A Comprehensive Guide for Investment Professionals
Ethics are the moral principles that guide our behavior. In the investment industry, ethical conduct is not just a personal virtue—it's the bedrock of the entire system. Trust is essential for capital markets to function efficiently, allocating capital to its most productive uses for the ultimate benefit of society.
While laws and regulations provide a framework, they cannot ensure trust on their own. A strong ethical culture is required to combat misconduct, foster robust markets, and build the client and public trust that the profession depends on.
The Code of Ethics is a set of six core principles that all CFA Institute members and candidates must adhere to. It provides the overarching ethical framework for the investment profession.
The seven Standards of Professional Conduct provide specific, mandatory guidance for applying the principles of the Code of Ethics in practice. Each standard is broken down into more detailed sub-standards.
Understand and comply with all applicable laws, rules, and regulations. In case of conflict, follow the more strict rule.
Do not offer, solicit, or accept any gift or benefit that could compromise your independence or objectivity.
Do not knowingly make any misrepresentations in your professional work.
Do not engage in any conduct involving dishonesty, fraud, or deceit that harms your professional reputation.
Do not act or cause others to act on material nonpublic (insider) information.
Do not engage in practices that distort prices or artificially inflate trading volume to mislead market participants.
Act for the benefit of your clients and place their interests before your employer's or your own.
Deal fairly and objectively with all clients when disseminating recommendations or taking investment action.
Make a reasonable inquiry into a client's investment experience, risk/return objectives, and constraints, and ensure that any investment action is suitable.
Ensure that performance information is fair, accurate, and complete.
Keep information about current, former, and prospective clients confidential unless specific circumstances apply.
Act for the benefit of your employer and do not deprive them of your skills or abilities.
Do not accept gifts or benefits that compete with your employer's interest without written consent from all parties involved.
Make reasonable efforts to ensure that anyone subject to your supervision complies with applicable laws and the Code and Standards.
Have a reasonable and adequate basis for any investment analysis, recommendation, or action.
Disclose the basic format and principles of your investment process and promptly disclose any changes. Clearly distinguish between fact and opinion.
Develop and maintain appropriate records to support your analysis and recommendations.
Make full and fair disclosure of all matters that could impair your independence and objectivity.
Investment transactions for clients and employers must have priority over your own personal transactions.
Disclose to clients and employers any compensation received for the recommendation of products or services.
Do not compromise the integrity of the CFA Institute or its programs.
Do not misrepresent or exaggerate the meaning or implications of membership, holding the designation, or candidacy.