7 Standards of Professional Conduct: CFA L1

The following is a list of the Standard of Professional Conduct. Candidates should on purpose of the standard, application of the standard, and proper procedures of compliance for each standard:

I. Professionalism
II. Integrity of Capital Markets
III. Duties to Clients and Prospective Clients
IV. Duties to Employers
V. Investment Analysis, Recommendations, and Action
VI. Conflicts of Interest
VII. Responsibilities as a CFA Institute Member or CFA Candidate

I. PROFESSIONALISM

A. Knowledge of the Law

Members and Candidates must understand and comply with all applicable
laws, rules, and regulations (including the CFA Institute Code of
Ethics and Standards of Professional Conduct) of any government, regulatory
organization, licensing agency, or professional association governing
their professional activities. In the event of conflict, Members and
Candidates must comply with the more strict law, rule, or regulation.
Members and Candidates must not knowingly participate or assist in and
must dissociate from any violation of such laws, rules, or regulations.

B. Independence and Objectivity

Members and Candidates must use reasonable care and judgment to achieve
and maintain independence and objectivity in their professional activities.
Members and Candidates must not offer, solicit, or accept any gift, benefit,
compensation, or consideration that reasonably could be expected to compromise
their own or another’s independence and objectivity.

C. Misrepresentation

Members and Candidates must not knowingly make any misrepresentations
relating to investment analysis, recommendations, actions, or other
professional activities.

D. Misconduct

Members and Candidates must not engage in any professional conduct
involving dishonesty, fraud, or deceit or commit any act that reflects
adversely on their professional reputation, integrity, or competence.

II. INTEGRITY OF CAPITAL MARKETS

A. Material Nonpublic Information

Members and Candidates who possess material nonpublic information
that could affect the value of an investment must not act or cause others
to act on the information.

B. 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.

III. DUTIES TO CLIENTS

A. 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.

B. 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.

C. Suitability

1. 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.
   b. 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.
   c. Judge the suitability
   
2.  When Members and Candidates are responsible for managing a
   portfolio to a specific mandate, strategy, or style, they must make
   only investment recommendations or take only investment actions
   that are consistent with the stated objectives and constraints of the
   portfolio.
   
   

D. Performance Presentation

When communicating investment performance information, Members
and Candidates must make reasonable efforts to ensure that it is fair,
accurate, and complete.

E. Preservation of Confidentiality

Members and Candidates must keep information about current, former,
and prospective clients confidential unless:
1. The information concerns illegal activities on the part of the client or
prospective client,

2. Disclosure is required by law, or

3. The client or prospective client permits disclosure of the information.

IV. DUTIES TO EMPLOYERS

A. Loyalty
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.

B. 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 interest unless they
obtain written consent from all parties involved.

C. Responsibilities of Supervisors
Members and Candidates must make reasonable efforts to ensure that
anyone subject to their supervision or authority complies with applicable
laws, rules, regulations, and the Code and Standards.

V. INVESTMENT ANALYSIS, RECOMMENDATIONS, AND ACTIONS

A. Diligence and Reasonable Basis
Members and Candidates must:

1. Exercise diligence, independence, and thoroughness in analyzing
investments, making investment recommendations, and taking
investment actions.

2. Have a reasonable and adequate basis, supported by appropriate
research and investigation, for any investment analysis, recommendation,
or action.

B. Communication with Clients and Prospective Clients
Members and Candidates must:

1. Disclose to clients and prospective clients the basic format and
general principles of the investment processes they use to analyze investments, select securities, and construct portfolios and must
promptly disclose any changes that might materially affect those
processes.

2. Disclose to clients and prospective clients significant limitations and
risks associated with the investment process.

3. Use reasonable judgment in identifying which factors are important
to their investment analyses, recommendations, or actions and
include those factors in communications with clients and prospective
clients.

4. Distinguish between fact and opinion in the presentation of investment
analysis and recommendations.

C. Record Retention

Members and Candidates must develop and maintain appropriate records
to support their investment analyses, recommendations, actions, and other
investment-related communications with clients and prospective clients.

VI. CONFLICTS OF INTEREST

A. Disclosure of Conflicts
Members and Candidates must make full and fair disclosure of all matters
that could reasonably be expected to impair their independence and
objectivity or interfere with respective duties to their clients, prospective
clients, and employer. Members and Candidates must ensure that such
disclosures are prominent, are delivered in plain language, and communicate
the relevant information effectively.

B. Priority of Transactions
Investment transactions for clients and employers must have priority
over investment transactions in which a Member or Candidate is the beneficial
owner.

C. Referral Fees
Members and Candidates must disclose to their employer, clients, and
prospective clients, as appropriate, any compensation, consideration, or
benefit received from or paid to others for the recommendation of products
or services.

VII. RESPONSIBILITIES AS A CFA INSTITUTE MEMBER OR CFA CANDIDATE

A. Conduct as Participants in CFA Institute Programs

Members and Candidates must not engage in any conduct that compromises
the reputation or integrity of CFA Institute or the CFA designation
or the integrity, validity, or security of CFA Institute programs.

B. Reference to CFA Institute, the CFA Designation, and the CFA Program

When referring to CFA Institute, CFA Institute membership, the CFA
designation, or candidacy in the CFA Program, Members and Candidates
must not misrepresent or exaggerate the meaning or implications of
membership in CFA Institute, holding the CFA designation, or candidacy
in the CFA Program.