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 of supporting documents that assist in meeting the Standard⁽¹⁾ include, but are not limited to:

• Personal notes from meetings with the covered company.
• Press releases or presentations issued by the covered company.
• Computer-based model outputs and analyses.
• Computer-based model input parameters.
• Risk analyses of securities’ impacts on a portfolio.
• Selection criteria for external advisers.
• Notes from clients from meetings to review investment policy statements.
• Outside research reports.

⁽¹⁾ The list is taken verbatim from the CFA curriculum.

The format and type of information communicated does not absolve a Member or Candidate from maintaining records of the information used in his or her analysis. Both traditional and new media (social media) are covered by this Standard.

New media formats include:

• Blogs.
• Texts.
• Communication through Twitter and Facebook.
• Emails.

All records created by a Member or Candidate are property of the firm. If a Member or Candidate leaves his employer, he is prohibited from making copies of any supporting documentation or work product without the express permission of their employer.

Members and Candidates should follow all local regulations related to record retention. Compliance with regulatory or firm requirements on record retention satisfies Standard V(C). In the absence of any regulatory or firm policies, the CFA Institute recommends maintaining records for at least seven years.

Compliance Recommendations

With no regulation or firm policies on record retention, firms should maintain records for at least seven years.

Application 1: Records of the Firm

Scott Garcia is the head of quantitative research at Green Point Investments. Over the six years at Green Point, he has contributed and developed the firm’s quantitatively driven investment strategies. Garcia has diligently documented the assumptions and reasoning behind all of his work product. Garcia has tendered his resignation and has plans to start a consultancy firm. With the permission of his employer, he copies the records of the supporting documentation of strategies he has previously worked on.

Has Garcia violated Standard V(C) – Record Retention?

     A. Yes, because he is not permitted to make copies of any material developed while at his previous employer.

     B. No, because he received permission to make copies of the supporting documentation.

     C. No, because he maintains all documents related to the work on the firm’s investment strategies.

Solution

The correct answer is B.

All the records developed by Garcia are the property of the firm. Garcia has not violated Standard V(C) – Record Retention, because he received permission from his employer to make copies of the supporting documentation. If Garcia had not received permission, he would be allowed to recreate the supporting documentation and strategies through publicly available information.

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

LOS 46 (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.