Guidance for Standards I-VII

Topics

• Standard I: Professionalism
  • Standard I(A) Knowledge of the Law
  • Guidance
• Standard I(A): Recommended Procedures
  • Members and Candidates
  • Distribution Area Laws
  • Legal Counsel
  • Dissociation
  • Firms
• Standard I(A): Application of the Standard
  • Example 1 (Notification of Known Violations):
  • Example 2 (Dissociating from a Violation):
  • Example 3 (Dissociating from a Violation):
  • Example 4 (Following the Highest Requirements):
  • Example 5 (Following the Highest Requirements):
  • Example 6 (Laws and Regulations Based on Religious Tenets):
  • Example 7 (Reporting Potential Unethical Actions):
  • Example 8 (Failure to Maintain Knowledge of the Law):
• Standard I(B) Independence and Objectivity
  • Guidance
• Standard I(B): Recommended Procedures
• Standard I(B): Application of the Standard
  • Example 1 (Travel Expenses):
  • Example 2 (Research Independence):
  • Example 3 (Research Independence and Intrafirm Pressure):
  • Example 4 (Research Independence and Issuer Relationship Pressure):
  • Example 5 (Research Independence and Sales Pressure):
  • Example 6 (Research Independence and Prior Coverage):
  • Example 7 (Gifts and Entertainment from Related Party):
  • Example 8 (Gifts and Entertainment from Client):
  • Example 9 (Travel Expenses from External Manager):
  • Example 10 (Research Independence and Compensation Arrangements):
  • Example 11 (Recommendation Objectivity and Service Fees):
  • Example 12 (Recommendation Objectivity):
  • Example 13 (Influencing Manager Selection Decisions):
  • Example 14 (Influencing Manager Selection Decisions):
  • Example 15 (Fund Manager Relationships):
  • Example 16 (Intrafirm Pressure):
• Standard I(C) Misrepresentation
  • Guidance
• Standard I(C): Recommended Procedures
  • Factual Presentations
  • Qualification Summary
  • Verify Outside Information
  • Maintain Webpages
  • Plagiarism Policy
• Standard I(C): Application of the Standard
  • Example 1 (Disclosure of Issuer-Paid Research):
  • Example 2 (Correction of Unintentional Errors):
  • Example 3 (Noncorrection of Known Errors):
  • Example 4 (Plagiarism):
  • Example 5 (Misrepresentation of Information):
  • Example 6 (Potential Information Misrepresentation):
  • Example 7 (Plagiarism):
  • Example 8 (Plagiarism):
  • Example 9 (Plagiarism):
  • Example 10 (Plagiarism):
  • Example 11 (Misrepresentation of Information):
  • Example 12 (Misrepresentation of Information):
  • Example 13 (Avoiding a Misrepresentation):
  • Example 14 (Misrepresenting Composite Construction):
  • Example 15 (Presenting Out-of-Date Information):
  • Example 16 (Overemphasis of Firm Results):
• Standard I(D) Misconduct
  • Guidance
• Standard I(D): Recommended Procedures
• Standard I(D): Application of the Standard
  • Example 1 (Professionalism and Competence):
  • Example 2 (Fraud and Deceit):
  • Example 3 (Fraud and Deceit):
  • Example 4 (Personal Actions and Integrity):
  • Example 5 (Professional Misconduct):
• Standard I(E) Competence
  • Guidance
• Standard I(E): Recommended Procedures
• Standard I(E): Application of the Standard
  • Example 1 (Maintaining Competence):
  • Example 2 (Improving Competence):
  • Example 3 (Change in Role):
  • Example 4 (Supervisory Responsibility):
  • Example 5 (Choosing Investments):
  • Example 6 (Understanding New Investment Products):
• Standard II: Integrity of Capital Markets
  • Standard II(A) Material Nonpublic Information
  • Guidance
• Standard II(A): Recommended Procedures
  • Achieve Public Dissemination
  • Adopt Compliance Procedures
  • Adopt Disclosure Procedures
  • Issue Press Releases
  • Firewall Elements
  • Appropriate Interdepartmental Communications
  • Personal Trading Limitations
  • Record Maintenance
  • Proprietary Trading Procedures
  • Communication to All Employees
• Standard II(A): Application of the Standard
  • Example 1 (Acting on Nonpublic Information):
  • Example 2 (Controlling Nonpublic Information):
  • Example 3 (Selective Disclosure of Material Information):
  • Example 4 (Determining Materiality):
  • Example 5 (Applying the Mosaic Theory):
  • Example 6 (Applying the Mosaic Theory):
  • Example 7 (Analyst Recommendations as Material Nonpublic Information):
  • Example 8 (Acting on Nonpublic Information):
  • Example 9 (Mosaic Theory):
  • Example 10 (Materiality Determination):
  • Example 11 (Using an Expert Network):
  • Example 12 (Using an Expert Network):
• Standard II(B) Market Manipulation
  • Guidance
• Standard II(B): Application of the Standard
  • Example 1 (Independent Analysis and Company Promotion):
  • Example 2 (Personal Trading Practices and Price):
  • Example 3 (Creating Artificial Price Volatility):
  • Example 4 (Personal Trading and Volume):
  • Example 5 (“Pump-Priming” Strategy):
  • Example 6 (Creating Artificial Price Volatility):
  • Example 7 (Pump and Dump Strategy):
  • Example 8 (Manipulating Model Inputs):
  • Example 9 (Information Manipulation):
• Standard III: Duties to Clients
  • Standard III(A) Loyalty, Prudence, and Care
  • Guidance
• Standard III(A): Recommended Procedures
  • Regular Account Information
  • Client Approval
  • Firm Policies
• Standard III(A): Application of the Standard
  • Example 1 (Identifying the Client—Plan Participants):
  • Example 2 (Client Commission Practices):
  • Example 3 (Brokerage Arrangements):
  • Example 4 (Brokerage Arrangements):
  • Example 5 (Client Commission Practices):
  • Example 6 (Excessive Trading):
  • Example 7 (Managing Family Accounts):
  • Example 8 (Identifying the Client):
  • Example 9 (Identifying the Client):
  • Example 10 (Client Loyalty):
  • Example 11 (Execution-Only Responsibilities):
• Standard III(B) Fair Dealing
  • Guidance
• Standard III(B): Recommended Procedures
  • Develop Firm Policies
  • Disclose Trade Allocation Procedures
  • Establish Systematic Account Review
  • Disclose Levels of Service
• Standard III(B): Application of the Standard
  • Example 1 (Selective Disclosure):
  • Example 2 (Fair Dealing between Funds):
  • Example 3 (Fair Dealing and IPO Distribution):
  • Example 4 (Fair Dealing and Transaction Allocation):
  • Example 5 (Selective Disclosure):
  • Example 6 (Additional Services for Select Clients):
  • Example 7 (Minimum Lot Allocations):
  • Example 8 (Excessive Trading):
  • Example 9 (Limited Social Media Disclosures):
  • Example 10 (Fair Dealing between Clients):
• Standard III(C) Suitability
  • Guidance
• Standard III(C): Recommended Procedures
  • Investment Policy Statement
  • Regular Updates
  • Suitability Test Policies
• Standard III(C): Application of the Standard
  • Example 1 (Investment Suitability—Risk Profile):
  • Example 2 (Investment Suitability—Entire Portfolio):
  • Example 3 (IPS Updating):
  • Example 4 (Following an Investment Mandate):
  • Example 5 (IPS Requirements and Limitations):
  • Example 6 (Submanager and IPS Reviews):
  • Example 7 (Investment Suitability—Risk Profile):
  • Example 8 (Investment Suitability):
• Standard III(D) Performance Presentation
  • Guidance
• Standard III(D): Recommended Procedures
  • Apply the GIPS Standards
  • Compliance without Applying GIPS Standards
• Standard III(D): Application of the Standard
  • Example 1 (Performance Calculation and Length of Time):
  • Example 2 (Performance Calculation and Asset Weighting):
  • Example 3 (Performance Presentation and Prior Fund/Employer):
  • Example 4 (Performance Presentation and Simulated Results):
  • Example 5 (Performance Calculation and Selected Accounts Only):
  • Example 6 (Performance Attribution Changes):
  • Example 7 (Performance Calculation Methodology Disclosure):
  • Example 8 (Performance Calculation Methodology Disclosure):
• Standard III(E) Preservation of Confidentiality
  • Guidance
• Standard III(E): Recommended Procedures
  • Communicating with Clients
• Standard III(E): Application of the Standard
  • Example 1 (Possessing Confidential Information):
  • Example 2 (Disclosing Confidential Information):
  • Example 3 (Disclosing Possible Illegal Activity):
  • Example 4 (Disclosing Possible Illegal Activity):
  • Example 5 (Accidental Disclosure of Confidential Information):
• Standard IV: Duties to Employers
  • Standard IV(A) Loyalty
  • Guidance
• Standard IV(A): Recommended Procedures
  • Competition Policy
  • Termination Policy
  • Incident-Reporting Procedures
  • Employee Classification
• Standard IV(A): Application of the Standard
  • Example 1 (Soliciting Former Clients):
  • Example 2 (Former Employer’s Documents and Files):
  • Example 3 (Addressing Rumors):
  • Example 4 (Ownership of Completed Prior Work):
  • Example 5 (Ownership of Completed Prior Work):
  • Example 6 (Soliciting Former Clients):
  • Example 7 (Starting a New Firm):
  • Example 8 (Competing with Current Employer):
  • Example 9 (Externally Compensated Assignments):
  • Example 10 (Soliciting Former Clients):
  • Example 11 (Whistleblowing Actions):
  • Example 12 (Soliciting Former Clients):
  • Example 13 (Notification of Code and Standards):
  • Example 14 (Leaving an Employer):
  • Example 15 (Confidential Firm Information):
• Standard IV(B) Additional Compensation Arrangements
  • Guidance
• Standard IV(B): Recommended Procedures
• Standard IV(B): Application of the Standard
  • Example 1 (Notification of Client Bonus Compensation):
  • Example 2 (Notification of Outside Compensation):
  • Example 3 (Prior Approval for Outside Compensation):
• Standard IV(C) Responsibilities of Supervisors
  • Guidance
• Standard IV(C): Recommended Procedures
  • Codes of Ethics or Compliance Procedures
  • Adequate Compliance Procedures
  • Implementation of Compliance Education and Training
  • Establish an Appropriate Incentive Structure
• Standard IV(C): Application of the Standard
  • Example 1 (Supervising Research Activities):
  • Example 2 (Supervising Research Activities):
  • Example 3 (Supervising Trading Activities):
  • Example 4 (Supervising Trading Activities and Record Keeping):
  • Example 5 (Accepting Responsibility):
  • Example 6 (Inadequate Procedures):
  • Example 7 (Inadequate Supervision):
  • Example 8 (Supervising Research Activities):
  • Example 9 (Supervising Research Activities):
• Standard V: Investment Analysis, Recommendations, and Actions
  • Standard V(A) Diligence and Reasonable Basis
  • Guidance
• Standard V(A): Recommended Procedures
• Standard V(A): Application of the Standard
  • Example 1 (Sufficient Due Diligence):
  • Example 2 (Sufficient Scenario Testing):
  • Example 3 (Developing a Reasonable Basis):
  • Example 4 (Timely Client Updates):
  • Example 5 (Group Research Opinions):
  • Example 6 (Reliance on Third-Party Research):
  • Example 7 (Due Diligence in Submanager Selection):
  • Example 8 (Sufficient Due Diligence):
  • Example 9 (Sufficient Due Diligence):
  • Example 10 (Sufficient Due Diligence):
  • Example 11 (Use of Quantitatively Oriented Models):
  • Example 12 (Successful Due Diligence/Failed Investment):
  • Example 13 (Quantitative Model Diligence):
  • Example 14 (Selecting a Service Provider):
  • Example 15 (Subadviser Selection):
  • Example 16 (Manager Selection):
  • Example 17 (Technical Model Requirements):
• Standard V(B) Communication with Clients and Prospective Clients
  • Guidance
• Standard V(B): Recommended Procedures
• Standard V(B): Application of the Standard
  • Example 1 (Costs of Services to Clients):
  • Example 2 (Costs of Services to Clients):
  • Example 3 (Disclosure of Changed Fee Calculation Methodology):
  • Example 4 (Sufficient Disclosure of Investment System):
  • Example 5 (Providing Opinions as Facts):
  • Example 6 (Proper Description of a Security):
  • Example 7 (Notification of Fund Mandate Change):
  • Example 8 (Notification of Fund Mandate Change):
  • Example 9 (Notification of Changes to the Investment Process):
  • Example 10 (Notification of Changes to the Investment Process):
  • Example 11 (Notification of Changes to the Investment Process):
  • Example 12 (Sufficient Disclosure of Investment System):
  • Example 13 (Notification of Changes to the Investment Process):
  • Example 14 (Notification of Errors):
  • Example 15 (Notification of Risks and Limitations):
  • Example 16 (Notification of Risks and Limitations):
  • Example 17 (Notification of Risks and Limitations):
• Standard V(C) Record Retention
  • Guidance
• Standard V(C): Recommended Procedures
• Standard V(C): Application of the Standard
  • Example 1 (Record Retention and IPS Objectives and Recommendations):
  • Example 2 (Record Retention and Research Process):
  • Example 3 (Records as Firm, Not Employee, Property):
• Standard VI: Conflicts of Interest
  • Standard VI(A) Avoid or Disclose Conflicts
  • Guidance
• Standard VI(A): Application of the Standard
  • Example 1 (Conflict of Interest and Business Relationships):
  • Example 2 (Conflict of Interest and Business Stock Ownership):
  • Example 3 (Conflict of Interest and Personal Stock Ownership):
  • Example 4 (Conflict of Interest and Personal Stock Ownership):
  • Example 5 (Conflict of Interest and Compensation Arrangements):
  • Example 6 (Conflict of Interest and Compensation Arrangements):
  • Example 7 (Conflict of Interest and Requested Favors):
• Standard VI(B) Priority of Transactions
  • Guidance
• Standard VI(B): Recommended Procedures
• Standard VI(B): Application of the Standard
  • Example 1 (Personal Trading):
  • Example 2 (Trading for Family Member Account):
  • Example 3 (Family Accounts as Equals):
  • Example 4 (Personal Trading and Disclosure):
  • Example 5 (Trading Prior to Report Dissemination):
• Standard VI(C) Referral Fees
  • Guidance
• Standard VI(C): Recommended Procedures
• Standard VI(C): Application of the Standard
  • Example 1 (Disclosure of Referral Arrangements and Outside Parties):
  • Example 2 (Disclosure of Interdepartmental Referral Arrangements):
  • Example 3 (Disclosure of Referral Arrangements and Informing Firm):
  • Example 4 (Disclosure of Referral Arrangements and Outside Organizations):
  • Example 5 (Disclosure of Referral Arrangements and Outside Parties):
• Standard VII: Responsibilities as a CFA Institute Member or CFA Candidate
  • Standard VII(A) Conduct as Participants in CFA Institute Programs
  • Guidance
• Standard VII(A): Application of the Standard
  • Example 1 (Sharing Exam Questions):
  • Example 2 (Bringing Written Material into Exam Room):
  • Example 3 (Writing after Exam Period End):
  • Example 4 (Sharing Exam Content):
  • Example 5 (Sharing Exam Content):
  • Example 6 (Sharing Exam Content):
  • Example 7 (Discussion of Exam Grading Guidelines and Results):
  • Example 8 (Compromising CFA Institute Integrity as a Volunteer):
  • Example 9 (Compromising CFA Institute Integrity as a Volunteer):
• Standard VII(B) Reference to CFA Institute, the CFA Designation, and the CFA Program
  • Guidance
• Standard VII(B): Recommended Procedures
• Standard VII(B): Application of the Standard
  • Example 1 (Passing Exams in Consecutive Years):
  • Example 2 (Right to Use CFA Designation):
  • Example 3 (“Retired” CFA Institute Membership Status):
  • Example 4 (Stating Facts about CFA Designation and Program):
  • Example 5 (Order of Professional and Academic Designations):
  • Example 6 (Use of Fictitious Name):