Module 5 · Ethics & Professional Standards

Ethics Application

EN: Common exam scenarios mapped to Standards. Ethics is 15-20% of the exam — read scenarios carefully.
VN: Tình huống thường gặp trong đề thi và Standard tương ứng.

Common Scenarios & Likely Standard Violated Concept

About: Map exam scenarios → likely Standard violated. Watch for MNPI, front-running, undisclosed conflicts, performance puffery, designation misuse.Tóm tắt: Tình huống thường gặp ↔ Standard vi phạm. Cẩn thận MNPI, front-running, conflict, puffery, misuse.

Insider info Trading on info from a friend at the company → II(A) MNPI.
Pumping a stock on TV → II(B) Market Manipulation.
Lavish gift from broker Could compromise objectivity → I(B). Modest, customary OK.
Front-running Personal trade ahead of client trade → III(A) Loyalty/Prudence + VI(B) Priority.
"Best ever" return claim → I(C) Misrepresentation; III(D) Performance Presentation.
Side business without disclosure → IV(A) Loyalty to Employer.
Issuing report w/o adequate research → V(A) Diligence.
Failing to disclose referral arrangement → VI(C) Referral Fees.
Using "CFA®" as a noun → VII(B). Correct: "John Doe, CFA" or "I am a CFA charterholder".
Disclosing exam questions → VII(A) Conduct as Member/Candidate.

Test-Taking Tips Concept

About: Pick MOST direct violation. Disclosure often resolves conflicts. Distinguish 'must' from 'should'. Read scenarios carefully — verb tense matters.Tóm tắt: Chọn vi phạm trực tiếp nhất. Disclosure thường giải quyết. 'Must' vs 'should' khác nhau.

Most likely violated Some answers may seem partially correct — pick the MOST direct violation.
Disclosure resolves Many conflicts are acceptable IF disclosed and consent obtained.
Best practice ≠ violation Distinguish required (must) from recommended (should).
Read carefully "What did Smith do wrong?" vs "Was Smith's action a violation?" require different analysis.
"Dissociate" When facing a violation by colleague/firm, dissociate (refuse to be linked) — not necessarily resign immediately.

Practice problem Practice

Practice problem

An analyst attends a private dinner where a CEO mentions, in confidence, that the company's quarterly earnings beat will be 30% — a major surprise. What should the analyst do?

Show solution

Information is material (large earnings surprise) and nonpublic.

Trading on it or sharing with clients = Standard II(A) violation.

Encourage CEO to disclose publicly; if not, do not act on the information.

Do not trade and do not share. Encourage public disclosure; document the encounter.