODES ARE APPLICABLE?
ALL CODE OF CONDUCT & STANDARDS APPLIES TO:

Candidates enrolled for CFA

Members with completed CFA
program
degree holders

Any violation will equally apply to both members & candidates( M&C)

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Structure of the CFA Institute Professional Conduct Program (PCP)

Board of Governors

Professional Conduct Program

Disciplinary Review Committee
(a Designated Officer usually (hearing panel)
proposes the sanction)

Both are responsible for the enforcement of the Code of Ethics and
Standards of Professional Conduct through the Rules of Procedure!

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Inquiries that Initiate the PCP Enforcement Process

Self-disclosure: all members and candidates must

disclose all matters that question their professional
conduct on an annual basis.

Written complaints: any complaints by third parties

received by the Professional Conduct staff.

Public awareness: Questionable conduct may be

displayed through the media or another public source.

Exam violation reports: Examination proctors submit

reports for candidates suspected of unethical behavior
during the CFA exam.

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 Enforcement Process for the Code
and Standards

PCP formally
Designated Officer
Inquiry Initiated conducts
concludes inquiry
Investigation

The conclusion can result in a cautionary letter or no sanction being issued.

Only if the Designated Officer finds that a violation of the Code and Standards
occurred, then the process continues as follows below:

Hearing panel
Designated Candidate chooses
determines if
Officer proposes to accept or reject
violation occurred
sanction sanction
occurred

If the candidate rejects the officer’s proposed sanction, then the hearing
panel must make the final decision!

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 The Code of Ethics
Code of Ethics (six components that CFA members and candidates must know and follow):
 Act with integrity, competence, diligence, and respect with the public, clients, employers,
employees, and others.
 Place the integrity of the investment profession and interests of clients above their own
personal interests.
 Use reasonable care and exercise independent professional judgment when conducting
investment analysis, making recommendations, taking actions, and engaging in other
activities.
 Practice and encourage others to practice in a professional and ethical manner.
 Promote the integrity of and uphold the rules governing capital markets.
 Maintain and improve their professional competence and strive for the competence of other
investment professionals.

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 Standards of Professional Conduct
The Standards of Professional Conduct can be divided into seven broad
provisions as follows:
 Professionalism
 Integrity of Capital Markets
 Duties to Clients
 Duties to Employers
 Investment Analysis, Recommendations, and Actions
 Conflicts of Interest
 Responsibilities as a CFA Institute Member or CFA Candidate

Note: Each provision will be discussed in greater detail, including its application(s)
and sub-sections

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 LEARN AT A GLANCE
DUTIES TOWRADS

INV. ANALYSIS ,
PROFESSIONAL- INTEGRITY OF CONFILCT OF RESPONSIBILITY
-ISM
CLIENTS EMPLOYER RECOMENDATION
AS A CFA M&C
MARKETS & ACTIONS INTEREST

Knowledge of Law Loyalty , Prudence Diligence & Disclosure of

Loyalty Conduct as
Material Non ,Care Reasonable Basis Conflict
Stricter law
Public Information Be loyal to customer Be loyal to employer participants in CFA
Due diligence to Any conflict to be
be done for disclosed
Institute
Independence & Sensitive Fair Dealing Additional investment Ethical conduct
information
Objectivity Equal treatment Compensation Communication
Benefits with Client & Priority of
No extra gifts
Suitability Prospective Client Transactions Reference to CFA
Check on extra gifts
Market Correct advise Special care for
Institute ,CFA
Share info with client
Misrepresentation Manipulation IPOS designation &
Performance Program
No false promise
Presentation Responsibility of
Harshad Mehta
Show true results Supervisors Record Retention Referral Fees No promises on
Misconduct account of CFA
Preservation of designation
Moral conduct Check on extra gifts
Confidentiality Retain all records Disclosure of any
Client info. safe for 7 years referral fees.

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