Standard I: Professionalism (A. Knowledge of the law (Not Violations …
Standard I: Professionalism
A. Knowledge of the law
~Knowingly participating or assisting in unethical activity done by others.
~Doing something allowed by local laws overseas but not CFA Institute standards.
~Reporting a legal violation to govt. or regulatory official is appropriate but not always required.
~Informing supervisors/firm's compliance departments for an appropriate action to be taken.
~Instances where the supervisor believes that an employee has violated the written policies regarding trading in personal accounts, the supervisor then should limit the trading activity and increase monitoring of the employee's trades.
Note: Follow the strictest of the following
~Where member does business
~Code & Standards
~Where member resides
B. Independence and Objectivity
~Accepting gifts from clients
after disclosure to the employer
For past performance - Disclosure.
For future performance - Written permission.
~Issuer paid research if conclusion is unbiased, compensation disclosed to employee & compensation preferably in the form of a flat fee without regard to the conclusion.
~Independently research credit ratings by agencies to evaluate their soundness.
~Paying travel expenses or arrangements for visit to remote locations.
~Not disclosing about gifts to other clients in case the gift was not based on future performance, (i.e., gifts based on future performance needs to be disclosed to other clients).
~Subscription of IPO based on prospectus and not insider information.
~Modest gifts from clients(nominal value).
~Getting bonus based on performance by employer.
~Gift received after the opinion has been given since it cannot affect judgement now.
~May accept gifts and bonuses from clients. However refer to standard IV-B
~Following instructions without using own judgement.
~Accepting fee for an issuer pay research report based on the conclusion of the report.
~An employee cannot allocate shares to his personal account if an IPO has been oversubscribed.
~Accepting tickets of a sold out concert as they have significant material value.
~Accepting expensive gifts & offers and using them for their own business marketing.
~Gifts from entities(third party service providers) like brokers, custodians, etc. to use their services.
~Issuing recommendations as per the instructions of supervisor and not based on independent judgement.
~Yielding to pressure from other departments.
~Accepting any form of expensive gifts.
~Informing clients of the guarantee of products built into this structure. Example: Senior tranche of C.D.O. has more credit standing than junior.
~Using information from recognized financial/statistical data & reporting without citing sources. Example: US Treasury website.
~Stating that US Treasury fund contains "guaranteed securities".
~Mentioned "we provide all services" and assist clients with financial & investigating services & making arrangements for service not given in-house.
~Unintentional error while preparing material.
~Citing assurance of consistency in future performance based on past. Ex:"We have outperformed in past & will continue to do so", "Continue to benefit clients", "Generate future results".
~Data taken from any source to support one's own investigation requires source citing.
~Not giving credit to same one else's innovative thinking or idea.
~Claiming third party research as own.
~Misrepresenting an analyst's qualification.
~Using someone else's work and not acknowledging the same.
~Statement of guarantee where in it is not applicable.
~Plagiarism - Using someone else's work without permission or credit.
~Copying proprietary information without authorization of owner.\
~No specific reference to source of information.
~Violation of law that does not reflect on member's honesty, integrity or competence.
~Working as a bar tender part-time.
~Being arrested for non-violent protest supporting personal beliefs; Civil disobedience.
~Personal bankruptcy is not a violation unless an element of fraud is involved.
~Firm should adopt code of ethics informing employees of violations & consequences(not of past violations).
~Neglecting to perform due diligence when required as it is a professional obligation.
~Being dishonest, altering facts of a situation
~Reporting to C.F.A. Institute to settle disputes unrelated to professional ethics.
~Including receipt that is not part of company trip as expense.
~Stating vague statements about a company's financial conditions to mislead investors.
~Being intoxicated while making financial decisions.