Module 3 · Ethics & Professional Standards

Guidance for Standards I–VII

EN: Detailed guidance and recommended procedures for each Standard.
VN: Hướng dẫn chi tiết và quy trình khuyến nghị cho từng Standard.

I. Professionalism

I(A) Knowledge of Law Comply with all applicable laws/regs. If conflict, follow stricter. Dissociate from violations.
I(B) Independence & Objectivity Use reasonable care; don't accept gifts that could compromise objectivity. Modest customary gifts OK.
I(C) Misrepresentation No false statements about credentials, services, performance.
I(D) Misconduct No dishonesty, fraud, deceit; conduct affecting professional reputation prohibited.

II. Integrity of Capital Markets

II(A) MNPI Material nonpublic info — must not act/cause others to act. Mosaic theory: combining public + non-material non-public is OK.
II(B) Market Manipulation No artificial price inflation, false trading impressions, or transaction-based manipulation.

III. Duties to Clients

III(A) Loyalty/Prudence/Care Act for client benefit. Soft dollars must benefit client.
III(B) Fair Dealing All clients treated fairly when distributing recommendations / executing trades.
III(C) Suitability Investment appropriate for client's situation/IPS.
III(D) Performance Presentation Fair, accurate, complete; consider GIPS.
III(E) Confidentiality Don't disclose client info except for legal/Standard requirements.

IV. Duties to Employers

IV(A) Loyalty No actions harmful to employer; no taking files/data when leaving.
IV(B) Additional Compensation Written disclosure and consent from employer for arrangements.
IV(C) Supervisor Responsibilities Adequate supervision; failure can violate.

V. Investment Analysis, Recommendations, and Actions

V(A) Diligence Reasonable basis supported by research.
V(B) Communication Distinguish facts from opinions; communicate basic process and risks.
V(C) Record Retention Retain records supporting analysis (typically 7 years).

VI. Conflicts of Interest

VI(A) Disclosure Full and fair disclosure of any conflict.
VI(B) Priority of Transactions Client → Employer → Personal (in that order).
VI(C) Referral Fees Disclose any compensation for referrals.

VII. Responsibilities as CFA Member/Candidate

VII(A) Conduct Don't compromise integrity of CFA Institute / programs / exams.
VII(B) CFA Designation Use correctly; don't exaggerate. "I am a CFA charterholder" or "John Doe, CFA". NOT "CFA®" as a noun.

Practice problem Practice

Practice problem

An analyst hears at a conference: 'Tech firm Z is about to announce a major acquisition next week.' She trades on this. Violation?

Show solution

Information is material (acquisition would move stock).

Information is nonpublic (next week's announcement, not yet released).

Trading on MNPI = Standard II(A) violation, regardless of source.

Yes — Standard II(A) Material Nonpublic Information violation.