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Standard VII (B) – Reference to CFA Institute, the CFA Designation, and the CFA Program

Standard VII (B) – Reference to CFA Institute, the CFA Designation, and the CFA Program

When referring to CFA Institute, CFA Institute membership, the CFA designation, or candidacy in the CFA Program, Members and Candidates must not misrepresent or exaggerate the meaning or implications of membership in CFA Institute, holding the CFA designation, or candidacy in the CFA Program.

Guidance

Members and Candidates are prohibited from making promises or guarantees about potential investment performance or ability that is founded on or related to the CFA program. Statements tied to the CFA program, designation and exam that exaggerate or misrepresent the performance or ability of a Member or Candidate are not permitted.

Members and Candidates are allowed to emphasize the high ethical and professional conduct required, the rigor of the program, and the merits of the CFA program as long as the statements are stated as opinions.

Standard VII(B) – Reference to CFA Institute, the CFA Designation, and the CFA Program applies to any form of communication (electronic, written, and verbal).

CFA Institute Membership

To be considered a CFA “member” or “affiliate,” individuals must meet the membership requirements as defined in the CFA Institute Bylaws.

A member must satisfy the following requirements to obtain his or her membership status:

  • Submit (on annual basis) a signed copy of the Professional Conduct Statement; and
  • Pay applicable CFA Institute membership dues annually.

If these requirements are not met, the individual is not considered an active member. Until an individual’s membership is reactivated, the individual must not misrepresent themselves as an active member. The individual is allowed to present themselves as a former member of the CFA Institute.

Using the CFA Designation

Members and Candidates are permitted to use the CFA designation in a manner that does not exaggerate or misrepresent the significance of the designation. The use of the CFA designation is permitted for individuals who have:

  • Completed the CFA Program;
  • Completed the required years of relevant work experience; and
  • Satisfied the CFA Institute membership requirements.

If a CFA charterholder fails to meet any of the CFA Institute membership requirements, he or she forfeits the right to use the designation until they reactivate their membership with the CFA Institute.

Referring to Candidacy in the Program

Candidates are allowed to refer to their participation in the CFA Program. However, any reference should state that the individual is a candidate in the Program. Individuals cannot claim partial designation. For example, an individual who has passed Level I and II cannot imply or state that they are “a partial CFA.”

An individual is a candidate in the CFA Program if they have:

  • Successfully registered for a CFA Program examination; or
  • Sat a specific exam and are waiting for their exam results.

A candidate is permitted to say that they passed the exams in three consecutive years (as this is a fact). However, they are not allowed to imply that they can achieve superior results or have a greater ability by passing the exams in only three years.

Common improper references include but are not limited to:

  • “As a CFA charterholder, I can achieve superior investment returns.”
  • “As a CFA charterholder, Susan Ndolo is the most qualified to manage large investment funds.”
  • “CFA, expected in 2022.”
  • “Ellen Johnson, charter pending.”

Recommended Compliance Procedures

Members and Candidates should disseminate information about Standard VII(B) –Reference to CFA Institute, CFA Designation, and the CFA Program to their employers to help their employers avoid improper reference to the CFA Program.

Application 1: Stating Facts about the CFA Designation and Program

Dorothy Chen, CFA, is in conversation with one of her mentees – Hannah Blake. Blake is considering sitting the CFA Level I exam and is asking Chen for her advice. Chen states that going through the CFA Program enhanced her knowledge of the investment industry and profession. Additionally, she praises the rigor and high ethical standards emphasized by the CFA Program. Chen informs Blake that she passed all three exams in three consecutive years.

Chen’s LinkedIn profile states that she is an active member of the CFA Institute. However, she is yet to pay her current annual membership dues.

Which of Chen’s statements would most likely be considered a violation of Standard VII(B) – Reference to CFA Institute, CFA Designation, and the CFA Program?

     A. The CFA Program enhanced her knowledge of the investment and industry and profession.

     B. Informing Blake that she passed all three exams in three consecutive years.

     C. Her LinkedIn profile stating that she is an active member of the CFA Institute.

Solution

The correct answer is C.

Chen has violated Standard VII(B) – Reference to CFA Institute, CFA Designation, and the CFA Program by implying that she is a CFA Institute member in her LinkedIn profile without paying her annual membership dues. Her statement regarding passing all three exams in three consecutive years is a fact and is therefore not a violation of Standard VII(B).

Example 2: Improper Reference to the CFA Program and Designation

Which of the following in an improper reference to the CFA Program and/or designation?

       A. “Enrolling in the CFA program has made me a better equity valuation analyst than my peers.”

       B. “I am February 2021 CFA Level I candidate.”

       C. “I have passed all three levels of the CFA Program and may be eligible for the charter subject to the completion of the required work experience.”

Solution

The correct answer is A.

Answers B and C make correct reference to the CFA Program and Designation. Implying that passing all three levels of the CFA Program makes an individual a better analyst is a violation of Standard VII(B) – Reference to CFA Institute, CFA Designation, and the CFA Program. Claiming superior ability by obtaining the designation or passing the examinations is strictly prohibited under Standard VII(B).

 Reading 46: Guidance for The Standards of Professional Conduct (I-VII)

LOS (a) Demonstrate a thorough knowledge of the CFA Institute Code of Ethics and Standards of Professional Conduct by applying the Code and Standards to specific situations.

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