Professional Conduct Program

The Code and Standards are mandatory for all CFA Institute members and CFA Program candidates. The Professional Conduct Program (PCP) is overseen by the CFA Institute Board of Governors, and it, along with the Disciplinary Review Committee (DRC), ensures compliance with the Code and Standards.

The DRC comprises volunteer CFA charter holders who form panels to assess conduct cases and collaborate with Professional Conduct staff to develop and review conduct-related policies. The enforcement framework for the Code and Standards is outlined in the CFA Institute Bylaws and Rules of Procedure for Professional Conduct. Additionally, the Professional Conduct division is responsible for upholding testing policies for other CFA Institute education programs.

Professional Conduct Inquiries

Professional Conduct inquiries arise from five primary sources:

1. Self-Disclosure: Members and candidates are required to report any issues questioning their professional conduct on the annual Professional Conduct (“PC”) Statement. This includes involvement in civil litigation, criminal investigations, or being the subject of a written complaint.
2. Written Complaints: PC staff initiates investigations based on written complaints received from various sources.
3. CFA Institute Observations: CFA Institute staff may identify questionable conduct through media reports, regulatory notices, or other public sources.
4. Candidate Monitoring: Proctors who oversee exams report any suspected violations of testing rules by candidates during the exam.
5. Post-Exam Analysis: CFA Institute may analyze scores and exam materials after the exam and monitor online and social media channels to identify any disclosure of confidential exam information.

Initiation of an Inquiry

When an inquiry is initiated, the PC staff may investigate by:

• Requesting a written explanation from the member or candidate.
• Interviewing the member or candidate, complaining parties, and third parties.
• Collecting documents and records relevant to the investigation.

After examining the gathered information, PC staff may reach several conclusions:

• No Disciplinary Action: The inquiry may conclude without imposing any disciplinary measures.
• Cautionary Letter: In some cases, a cautionary letter may be issued.
• Disciplinary Proceedings: If there’s evidence of a violation of the Code and Standards or testing policies, the member or candidate has the option to either accept or reject the charges and proposed sanctions.

If the member or candidate rejects the charges and sanctions:

• Panel Review: The matter proceeds to a panel consisting of DRC members.
• Panel Assessment: The panel reviews evidence and presentations from both PC staff and the member or candidate.
• Determination: The panel’s role is to decide whether a violation occurred and, if so, what sanctions are appropriate.

Consequences of Violations

CFA Institute sanctions for violations can result in severe outcomes, including:

• Public Censure: The member’s wrongdoing is publicly acknowledged.
• Membership Suspension: Temporary loss of membership and the right to use the CFA designation.
• CFA Charter Revocation: The CFA charter can be permanently revoked.

For candidates in the CFA Program:

• Suspension: Temporary suspension from the program.
• Prohibition: Being barred from further participation in the CFA Program may occur if violations are substantiated.

Question

When an inquiry is initiated, the PC staff may investigate via all but which of the following?

1. Requesting a self-disclosure statement from the member or candidate.
2. Interviewing the member or candidate, complaining parties, and third parties.
3. Collecting documents and records relevant to the investigation.

Solution

The correct answer is C.

Following an inquiry, PC staff might investigate further by seeking a written explanation from the member or candidate. This explanation may or may not relate to the initial inquiry.

A and B are incorrect. Members and candidates must annually disclose any issues that raise concerns about their professional conduct, like civil litigation, criminal investigations, or written complaints. This disclosure is part of the Professional Conduct (“PC”) Statement and is not triggered by an inquiry.

Reading 29: Code of Ethics and Standards of Professional Conduct

Los 29 (a) Describe the structure of the CFA Institute Professional Conduct Program and the disciplinary review process for the enforcement of the CFA Institute Code of Ethics and Standards of Professional Conduct