CFA Level 1 Ethics
Each CFA level 1 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 code of ethics provides guidelines you should follow at any time and place.
CFA Code of Ethics
CFA 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 Code of Ethics that generally correspond to the following moral obligations:
- Act in a morally acceptable manner and to the best of your abilities in any of your professional relationships.
- Always place the good of your profession and of your clients first.
- Stay independent and exercise reasonable care in your professional activities.
- Practice in an ethical way that earns you an honest reputation and encourage others to do so.
- Promote the integrity of the market.
- Maintain and improve your competence and encourage others to do so.
CFA Ethics Summary Presentation
Below you can watch the summary of CFA Ethics created by our team. We hope you like it and find it useful. This summary was prepared to complement our Smart CFA Study PLAN and can be used by candidates of all levels of the CFA exam.
The presentation is about the CFA Code of Ethics & Standards of Professional Conduct and was prepared in Prezi.
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.
- (A) Knowledge of the Law
- (B) Independence and Objectivity
- (C) Misrepresentation
- (D) Misconduct
- (A) Material Nonpublic Information
- (B) Market Manipulation
- (A) Loyalty, Prudence, and Care
- (B) Fair Dealing
- (C) Suitability
- (D) Performance Presentation
- (E) Preservation of Confidentiality
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
The general idea behind the Standards has not changed since their creation in 1960s. All CFA 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.
CFA Level 1 Ethics Practice Questions
(Note: To take the test, you need to register a free account first)