Course Content
ETHICS AND TRUST IN THE INVESTMENT PROFESSION
This chapter is covered in Reading 1 of the Study Session 1, of the study material prescribed by the institute. After reading this chapter a student should be able to: a explain ethics; b describe the role of a code of ethics in defining a profession; c describe professions and how they establish trust; d describe the need for high ethical standards in investment management; e explain professionalism in investment management; f identify challenges to ethical behavior; g distinguish between ethical and legal standards; h describe a framework for ethical decision making.
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LOS A: Explain Ethics
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LOS B: Ethics and Professionalism
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LOS C: How Professions Establish Trust
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LOS D and E: Professionalism in Investment Management
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LOS F: Challenges to Ethical Conduct
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LOS G: Ethical and Legal Standards
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LOS H: Framework for Ethical Decision Making
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CODE OF ETHICS AND STANDARDS OF PROFESSIONAL CONDUCT
This chapter is covered in Reading 2 of the Study Session 1, of the study material prescribed by the institute. After reading this chapter a student should be able to: a. describe the structure of the CFA Institute Professional Conduct Program and the process for the enforcement of the Code and Standards; b. state the six components of the Code of Ethics and the seven Standards of Professional Conduct; c. explain the ethical responsibilities required by the Code and Standards, including the sub-sections of each Standard.
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LOS A: Professional Conduct Program
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LOS B: Code of Ethics
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LOS C: Code and Standards
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GUIDANCE FOR STANDARDS I–VII
This chapter is covered in Reading 3 of the Study Session 1, of the study material prescribed by the institute. After reading this chapter a student should be able to: a. demonstrate the application of the Code of Ethics and Standards of Professional Conduct to situations involving issues of professional integrity; b. distinguish between conduct that conforms to the Code and Standards and conduct that violates the Code and Standards; c. recommend practices and procedures designed to prevent violations of the Code of Ethics and Standards of Professional Conduct.
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Professionalism – First standard of Professional Conduct
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Integrity of Capital Markets – Second Standard of Professional Conduct
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Duties to Clients – Third Standard of Professional Conduct
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Duties to Employer – Fourth Standard of Professional Conduct
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Investment Analysis, Recommendations, & Actions
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Conflict of Interest
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Responsibility as a CFA Institute Member or CFA Candidate
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INTRODUCTION TO THE GLOBAL INVESTMENT PERFORMANCE STANDARDS (GIPS)
This chapter is covered in Reading 4 of the Study Session 1, of the study material prescribed by the institute. After reading this chapter a student should be able to: a. a explain why the GIPS standards were created, what parties the GIPS standards apply to, and who is served by the standards; b. explain the construction and purpose of composites in performance reporting; c. explain the requirements for verification.
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Why Were GIPS Standards Created?
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Who Can Claim Compliance?
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Who Benefits from Compliance?
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Composites
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Verification
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GLOBAL INVESTMENT PERFORMANCE STANDARDS (GIPS)
This chapter is covered in Reading 5 of the Study Session 1, of the study material prescribed by the institute. After reading this chapter a student should be able to: a. describe the key features of the GIPS standards and the fundamentals of compliance; b. describe the scope of the GIPS standards with respect to an investment firm’s definition and historical performance record; c. explain how the GIPS standards are implemented in countries with existing standards for performance reporting and describe the appropriate response when the GIPS standards and local regulations conflict; d. describe the nine major sections of the GIPS standards.
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Objectives of GIPS
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Overview of GIPS Standards
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Compliance with GIPS
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Recommendations
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Scope of GIPS Standards
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Implementation
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Major Section of GIPS Standards
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Ethical and Professional Standards
About Lesson

A.   Conduct as Participants in CFA Institute Programs

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 CFA Institute programs.

A.1. Guidance

A.1.1.  Confidential Program Information

a.  The candidates are strictly prohibited from disclosing any confidential material gained during the exam process, especially:

     i.  Specific details of the questions appearing in the exam

    ii.  Broad topical areas and formulas tested or not tested during the exam

b.  All the aspects of the exams are considered confidential until CFA releases them publically

A.1.2.  Additional CFA Program Restrictions

a.  The violation of testing policies such as the use of calculators other than those recommended or the candidates pledge, etc. is considered as a violation of this standard.

A.1.3.  Expressing an Opinion

a.  The members and candidates are free to disagree and express their disagreement with CFA Institute on their policies and procedures.

b.  However, they cannot disclose content-specific information to others.

B.   Reference to CFA Institute, the CFA Designation, and the CFA Program

a.  When referring to CFA Institute, CFA Institute membership, the 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.

b.  This standard is meant to prevent promotional efforts that make promises or guarantees that are tied to CFA designation.

c.  The members cannot imply that as a result of holding CFA designation, their clients can expect superior performance from them.

B.1. Guidance

B.1.1.  CFA Institute’s Membership

a.  Membership refers to the ‘regular’ and ‘affiliate’ membership granted to the candidates who have met the membership requirements.

b.  Once a candidate is accepted as a member, it is their duty to maintain the status, and:

     i.  Remit annually a professional conduct statement

    ii.  Pay applicable membership dues

c.  If any member fails to follow the above, they will no longer be regarded as active members and must not represent themselves as such.

B.1.2.  Using the CFA Designation

a.  Those candidates who have earned it may use the trademark ‘Chartered Financial Analyst’ or CFA.

b.  The members must also satisfy the membership requirements to maintain their rights to use the designation.

c.  If any member fails to fill the criteria of the annual professional conduct statement or membership fee, they forfeit their right to use the designation. In such cases, the members must not present themselves as CFA charter holders.

B.1.3.  Referring to Candidacy in the CFA Program

a.  All the candidates taking part in the CFA program must clearly state their candidacy and must not imply the achievement of any partial designation.

b.  A person will be considered as a candidate if:

     i.  their application for registration has been accepted and they are enrolled to sit for a specified exam

    ii.  have sat for the exam and their results are not out yet

c.  A candidate must never state or imply partial designation or cite an expected completion date.

d.  If a candidate passes all three levels in consecutive years, they can state so. But the members cannot state that this gives them any kind of superior ability.

B.1.4.  Proper Usage of the CFA Marks

a.  The designation ‘CFA’ must be used only after the name or as an adjective.

b.  It cannot be used as a part of the name of a firm.

 

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