Standard I(D) Misconduct

what is the core principle of Standard I(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.

standard I(A) vs I(D)

Standard I(A) focuses on obeying laws.
Standard I(D) focuses on ethical conduct and professional integrity.

What are the 8 main rules for Misconduct?

1. Avoid dishonest conduct: Do not engage in lying, cheating, stealing, fraud, or other behavior that reflects negatively on professional integrity.

2. Protect professional reputation: Avoid conduct that damages trustworthiness, competence, or the reputation of the investment profession.

3. Professional and personal conduct matter: Personal actions can violate the standard if they adversely affect professional responsibilities or reputation.

4. Maintain competence and diligence: Perform adequate due diligence and do not blindly rely on others for investment analysis or recommendations.

5. Avoid impairment of judgment: Activities (e.g., substance abuse during work hours) that reduce professional competence may violate the standard.

6. Fraudulent conduct is a violation: Even if an event itself (e.g., bankruptcy) is not unethical, fraudulent or deceitful behavior surrounding it may violate the standard.

7. Preserve client trust: Failure to exercise reasonable care and diligence can undermine trust and harm market integrity.

8. Do not misuse ethics procedures: The CFA Institute Professional Conduct Program should not be used to pursue personal, political, or unrelated disputes.

Recommended Procedures

1. Adopt a code of ethics: Require all employees to adhere to ethical standards and professional conduct.

2. Promote professional behavior: Make clear that conduct damaging to the individual, firm, or investment profession will not be tolerated.

3. Communicate violations and penalties: Provide employees with a list of prohibited behaviors and associated disciplinary actions.

4. Screen prospective employees: Check references and background information to identify prior ethical, legal, or professional misconduct.