CFA
LEVEL 2
(Personal Notes)
, 1
Ethics
PAGE NOS. 13 VOL. 1 CHAPTERS. 2
CHAPTER 1 Code of Ethics and Standards of Professional Conduct
DEF Ethical vs. Legal: Ethical behavior is often distinguished from legal conduct by describing Legal behavior
as 'what is required' and Ethical behavior as 'conduct that is morally correct'. Ethical principles go
beyond that which is legally sufficient and encompasses what is the right thing to do.
The Standard tells you 'What to do?'
The Code tells you 'How to do it?'
Technique: IRAC Issue, Rule, Application and Conclusion
,2
, 3
Code of Ethics
1. Act with integrity, competence, diligence, respect and in an ethical manner.
2. Place integrity of investment profession & client above personal interests.
3. Use reasonable care and exercise independent professional judgement when conducting IRA (Investment
Recommendation & Analysis) and engaging in other professional activities.
4. Practice and encourage others to practice in professional and ethical manner.
5. Promote the integrity and viability of the global capital markets for the ultimate benefit of society.
6. Maintain and improve their professional competence and strive to maintain and improve the competence
of other investment professionals.
Standards of Professional Conduct
I PROFESSIONALISM
A. Knowledge of the Law
B. Independence and Objectivity
C. Misrepresentation
D. Misconduct
II INTEGRITY OF CAPITAL MARKETS
A. Material Non-public Information
B. Market Manipulation
III DUTIES TO CLIENTS
A. Loyalty, Prudence and Care
B. Fair Dealing
C. Suitability
D. Performance Presentation
E. Preservation of Confidentiality
IV DUTIES TO EMPLOYERS
A. Loyalty
B. Additional Compensation Arrangements
C. Responsibilities of Supervisors
V INVESTMENT ANALYSIS, RECOMMENDATIONS AND ACTIONS
A. Diligence and Reasonable Basis
B. Communication with Clients and Prospective Clients
C. Record Retention
VI CONFLICTS OF INTEREST
A. Disclosure of Conflicts
B. Priority of Transactions
C. Referral Fees
VII RESPONSIBILITIES AS A CFA INSTITUTE MEMBER or CFA CANDIDATE
A. Conduct as Participants in CFA Institute Programs
B. Reference to CFA Institute, the CFA Designation and the CFA Program
CFA Institute Code & Standards are an example of 'Principle-Based' Standards.
LEVEL 2
(Personal Notes)
, 1
Ethics
PAGE NOS. 13 VOL. 1 CHAPTERS. 2
CHAPTER 1 Code of Ethics and Standards of Professional Conduct
DEF Ethical vs. Legal: Ethical behavior is often distinguished from legal conduct by describing Legal behavior
as 'what is required' and Ethical behavior as 'conduct that is morally correct'. Ethical principles go
beyond that which is legally sufficient and encompasses what is the right thing to do.
The Standard tells you 'What to do?'
The Code tells you 'How to do it?'
Technique: IRAC Issue, Rule, Application and Conclusion
,2
, 3
Code of Ethics
1. Act with integrity, competence, diligence, respect and in an ethical manner.
2. Place integrity of investment profession & client above personal interests.
3. Use reasonable care and exercise independent professional judgement when conducting IRA (Investment
Recommendation & Analysis) and engaging in other professional activities.
4. Practice and encourage others to practice in professional and ethical manner.
5. Promote the integrity and viability of the global capital markets for the ultimate benefit of society.
6. Maintain and improve their professional competence and strive to maintain and improve the competence
of other investment professionals.
Standards of Professional Conduct
I PROFESSIONALISM
A. Knowledge of the Law
B. Independence and Objectivity
C. Misrepresentation
D. Misconduct
II INTEGRITY OF CAPITAL MARKETS
A. Material Non-public Information
B. Market Manipulation
III DUTIES TO CLIENTS
A. Loyalty, Prudence and Care
B. Fair Dealing
C. Suitability
D. Performance Presentation
E. Preservation of Confidentiality
IV DUTIES TO EMPLOYERS
A. Loyalty
B. Additional Compensation Arrangements
C. Responsibilities of Supervisors
V INVESTMENT ANALYSIS, RECOMMENDATIONS AND ACTIONS
A. Diligence and Reasonable Basis
B. Communication with Clients and Prospective Clients
C. Record Retention
VI CONFLICTS OF INTEREST
A. Disclosure of Conflicts
B. Priority of Transactions
C. Referral Fees
VII RESPONSIBILITIES AS A CFA INSTITUTE MEMBER or CFA CANDIDATE
A. Conduct as Participants in CFA Institute Programs
B. Reference to CFA Institute, the CFA Designation and the CFA Program
CFA Institute Code & Standards are an example of 'Principle-Based' Standards.
