ETHICS – Code and Standards (Reading 1a)

Reading 1a Objectives (Source)

The candidate should be able to:

a. describe the six components of the Code of Ethics and the seven Standards of Professional Conduct;

b explain the ethical responsibilities required of CFA Institute members and candidates in the CFA Program by the Code and Standards.

6 Components of Code of Ethics

Act with DRICE ( Diligence, Respect, Integrity, Competence, Ethical)

Place integrity of investment profession and interests of clients above personal interests.

Reasonable care related to independent due diligence analysis / research for customer investment decisions and with objectivity.

Practice and encourage others to practice in professional and ethical manner  to maintain the credibility and integrity of the profession.

Promote the integrity of rules governing capital markets

Maintain and improve both your and other’s professional competence

7 Standards of Professional Conduct (PIDDICR)

Professionalism – KIMM

Knowledge of Law, Independence and Objectivity, Misrepresentation, Misconduct.

Integrity of Capital Markets – MM

Market Non public information, Market manipulation

Duties to Clients – LFSPP

Loyalty Prudence and Care, Fair dealing, Suitability, Performance presentation, Preservation of Confidentiality.

Duties to Employers – LAR

Loyalty, Additional Compensation Arrangement, Responsibilities of Supervisors.

Investment Analysis Recommendations and Actions – DCR

Diligence and Reasonable basis, Communications with Clients and Prospective Clients, Record Retention ( recommended 7 years )

Conflicts of Interest – DPR

Disclosure of Conflicts, Priority of Transactions, Referral fees.

Responsibilities as a CFA Member  – CR

Conduct as Members and Candidates in the CFA Program, Reference to CFA Institute Designation and Program.


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