Standard I(D) – Misconduct

Standard I(D) – Misconduct addresses issues of honesty vs. deceit. It indicates that CFA members must not compromise their reputation, integrity, or competence. Standard I(D) – Misconduct contrasts with Standard 1(A) – Knowledge of the Law in that Standard 1(A) addresses applicable laws, and 1(D) is concerned with all behavior that could impact professional integrity.

Compliance

Preservation of integrity covers a broad scope of behavior.  It can be interpreted as refraining from drinking alcohol during business hours and conducting due diligence related to recommendations. Any and all behaviors that upset a member’s integrity or threaten the reputation of CFA Institute should be called into question. Therefore, whether the perception of misconduct relates to social behavior or professional competence, CFA members must hold themselves to the highest management standard.

Standard, I(D) covers conduct during normal business hours and in cases that a CFA member participates in financial services to charities or other non-profit organizations.  For example, an investment professional may volunteer to serve a charity by negotiating the purchase of capital equipment. In doing so, if (s)he pays the overall purchase price to compensate for time and trouble, without express permission to do so, then it can be viewed in the light of Standard I(D) – Misconduct.

Violation

Standard I(D) – Misconduct expressly communicates that following the CFA Code of Standards to the letter is insufficient.  Members must also hold themselves to high moral ideals by complying with the spirit of CFA Ethics and Standards.

A common concern related to misconduct is professional expenses.  For example, an employee may augment expense receipts for client meetings, insurance reimbursement, or travel costs.  All of these requests for expense payments would be considered an intent to defraud and, therefore, are a violation of Standard I(D) – Misconduct.

Question

Which of the following is least likely a violation of Standard I(D) – Misconduct?

I. Being intoxicated at the office

II. Being convicted of misdemeanor public nuisance over a holiday weekend

A. I only

B. II only

C. None of the above

Solution

The correct answer is B.

According to Standard I(D) “Members shall not engage in any professional conduct involving dishonesty, fraud, deceit, or commit any act that reflects adversely on their professional reputation, integrity, or competence.” The standard is not intended to regulate one’s personal behavior. Therefore, conviction of a misdemeanor public nuisance could be considered a passable act, not in violation of Standard I(D) – Misconduct.