© CFA Institute. For candidate use only. Not for distribution.
ETHICAL AND
PROFESSIONAL
STANDARDS
CFA® Program Curriculum
2025 • LEVEL 1 • VOLUME 10
,© CFA Institute. For candidate use only. Not for distribution.
©2023 by CFA Institute. All rights reserved. This copyright covers material written
expressly for this volume by the editor/s as well as the compilation itself. It does
not cover the individual selections herein that first appeared elsewhere. Permission
to reprint these has been obtained by CFA Institute for this edition only. Further
reproductions by any means, electronic or mechanical, including photocopying and
recording, or by any information storage or retrieval systems, must be arranged with
the individual copyright holders noted.
CFA®, Chartered Financial Analyst®, AIMR-PPS®, and GIPS® are just a few of the
trademarks owned by CFA Institute. To view a list of CFA Institute trademarks and the
Guide for Use of CFA Institute Marks, please visit our website at www.cfainstitute.org.
This publication is designed to provide accurate and authoritative information
in regard to the subject matter covered. It is sold with the understanding that the
publisher is not engaged in rendering legal, accounting, or other professional service.
If legal advice or other expert assistance is required, the services of a competent pro-
fessional should be sought.
All trademarks, service marks, registered trademarks, and registered service marks
are the property of their respective owners and are used herein for identification
purposes only.
ISBN 9781961409071 (paper)
ISBN 9781961409194 (ebook)
May 2024
, © CFA Institute. For candidate use only. Not for distribution.
CONTENTS
How to Use the CFA Program Curriculum xiii
CFA Institute Learning Ecosystem (LES) xiii
Designing Your Personal Study Program xiii
Errata xiv
Other Feedback xiv
Ethical and Professional Standards
Learning Module 1 Ethics and Trust in the Investment Profession 3
Introduction 3
Ethics 5
Ethics and Professionalism 7
How Professions Establish Trust 8
Professions Are Evolving 10
Professionalism in Investment Management 10
Trust in Investment Management 11
CFA Institute as an Investment Management Professional Body 11
Challenges to Ethical Conduct 13
Ethical vs. Legal Standards 16
Ethical Decision-Making Frameworks 18
The Framework for Ethical Decision-Making 19
Applying the Framework 21
Conclusion 27
Summary 27
Practice Problems 29
Solutions 31
Learning Module 2 Code of Ethics and Standards of Professional Conduct 33
Preface 33
Evolution of the CFA Institute Code of Ethics and Standards of
Professional Conduct 34
Standards of Practice Handbook 34
Summary of the 2023 Revisions to the Code and Standards 35
New and Revised Standards of Professional Conduct 35
CFA Institute Professional Conduct Program 37
Adoption of the Code and Standards 38
Acknowledgments 38
Ethics and the Investment Industry 39
Why Ethics Matters 39
CFA Institute Code of Ethics and Standards of Professional Conduct 43
Preamble 43
The Code of Ethics 43
Standards of Professional Conduct 44
Practice Problems 48
, © CFA Institute. For candidate use only. Not for distribution.
iv Contents
Solutions 50
Learning Module 3 Guidance for Standards I–VII 53
Standard I: Professionalism 53
Standard I(A) Knowledge of the Law 53
Guidance 53
Standard I(A): Recommended Procedures 58
Members and Candidates 58
Distribution Area Laws 58
Legal Counsel 58
Dissociation 58
Firms 59
Standard I(A): Application of the Standard 59
Example 1 (Notification of Known Violations): 59
Example 2 (Dissociating from a Violation): 59
Example 3 (Dissociating from a Violation): 60
Example 4 (Following the Highest Requirements): 60
Example 5 (Following the Highest Requirements): 60
Example 6 (Laws and Regulations Based on Religious Tenets): 61
Example 7 (Reporting Potential Unethical Actions): 61
Example 8 (Failure to Maintain Knowledge of the Law): 62
Standard I(B) Independence and Objectivity 62
Guidance 62
Standard I(B): Recommended Procedures 68
Standard I(B): Application of the Standard 69
Example 1 (Travel Expenses): 69
Example 2 (Research Independence): 70
Example 3 (Research Independence and Intrafirm Pressure): 70
Example 4 (Research Independence and Issuer Relationship Pressure): 70
Example 5 (Research Independence and Sales Pressure): 70
Example 6 (Research Independence and Prior Coverage): 71
Example 7 (Gifts and Entertainment from Related Party): 71
Example 8 (Gifts and Entertainment from Client): 71
Example 9 (Travel Expenses from External Manager): 72
Example 10 (Research Independence and Compensation
Arrangements): 73
Example 11 (Recommendation Objectivity and Service Fees): 73
Example 12 (Recommendation Objectivity): 73
Example 13 (Influencing Manager Selection Decisions): 74
Example 14 (Influencing Manager Selection Decisions): 74
Example 15 (Fund Manager Relationships): 75
Example 16 (Intrafirm Pressure): 75
Standard I(C) Misrepresentation 76
Guidance 76
Standard I(C): Recommended Procedures 80
Factual Presentations 80
Qualification Summary 80
Verify Outside Information 80
ETHICAL AND
PROFESSIONAL
STANDARDS
CFA® Program Curriculum
2025 • LEVEL 1 • VOLUME 10
,© CFA Institute. For candidate use only. Not for distribution.
©2023 by CFA Institute. All rights reserved. This copyright covers material written
expressly for this volume by the editor/s as well as the compilation itself. It does
not cover the individual selections herein that first appeared elsewhere. Permission
to reprint these has been obtained by CFA Institute for this edition only. Further
reproductions by any means, electronic or mechanical, including photocopying and
recording, or by any information storage or retrieval systems, must be arranged with
the individual copyright holders noted.
CFA®, Chartered Financial Analyst®, AIMR-PPS®, and GIPS® are just a few of the
trademarks owned by CFA Institute. To view a list of CFA Institute trademarks and the
Guide for Use of CFA Institute Marks, please visit our website at www.cfainstitute.org.
This publication is designed to provide accurate and authoritative information
in regard to the subject matter covered. It is sold with the understanding that the
publisher is not engaged in rendering legal, accounting, or other professional service.
If legal advice or other expert assistance is required, the services of a competent pro-
fessional should be sought.
All trademarks, service marks, registered trademarks, and registered service marks
are the property of their respective owners and are used herein for identification
purposes only.
ISBN 9781961409071 (paper)
ISBN 9781961409194 (ebook)
May 2024
, © CFA Institute. For candidate use only. Not for distribution.
CONTENTS
How to Use the CFA Program Curriculum xiii
CFA Institute Learning Ecosystem (LES) xiii
Designing Your Personal Study Program xiii
Errata xiv
Other Feedback xiv
Ethical and Professional Standards
Learning Module 1 Ethics and Trust in the Investment Profession 3
Introduction 3
Ethics 5
Ethics and Professionalism 7
How Professions Establish Trust 8
Professions Are Evolving 10
Professionalism in Investment Management 10
Trust in Investment Management 11
CFA Institute as an Investment Management Professional Body 11
Challenges to Ethical Conduct 13
Ethical vs. Legal Standards 16
Ethical Decision-Making Frameworks 18
The Framework for Ethical Decision-Making 19
Applying the Framework 21
Conclusion 27
Summary 27
Practice Problems 29
Solutions 31
Learning Module 2 Code of Ethics and Standards of Professional Conduct 33
Preface 33
Evolution of the CFA Institute Code of Ethics and Standards of
Professional Conduct 34
Standards of Practice Handbook 34
Summary of the 2023 Revisions to the Code and Standards 35
New and Revised Standards of Professional Conduct 35
CFA Institute Professional Conduct Program 37
Adoption of the Code and Standards 38
Acknowledgments 38
Ethics and the Investment Industry 39
Why Ethics Matters 39
CFA Institute Code of Ethics and Standards of Professional Conduct 43
Preamble 43
The Code of Ethics 43
Standards of Professional Conduct 44
Practice Problems 48
, © CFA Institute. For candidate use only. Not for distribution.
iv Contents
Solutions 50
Learning Module 3 Guidance for Standards I–VII 53
Standard I: Professionalism 53
Standard I(A) Knowledge of the Law 53
Guidance 53
Standard I(A): Recommended Procedures 58
Members and Candidates 58
Distribution Area Laws 58
Legal Counsel 58
Dissociation 58
Firms 59
Standard I(A): Application of the Standard 59
Example 1 (Notification of Known Violations): 59
Example 2 (Dissociating from a Violation): 59
Example 3 (Dissociating from a Violation): 60
Example 4 (Following the Highest Requirements): 60
Example 5 (Following the Highest Requirements): 60
Example 6 (Laws and Regulations Based on Religious Tenets): 61
Example 7 (Reporting Potential Unethical Actions): 61
Example 8 (Failure to Maintain Knowledge of the Law): 62
Standard I(B) Independence and Objectivity 62
Guidance 62
Standard I(B): Recommended Procedures 68
Standard I(B): Application of the Standard 69
Example 1 (Travel Expenses): 69
Example 2 (Research Independence): 70
Example 3 (Research Independence and Intrafirm Pressure): 70
Example 4 (Research Independence and Issuer Relationship Pressure): 70
Example 5 (Research Independence and Sales Pressure): 70
Example 6 (Research Independence and Prior Coverage): 71
Example 7 (Gifts and Entertainment from Related Party): 71
Example 8 (Gifts and Entertainment from Client): 71
Example 9 (Travel Expenses from External Manager): 72
Example 10 (Research Independence and Compensation
Arrangements): 73
Example 11 (Recommendation Objectivity and Service Fees): 73
Example 12 (Recommendation Objectivity): 73
Example 13 (Influencing Manager Selection Decisions): 74
Example 14 (Influencing Manager Selection Decisions): 74
Example 15 (Fund Manager Relationships): 75
Example 16 (Intrafirm Pressure): 75
Standard I(C) Misrepresentation 76
Guidance 76
Standard I(C): Recommended Procedures 80
Factual Presentations 80
Qualification Summary 80
Verify Outside Information 80
