90. CFA Institute Code of Ethics

• When dealing with the public, the CFA Institute Code of Ethics requires CFA Institute members to act with integrity, competence, and respect

First Component of the Code of Ethics

• Members and candidates should "act with integrity, competence, diligence, respect, and in an ethical manner."
• The Code does not explicitly state that a CFA Institute member should act with solemnity and in an ethical manner

Code of Ethics

• CFA Institute members are required to maintain and improve their competence and strive to maintain the competence of others in the profession
• CFA Institute members are required to use reasonable care and exercise independent professional judgment
• CFA Institute members are NOT required to comply with the CFA Institute Global Investment Performance Standards, because those are voluntary standards for the industry
• GIPS standards are voluntary for firms when presenting performance

CFA Institute Members

• Shall act with integrity, competence, diligence, respect, and in an ethical manner when dealing with the public, clients, prospective clients, employers, employees, colleagues in the investment profession, and other participants in the global capital markets.
• Shall use reasonable care and exercise independent professional judgment
• The Code of Ethics does not explicitly refer to educating the general public on investing
• The Code of Ethics does not explicitly state that a CFA Institute member shall advocate laws; the Standards of Professional Conduct dictates that members obey laws
• Shall strive to maintain and improve their professional competence and maintain and improve the competence of other investment professionals
• Demonstrating diligence, independence, and thoroughness when preparing investment reports is part of the Standards of Professional Conduct
• The professional judgement of a member should be independent

CFA Institute professional conduct

• The program may learn about potential violations of the Code and Standards by members and candidates from sources other than written complaints or members and candidates self-reporting
• The staff will consider complaints from anyone regarding the professional conduct of a member or candidate

Possible disciplinary sanctions - CFA Institute

• Sanctions do NOT include payment of a fine
• Sanctions include public censure, suspension of a candidate from participation in the CFA program, or suspension or revocation of a member's right to use the CFA designation
• Sanctions may also include public censure and suspension from membership and use of the CFA designation, revocation of the CFA charter, or suspension of a candidate's participation in the CFA program

Suspensions

• A misdemeanor charge that has no association to professional conduct is an unlikely reason for a suspension
• Refusal to cooperate with a CFA Institute investigation of a member's behavior could lead to suspension of membership or participation in the CFA Program

Professional Conduct

• A member or candidate can appeal a proposed disciplinary sanction to a hearing panel
• Contractual provisions are not part of the Code of Ethics

CFA Institute Code of Ethics

• Specifies that CFA Institute Members and Candidates must refrain from any conduct that compromises the reputation or integrity of the CFA designation
• Transactions for clients and employers have priority over transactions in which a member or candidate is the beneficial owner
• Does not explicitly mention CFA Institute members and candidates in the CFA Program

McCoy Scenario

• McCoy should document the details of the conversation with the client regarding his investment recommendation

Members should

• Practice in a professional and ethical manner to reflect credit on members and the profession
• Use reasonable care and exercise independent professional judgment. *Neither of the other answers resemble anything in the Code
• Recommended procedures for compliance with Standard III(B) Fair Dealing include limiting the number of people in the firm who know that a change in recommendation will be made

Blank Scenario

• Blank violated the Code and Standards when he misrepresented the qualifications of his firm, later learned the truth, and failed to contact the prospective client to correct his earlier statement
• Standard I(C) Misrepresentation prohibits members from making statements that misrepresent the services that they or their firms are capable of providing