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Week 8: CFA Code of Ethics and Standards of Professional Conduct (Research…
Week 8: CFA Code of Ethics and Standards of Professional Conduct
Overview
CFA Institute Codes
Conduct are the
ethical benchmark
for investment professionals around the globe
Voluntary standards
Code of ethics
Demonstrate ethical practice & professionalism
Promote capital market integrity
Exercise reasonable care & professional judgement
Place the integrity of the profession and the interests of clients above your own interests
Act with integrity, competence, diligence
Maintain & improve professional competence
Professional conduct
Professionalism
B. Independence and Objectivity: don't receive gift that skews objectivity
C. Misrepresentation: do not lie about investment or performance
A. Knowledge of the law
D. Misconduct: no dishonesty, fraud
Integrity of capital markets
Material Nonpublic Information: don't use it/ don't cause others to use
Market Manipulation: do not distort prices/ trading volume, do not mislead investors
Duties to clients
C. Suitability
D. Performance presentation: fair, accurate, complete
B. Fair dealing
E. Preservation of Confidentiality: no sharing of clients details
A. Loyalty, prudence and care
Duties to employers
B. Additional Compensation
C. Responsibility of supervisors
A. Loyalty
Investment analysis, recommendations, actions
B. Communication with clients & prospective clients
C. Record retention
A. Diligence & reasonable basis
Conflict of interests
B. Priority of transations
C. Referral fees
A. Disclosure of conflicts
Responsibilities of CFA members
A. Conduct as member
B. Reference to CFA institute, designation or program
Misconduct in financial services
Ethical case decision- making process (p.13)
examine
Application of the code
(learn the situations- very confusing)
Motivation
Research question
principal and agent model
the game
the environment