Ethics and Standards
The CFA Institute is an international, nonprofit organization of more than 50,000 investment practitioners and educators in over 100 countries.Founded in January 1990, the CFA Institute (formerly the Association for Investment Management and Research) was created from the merger of the Financial Analysts Federation (FAF) and the Institute of Chartered Financial Analysts (ICFA). The FAF was originally established in 1947 as a service organization for investment professionals in its societies and chapters. The ICFA was founded in 1959 to examine candidates and award the Chartered Financial Analyst (CFA) designation.The CFA Institute's mission is to serve its members and investors as a global leader in educating and examining investment managers and analysts and sustaining high standards of professional conduct. The CFA Institute's membership is global in scope, and its activities are worldwide.
The Research Foundation of the CFA Institute sponsors practitioner-oriented research through funding and publishing a diverse assortment of monographs, tutorials, and research papers to broaden investment professionals' knowledge and understanding of their field.The CFA Institute offers services in three broad categories: Education through seminars and publications; Professional Conduct and Ethics; and Standards of Practice and Advocacy.The CFA Institute's members are employed as securities analysts, portfolio managers, strategists, consultants, educators, and other investment specialists. These professionals practice in a variety of fields, including investment counseling and management, banking, insurance, and investment banking and brokerage firms.
Code of Ethics
1)Act with integrity,competence,dillgence,repect and in an ethical manner with the public,clients,prospective clients,employers,employees,collegagues in the investment profession, and other participants in the global capital markets.
2)Place the integrity of the investment profession and the interests of clients above their own professional interests.
3)Promote the integrity of anmd uphold the rules governing capital markets
4)Use reasonable care and exercise independent professional judgement when conducting investment analysis, making investment recommendations,taking investment actions,and engaging in other professional activities.
5)Practice and encourage others to practice in a professional and ethical manner that will reflect credit on themselves and the profession.
6)Maintain and improve their professional competence and strive to maintain and improve the competence of other investment professionals.
Standards of Professional Conduct
i)Knowledge of the Law
Memers and Candidates must understand and comply with all applicable laws, rules, and regulations (including the CFA Institute Code of Ethics and Standards of Professional Conduct) of any government, regulatory organization, licensing agency, or professional association governing their professional activities. In the event of conflict, Members and Candidates must comply with the more strict law, rule, or regulation. Members and Candidates must not knowingly participate or assist in and must dissociate from any violation of such laws, rules, or regulations.
ii)Independence and Objectivity
Members and Candidats must use reasonable care and judgment to achieve and maintain independence and objectivity in their professional activities. Members and Candidates must not offer, solicit, or accept any gift, benefit, compensation, or consideration that reasonably could be expected to compromise their own or another’s independence and objectivity.
Members and Candidates must not knowingly make any misrepresentations relating to investment analysis, recommendations, actions, or other professional activities.
Members and Candidates must not engage in any professional conduct including dishonesty, fraud, or deceit or commit any act that reflects adversely on their professional reputation, integrity, or competence.
2)Integrity of Capital Markets
i)Material Nonpublic Information
Members and Candidates who possess material nonpublic information that could affect the value of an investment must not act or cause others to act on the information.
Members and Candidates must not engage in practices that distort prices or artificially inflate trading volume with the intent to mislead market participants.
3)Duties to Clients
i)Loyalty, Prudence, and Care
Members and Candidates have a duty of loyalty to their clients and must act with reasonable care and exercise prudent judgment. Members and Candidates must act for the benefit of their clients and place their clients’ interests before their employer’s or their own interests. In relationships with clients, Members and Candidates must determine applicable fiduciary duty and must comply with such duty to persons and interests to whom it is owed.
Members and Candidates must deal fairly and objectively with all clients when providing investment analysis, making investment recommendations, taking investment action, or engaging in other professional activities.
a)When Members and Candidates are in an advisory relationship with a client, they must:
*Make a reasonable inquiry into a client’s or prospective clients’ investment experience, risk and return objectives, and financial constraints prior to making any investment recommendation or taking investment action and must reassess and update this information regularly.
*Determine that an investment is suitable to the client’s financial situation and consistent with the client’s written objectives, mandates, and constraints before making an investment recommendation or taking investment action.
*Judge the suitability of investments in the context of the client’s total portfolio.
b)When Members and Candidates are responsible for managing a portfolio to a specific mandate, strategy, or style, they must only make investment recommendations or take investment actions that are consistent with the stated objectives and constraints of the portfolio.
Performance Presentation. When communicating investment performance information, Members or Candidates must make reasonable efforts to ensure that it is fair, accurate, and complete.
iv)Preservation of Confidentiality
Members and Candidates must keep information about current, former, and prospective clients confidential unless:
The information concerns illegal activites on the part of the client or prospective client.
v)Disclosure is required by law.
The client or prospective client permits disclosure of the information.
4)Duties to Employers
In matters related to their employment, Members and Candidates must act for the benefit of their employer and not deprive their employer of the advantage of their skills and abilities, divulge confidential information, or otherwise cause harm to their employer.
ii)Additional Compensation Arrangements
Members and Candidates must not accept gifts, benefits, compensation, or considerations that competes with, or might reasonably be expected to create a conflict of interest with, their employer;s interest unless they obtain written consent from all parties involved.
iii)Responsibilities of Supervisors
Members and Candidates must make reasonable efforts to detect and prevent violations of applicable laws, rules, regulations, and the Code and Standards by anyone subject to their supervision or authority.
5)Investment Analysis, Recommendations, and Action
i)Diligence and Reasonable Basis. Members and Candidates must:
*Exercise diligence, independence, and thoroughness in analyzing investments, making investment recommendations, and taking investment actions.
*Have a reasonable and adequate basis, supported by appropriate research and investigation, for any investment analysis, recommendation, or action.
ii)Communication with Clients and Prospective Clients.
iii)Members and Candidates must:
*Disclose to clients and prospective clients the basic format and general principles of the investment processes used to analyze investments, select securities, and construct portfolios and must promptly disclose any changes that might materially affect those processes.
*Use reasonable judgment in identifying which factors are important to their analyses, recommendations, or actions and include those factors in communications with clients and prospective clients.
*Distinguish between fact and opinion in the presentation of investment analysis and recommendations.
iv)Record Retention. Members and Candidates must develop and maintain appropriate records to support their investment analysis, recommendations, actions, and other investment-related communications with clients and prospective clients.
6)Conflicts of Interest
i)Disclosure of Conflicts
Members and Candidates must make full and fair disclosure of all matters that could reasonably be expected to impair their independence and objectivity or interfere with respective duties to their clients, prospective clients, and employer. Members and Candidates must ensure that such disclosures are prominent, are delivered in plain language, and communicate the relevant information effectively.
ii)Priority of Transactions
Investment transactions for clients and employers must have priority over investment transactions in which a Member or Candidate if the beneficial owner.
Members and Candidates must disclosure to their employer, clients, and prospective clients, as appropriate, any compensation, consideration, or benefit received from, or paid to, others for the recommendation of products or services.
7)Responsibilities as a CFA Institute Member or CFA Candidate
i)Conduct as Members and Candidates in the CFA Program. Members and Candidates must not engage in any conduct that compromises the reputation or integrity of CFA Institute or the CFA designation or the integrity, validity, or security of the CFA examiners.
ii)Reference to CFA Institute, the CFA designation, and the CFA Program. When referring to CFA Institute, CFA Institute membership, he CFA designation, or candidacy in the CFA Program, Members and Candidates must not misrepresent or exaggerate the meaning or implications of membership in CFA Institute, holding the CFA designation, or candidacy in the CFA Program.
Code of Ethics