Study Notes for CFA® Level II – Ethical and Professional Standards – offered by AnalystPrep
Reading 45: Code of Ethics and Standards of Professional Conduct -a. Describe the six components of the Code of Ethics and the seven Standards of Professional Conduct; -b. Explain the ethical responsibilities required of CFA Institute members and candidates in…
Standard VI (C) – Referral Fees
Members and Candidates must disclose to their employer, clients, and prospective clients, as appropriate, any compensation, consideration, or benefit received from or paid to others for the recommendation of products or services. Guidance Members and Candidates are responsible for informing…
Standard VI (B) – Priority of Transactions
Investment transactions for clients and employers must have priority over investment transactions in which a Member or Candidate is the beneficial owner. Guidance Client transactions must always take priority over transactions made on behalf of the Member or Candidate’s firm…
Standard VI (A) – Disclosure of Conflicts
Members and Candidates must make full and fair disclosure of all matters that could reasonably be expected to impair their independence and objectivity or interfere with respective duties to their clients, prospective clients, and employer. Members and Candidates must ensure that such…
Standard V (C) – Record Retention
Members and Candidates must develop and maintain appropriate records to support their investment analyses, recommendations, actions, and other investment-related communications with clients and prospective clients. Members and Candidates must retain records that support their recommendations, investment actions, or conclusions. Examples…
Standard V (B) – Communication with Clients and Prospective Clients
Members and Candidates must: Disclose to clients and prospective clients the basic format and general principles of the investment processes they use to analyze investments, select securities, and construct portfolios and must promptly disclose any changes that might materially affect…
Standard V (A) – Diligence and Reasonable Basis
Members and Candidates must: Exercise diligence, independence, and thoroughness in analyzing investments, making investment recommendations, and taking investment actions. Have a reasonable and adequate basis, supported by appropriate research and investigation, for any investment analysis, recommendation, or action. The application…
Standard IV (C) – Responsibilities of Supervisors
Members and Candidates must make reasonable efforts to ensure that anyone subject to their supervision or authority complies with applicable laws, rules, regulations, and the Code and Standards. Members and Candidates with supervisory responsibilities must make reasonable efforts to prevent…
Standard IV (B) – Additional Compensation Arrangements
Members and Candidates must not accept gifts, benefits, compensation, or consideration that competes with or might reasonably be expected to create a conflict of interest with their employer’s interest unless they obtain written consent from all parties involved. Members and…
Standard IV (A) – Loyalty
In matters related to their employment, Members and Candidates must act for the benefit of their employer and not deprive their employer of the advantage of their skills and abilities, divulge confidential information, or otherwise cause harm to their employer….
