Cfa standard of practice handbook

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You can customize the difficulty of the quizzes, and exams get more difficult as your scores improve. The Code and Standards presented are effective from 1 July Before you begin, let …. The Standards of Practice Guidance for Members contains the CFA Institute Code of Ethics and Standards of Professional Conduct with related guidance and examples illustrating application of the Standards in the day-to-day professional activities of members and candidates.

Ethical and Professional Standards; Study Session 1. Ethical and Professional Standards Take a practice exam and see your results! What does my ranking mean? Here you'll find The Standards of Practice Guidance for Members contains the CFA Institute Code of Ethics and Standards of Professional Conduct with related guidance and examples illustrating application of the Standards in the day-to-day professional activities of members and candidates.

An integral part of the CFA Institute mission is to develop and administer codes, best practice guidelines, and standards that guide the investment industry and help ensure all investment professionals place client interests first. CFA Institute is an example of a community that has laid down a code of ethics and standards of conduct for its members and candidates to follow.

The set of principles comprising the Code of Ethics and Standards of Professional Conduct is clearly documented … An integral part of the CFA Institute mission is to develop and administer codes, best practice guidelines, and standards that guide the investment industry and help ensure all investment professionals place client interests first.

Market Manipulation. Members and candidates must not engage in practices that distort prices or artificially inflate trading volume with the intent to mislead market participants. Loyalty, Prudence, and Care. Members and candidates have a duty of loyalty to their clients and must act with reasonable care and exercise prudent judgment. Members and candidates must act for the benefit of their clients and place their clients' interests before their employer's or their own interests.

Fair Dealing. Members and candidates must deal fairly and objectively with all clients when providing investment analysis, making investment recommendations, taking investment action, or engaging in other professional activities. When members and candidates are in an advisory relationship with a client, they must: a.

Make a reasonable inquiry into a client's or prospective client's investment experience, risk and return objectives, and financial constraints prior to making any investment recommendation or taking investment action and must reassess and update this information regularly.

Determine that an investment is suitable to the client's financial situation and consistent with the client's written objectives, mandates, and constraints before making an investment recommendation or taking investment action. Judge the suitability of investments in the context of the client's total portfolio. When members and candidates are responsible for managing a portfolio to a specific mandate, strategy, or style, they must only make investment recommendations or take investment actions that are consistent with the stated objectives and constraints of that portfolio.

Performance Presentation. When communicating investment performance information, members or candidates must make reasonable efforts to ensure that it is fair, accurate, and complete.

Preservation of Confidentiality. Members and candidates must keep information about current, former, and prospective clients confidential unless: The information concerns illegal activities on the part of the client or prospective client, Disclosure is required by law, or The client or prospective client permits disclosure of the information.

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. 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 interests unless they obtain written consent from all parties involved.

Responsibilities of Supervisors. Relationships and Responsibilities to the Employer A. III A. The member should also suggest that the employers adopt the Code and Standards and disseminate it throughout the firm.

Members who plan to engage in independent practice for compensation should provide written statements to their employer describing the types of services they will perform, the expected duration of the services, and the compensation they will receive.

Members should also disclose to their prospective clients the identity of their employer, the fact that they are performing independently of the employer, and what their employer would charge for similar services.

III C. Compliance: Members should report to their employers any beneficial interest and any special relationships, like corporate directorships, that may reasonably be considered a conflict of interest with their responsibilities. Compliance: Members should make an immediate written report to their employer specifying any compensation or benefits they receive or propose to receive for services in addition to what their employer is to give them.

This written report should state the terms of any oral or written agreement, the amount of compensation, and the duration of the agreement. Standard: Members with supervisory responsibilities, authority, or the ability to influence the conduct of others shall exercise reasonable supervision over those subject to their supervision or authority to prevent any violation of applicable statutes, regulation, or provisions of the Code and Standards.

In so doing, members are entitled to rely on reasonable procedures designed to detect and prevent such violations. Compliance: The supervisor and the compliance officer should: 1. Disseminate the compliance procedures. Update the procedures as necessary. Educate the staff and issue periodic reminders. Review employee actions to ensure compliance and identify violators, initiating procedures once a violation has occurred.

A supervisor should respond promptly to the violation by conducting a thorough investigation, and placing limitations on the wrongdoer until the investigation is complete.

Relationships with and Responsibilities to Clients and Prospects A. Members shall: a. Exercise diligence and thoroughness in making investment recommendations or in taking investment actions.

Have a reasonable and adequate basis, supported by appropriate research and investigation, for such recommendations or actions. Make reasonable and diligent efforts to avoid any material misrepresentation in any research report or investment recommendation. Maintain appropriate records to support the reasonableness of such recommendations or actions. Maintain files to support investment recommendations. Use reasonable judgment regarding the inclusion or exclusion of relevant factors in research reports.

Distinguish between facts and opinions in research reports. Indicate the basic characteristics of the investment involved when preparing for public distribution a research report that is not directly related to a specific portfolio or client. Compliance: Members should consider including the following information in research reports: 1.

Expected annual rates of return, calculated on a total return basis. Annual income expectations. Current rate of return or yield. The degree of uncertainty associated with the cash flows, and other risk factors. Members shall use reasonable care and judgment to achieve and maintain independence and objectivity in making investment recommendations or taking investment actions. Protect integrity of opinions.

Disclose all corporate relationships i. Disclose personal holdings and beneficial ownerships. Create a restricted list. Restrict special cost arrangements.