Level 1 CFA® Exam Ethics Summary

CFA Exam: Level 1 / Ethics



Level 1 CFA Exam Ethics Summary

CFA Exam: Level 1 Ethics

As a candidate in the level 1 CFA exam, you must know that each ethics standard is devoted to a separate area of the investment profession. The Standards cannot, however, be used selectively. They are closely interwoven and you need to see them as a whole. The CFA Institute code of ethics provides guidelines you should follow at any time and place.


This blog post was created as a part of the CFA exam review series to help you in your level 1 exam revision, whether done regularly or shortly before your CFA exam.




CFA Institute Code of Ethics

CFA Institute Code of Ethics is a set of principles and moral rules agreed on and accepted by investment professionals.

There are six major principles included in the CFA Institute Code of Ethics that generally correspond to the following moral obligations:

  1. Act in a morally acceptable manner and to the best of your abilities in any of your professional relationships.
  2. Always place the good of your profession and of your clients first.
  3. Stay independent and exercise reasonable care in your professional activities.
  4. Practice in an ethical way that earns you an honest reputation and encourage others to do so.
  5. Promote the integrity of the market.
  6. Maintain and improve your competence and encourage others to do so.

You can learn more about CFA Institute Code of Ethics & Standards of Professional Conduct by visiting our CFA exam lesson on Ethical Standards .


CFA Exam: Ethics Summary Presentation

Below you can watch the summary of CFA exam Ethics created by our team. We hope you like it and find it useful. This summary was prepared to complement our Smart CFA Exam Study PLAN and can be used by candidates of all levels of the CFA exam.

The presentation is about the CFA Institute Code of Ethics & Standards of Professional Conduct and was prepared in Prezi.



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Standards of Professional Conduct

When defining the Standards of Professional Conduct we might say that they provide comprehensive description of best practices and moral duties for investment professionals.

There are seven Standards. Each of them includes a number of sub-sections that specify acceptable ethical conduct and responsibilities applicable to particular profession-related situations.


Standard I: Professionalism

see also: CFA exam lesson on Ethics, Standard I

  • (A) Knowledge of the Law
  • (B) Independence and Objectivity
  • (C) Misrepresentation
  • (D) Misconduct

Standard II: Integrity of Capital Markets

see also: CFA exam lesson on Ethics, Standard II

  • (A) Material Nonpublic Information
  • (B) Market Manipulation

Standard III: Duties to Clients

see also: CFA exam lesson on Ethics, Standard III

  • (A) Loyalty, Prudence, and Care
  • (B) Fair Dealing
  • (C) Suitability
  • (D) Performance Presentation
  • (E) Preservation of Confidentiality

Level 1 GIPS Standards

see also: CFA exam lesson on GIPS


Standard IV: Duties to Employers

  • (A) Loyalty
  • (B) Additional Compensation Arrangements
  • (C) Responsibilities of Supervisor

Standard V: Investment Analysis, Recommendations, and Actions

  • (A) Diligence and Reasonable Basis
  • (B) Communication with Clients and Prospective Clients
  • (C) Record Retention

Standard VI: Conflicts of Interest

  • (A) Disclosure of Conflicts
  • (B) Priority of Transactions
  • (C) Referral Fees

Standard VII: Responsibilities as a CFA Institute Member or CFA Candidate

  • (A) Conduct as Members and Candidates in the CFA Program
  • (B) Reference to CFA Institute, the CFA Designation, and the CFA Program

Level 1 GIPS Standards

see also: CFA exam lesson on GIPS



The general idea behind the Standards has not changed since their creation in 1960s. All members and candidates are obliged to obey by the provisions of the Code of Ethics and the Standards of Professional Conduct. Any violations may result in appropriate disciplinary sanctions including, but not limited to, the exclusion from the CFA Program or the revocation of the CFA designation.


LAST UPDATE: 5 April 2022


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Comments

Nice presentation but we should add some cases to be closer to the concepts