Code of Ethics

1. Act with integrity, competence, diligence, respect, and in an ethical manner with the public, clients, prospective clients,
employers, employees, colleagues in the investment profession, and other participants in the global capital markets.
2. Place the integrity of the investment profession and the interests of clients above their own personal interests.
3. Use reasonable care and exercise independent professional judgment when conducting investment analysis, making
investment recommendations, taking investment actions, and engaging in other professional activities.
4. Practice and encourage others to practice in a professional and ethical manner that will reflect credit on themselves and
the profession.
5. Promote the integrity of, and uphold the rules governing, capital markets.
6. Maintain and improve their professional competence and strive to maintain and improve the competence of other
investment professionals

Standard I aims to set out a minimum level of conduct to guide CFA members and candidates in all business situations and is
intended to be broad in scope. Standards II to VII are more focused and address specific topics that are critical to the integrity
of the investment.

1. Professionalism
a. Knowledge of the Law
i. Know and comply with law and regulation related to professional activities
ii. Not engage in conduct violating the Code and the Standards even if legal,
iii. Abide by CFA Institute AOI, Bylaws, Code of Ethics, Standards of Pro. Conduct, Membership Agreement
and other applicable rules. (Candidates exclude membership agreement add candidate responsibility
statement and candidate pledge).
iv. Follow the more strict law. Responsible for violations where knowingly participated or assisted. If
client/employer activity seems illegal then attempt to stop it by reporting to Supervisor or Compliance.
Then member should directly confront the person. Then disassociate from such activity (document
violations). Lastly leave job. If feel that law is violated (in doubt) then contact firm counsel. If sure
contact supervisor. Disassociate if someone other than CFA does illegal things.
v. C & S does not require reporting violation to local authority or CFAI but this may be prudent in cases.
Encourages reporting violations to CFAI PCP.
vi. If preliminary prospectus is misleading then report to supervisor. If not remedied then disassociate.
Also seek legal advice.
vii. Should know CFA Laws if you are CFA.
b. Independence and Objectivity
i. Maintain I&O so that clients get benefit without conflict of interest.
ii. Gifts less than $100 is okay and not need to be disclosed. But greater needs to be disclosed. Gifts from
client will affect I&O less than gifts from companies seeking to influence.
iii. Avoid shares in oversubscribed IPO’s, Gifts without disclosure etc
iv. Do not issue favorable research under pressure (pressure from Investment Banking, Public Companies,
Buy Side Analysts, Issuer paid research-limit compensation).
v. Don’t solicit gifts.
vi. Members sometimes coped with pressures by using subtle and ambiguous language.
vii. An analyst conference might or might not break this standard. If relationship manager wants favorable
research then put on restricted list/reach independent conclusion/refuse to do it. If director of research
states to a new analyst not to change recommendation then do your own independent research and
give that. Portfolio manager receiving expensive holiday from a brokerage is a violation unless
disclosed in writing. Same person receiving modest gift need not be disclosed.
viii. Compensation should not be linked with investment banking assignments.
ix. Disclose conflicts: Analysts working with Investment Bankers only acceptable when conflicts are
adequately managed and disclosed. Firewall is required like separate reporting structures. Can accept
 compensation from a company to write a research report if you disclose the relationship and nature of
compensation.
x. Report holdings.
xi. Establish a restricted list (If firm unwilling to publish negative information about a particular company
then remove it from research list).
xii. Generally air transport, ground transport and hotel accommodation should be responsibility of the
member when available and no reimbursements by client allowed. This is recommended.
c. Misrepresentation
i. Cannot knowingly (knows or should have known) misrepresent orally, written, advertising or
electronically. Untrue statement or omission of fact that is false or misleading.
ii. Do not neglect to include caveats in any financial data.
iii. Can use information from a recognized statistical source (S&P 500).Can say that Treasury Securities are
without Default risk but not interest rate risk/price risk. Can use words like ‘guaranteed’.
iv. Avoid misrepresenting qualifications, company qualifications, performance record or characteristic of
investment. Avoid guaranteeing return on investments (unless insured). Avoid plagiarism even with
permission, and acknowledge source. Do not claim ownership of outsourced research. Acknowledge
even if permission given to use.
v. Owner or managing partner should acknowledge members of research team if representing himself.
vi. New analyst should add appropriate written acknowledgement of old analyst.
vii. Modified models should also be acknowledged.
viii. Employee cannot be using in-house research if acting like agent of others.
ix. Maintain research files/use direct quotes/obtain permission/attribute summarized material.
x. Verify accuracy of secondary data.
d. Misconduct
i. Avoid Lying, cheating, stealing, alcohol during work hours etc.Don’t do things outside of work that
reflects poorly on integrity or professional competence.
ii. Application: Don’t rely on judgment of individual supervisor/don’t forgive misconduct simply because
there is no conviction/dishonesty and fraud possible even for volunteering and charity if it is deceitful
or misconduct.
iii. Use CFA codes only with professional activities, not to settle personal disputes.
iv. No problem if misdemeanor did not affect work, professional integrity, judgment or reputation.
Repeated misdemeanor is wrong. Can get drunk when not at work and commit misdemeanors that do
not involve fraud, theft or deceit. Can mimic client trade.
v. Employers should do a background check.
2. Integrity of Capital Markets
a. Material Non-public information
i. Do not act or cause others to act on material non-public information.
ii. Material influences prices (source matters). Non-public not distributed to mass market.
iii. Firms with Investment Banking and Trading depts. should restrict employee trading in securities for
which the firm has material non-public information.
iv. Information given to one room full of analyst cannot be considered ‘public’.
v. Not possible to monitor all phone calls.
vi. Work of well known analyst can be ‘material’ but doesn’t need to be shared with all.
vii. Putting on restricted list or refusing to trade violates standard.
viii. Mosaic Theory- can combine non material , nonpublic info. Save all documents.
ix. If material non-public info found then a. try to make it public b. communicate to specific supervisor or
compliance officer and do not take any investment action c. dont engage in conduct that may induce
company insiders to privately disclose the material non-public info.
x. Firewall-control interdepartmental communication (authorized person review) , monitor employee
trades, documentation
xi. Physical separation of departments and files. Analyst may work in IB in controlled situation.
 b. Market Manipulation
i. Avoid price distorting transactions and securing position in an instrument to influence price of
derivative/underlying. Do not spread false rumors.
ii. Can do large trades that affect market prices if the intent is not to mislead others. Trade for tax purposes
allowed.
3. Duties to Clients
a. Loyalty
i. Duty of loyalty (client identity) and reasonable care and prudence (balance risk-return). Client interest
paramount.
ii. Fulfill legal fiduciary responsibilities. Follow investment rules set by client. Match investments to total
portfolio. Proper nontrivial proxy voting (not all). Disclose proxy voting policies and brokerage conflicts.
iii. Do not make assistants or sponsors of funds to vote proxies.
iv. Do not personally take shares in oversubscribed IPOs
v. Must follow guidelines set by client.
vi. Know to whom a fiduciary duty is owed with regards to trust accounts and retirement obligations.
vii. ‘Soft Dollars’ (research for brokerage) must benefit clients. Directed brokerage is allowed.
viii. Only applied to instances where fiduciary duty exists to clients.
ix. Disclose conflicts and managerial compensation.
b. Fair Dealing
i. Attempt simultaneous and fair dissemination (no discrimination) of investment recommendations and
changes. Contact clients who had interest first.
ii. Investment recommendation (different due to fees) should allow clients to act on information.
iii. Material changes communicated to all clients, particularly those affected by earlier advice. If clients don’t
know of changes and want to take investment actions then they should be notified b4 order accepted.
iv. Distribute issues to appropriate clients first and disclose written allocation procedures. Prorated if
oversubscribed. Avoid holding hot issue securities.
v. Can call bigger clients first (after fair distribution of investment recommendation and changes) according
to size
vi. Distribute trading on pro-rata basis not just on any method even if disclosed.
vii. Limit number of people involved/ shorten the time frame between decision and
dissemination/simultaneous dissemination/publish personnel guidelines for pre-dissemination/maintain a
list of clients and their holdings/develop written trade allocation procedures/disclose trade allocation
procedure/establish systematic account review/disclose levels of service.
c. Suitability
i. Understand client needs and make suitable recommendations in the context of total portfolio. Check
needs from time to time.
ii. Responsibilities only to the extent of information provided.
iii. IPS at least annually. Wanting to update is not enough. Recommended regularly. Create benchmark.
iv. Breaking Investment strategy breaks 3A and 3C.
v. Automatic model results must be suited to clients.
vi. Can manage account even if a client doesn’t mention certain factors like risk tolerance.
d. Performance Presentation
i. Fair, accurate and complete presentation. Do not claim to repeat historical performance.
ii. Presenting performance of weighted composites rather than single accounts
e. Preservation of Confidentiality
i. Preserve confidentiality unless required by law, allowed by client or illegal activity
ii. Protects past client.
iii. Can disclose confidential client information to colleagues working for client.
iv. Can make settlement with clients.
v. Personal data forms are allowed. Using assistants is ok.
vi. If illegal things suspected then contact with compliance. Then legal counsel. Finally disassociate.
4. Duties to Employers
a. Loyalty
i. Do not harm your employer. Obtain written permission to compete with employer.
ii. Refrain from injuring the firm, deprive it of profit, and deprive it of the member’s advantage and skills.
Client>Employers. Duties on both parties.
iii. Abstain from independent activity that conflicts with interest of employers. Otherwise take consent.
iv. While leaving an employer act in best interest. Simple knowledge of client names not problem. Records in
computer may need to be erased. Don’t take any material while leaving except in memory.
v. Can contact former clients unless violating non-compete agreements.
vi. Employee can be disloyal to company to protect integrity of capital market.
vii. Can make arrangements for new company even while employed.
viii. Cant take discarded research.
ix. 4a applicable for employees and not independent contractor.
x. In an independent contractual relationship members duties are bounded by oral or written agreements.
b. Additional Compensation Arrangements
i. Take written permission from employer before taking additional compensation from clients contingent on
future performance.
ii. Disclose any token gifts to employer.
iii. Take permission from both organizations in case of extra work.
c. Responsibility of Supervisors
i. Cannot supervise all and can delegate authority but is still responsible.
ii. Supervisors must take action to both prevent and detect violations of rules, laws, etc.
iii. Violations occurring might mean that compliance was inadequate.
iv. Separate code of ethics from compliance.
v. Ensure code and standards for subordinates and prepare compliance procedures.
vi. Inadequate compliance systems should be brought to attention. If not changed, decline supervisory
responsibility.
vii. Investigate any violation by employee and take necessary steps to prevent further violation during
investigation period.
viii. Supervisors must make a reasonable effort to detect violation. But in spite of that if subordinates make
mistakes it is not the supervisors fault.
5. Investment Analysis, Recommendations and Action
a. Diligence and Reasonable Basis
i. Cover all issues before recommending.
ii. Check if third party research is sound.
iii. Document difference of opinion with team.
iv. Have reasonable basis.
v. Ad-hoc models don’t have reasonable basis.
vi. If member relies on someone in firm that 2nd or 3rd party research is sound, the information can be used in
good faith.
vii. You can be wrong if you had reasonable basis at the time.
b. Communication with clients and prospective clients
i. Clarify the investment decision making process. Distinguish between fact and opinion. Keep clients
informed continuously.
ii. Investment advice supported by reference material. Outline risks.
iii. Member can emphasize and omit some information.
iv. Any change in investment policy should be promptly disclosed. No writing required.
c. Record Retention
i. Maintain all sorts of records.
ii. Cannot take records in a previous firm without consent.
iii. Can get rid of records after 7 years. 7 years is recommended but not mandatory.
 6. Conflicts of Interest
a. Disclosure of Conflicts
i. Disclose all conflicts (let others judge if there are conflicts) in a prominent and plain language.
ii. Disclose referrals.
iii. Disclose to employers and affected clients.
iv. Conflicts not avoidable.
v. Prevent employees from owning shares.
vi. Can accept gifts and referral fees as long as properly disclosed.
b. Priority of transaction
i. Transaction for clients and employers>transactions where candidate BO.
ii. Treat clients that are family members like other clients.
iii. Candidate can trade as long as client not disadvantaged, candidate benefits from client trades, regulatory
standards met.
iv. Cant convey research info to people beneficial to candidate. Can’t convey material nonpublic info.
v. Front running not allowed. Establish blackout periods.
vi. Disclose holdings at least annually/duplicate confirmation/preclearance
vii. Upon request disclose personnel investing policies.
viii. Can undertake transaction of BA only after clients and employers. Family accounts treated in same
manner.
ix. Can mimic client trade.
c. Referral Fees
i. Disclose any compensation, consideration or benefit received from or paid to others. Disclose nature.
ii. % of business coming from referrals need not be disclosed.
iii. Bonus from own company need not be disclosed.
7. Responsibilities as a CFA Institute Member or Candidate
a. Conduct as Member and Candidates in CFA program
i. Avoid anything that lowers public confidence in CFA. Free to express opinions.
ii. Don’t discuss specific exam questions/misrepresent on PCS or PDP/
iii. Do not exaggerate the implication of being a CFA
b. Reference to the CFA Institute, Program and Membership
i. Do no overpromise the competency of individuals or performance. Commitment of the CFA institute can
be used. Claims about merits of CFA should be opinions. Otherwise need to have factual support.
ii. Use “CFA” only after given right. No partial designation. Passing on first attempt can be mentioned by
cannot be used to promise better performance.
iii. Candidacy can be mentioned if results pending or application accepted. Don’t write “CFA Candidate” on
card.
iv. Use as adjective only, CFA in capital without periods, after name, cannot be more highlighted than name.
v. Don’t put CFA in bold or bigger font than name.
vi. Don’t use CFA Institute position to improperly further your personal or professional goals.
vii. You can say that you have passed Lever 1, 2 or 3 CFA exams if you really have.
viii. You can accurately describe the nature of the examination process and the requirements to earn the right
to use the CFA designation.
ix. If annual dues or PCS not submitted then member considered suspended and not a CFA charterholder.

Software glitch should be reported to supervisor