CFA Level 1 - Ethics

The Standard of Professional Conduct

I. Professionalism

II. Integrity of Capital Markets

III. Duties to Clients

IV. Duties to Employers

V. Investment Analysis, Recommendations and Actions

VI. Conflicts of Interest

VII. Responsibilities as a CFA Inst. Mem. or CFA Cand.

I. Professionalism

A. Knowledge of the Law

B. Independence and Objectivity

C. Misrepresentation

D. Misconduct

II. Integrity of Capital Markets

A. Material Nonpublic Information

B. Market Manipulation

III. Duties to Clients

A. Loyalty, Prudence and Care

B. Fair Dealing

C. Suitability

D. Performance Presentation

E. Preservation of Confidentiality

IV. Duties to Employers

A. Loyalty

B. Additional Compensation Agreements

C. Responsibilities of Supervisors

V. Investment Analysis, Recommendations and Actions

A. Diligence and Reasonable Basis

B. Communication with Clients and Prospective Clients

C. Record Retention

VI. Conflicts of Interest

A. Disclosure Conflicts

B. Priority of Transactions

C. Referral Fees

VII. Responsibilities as a CFA Institute Member or CFA Candidate

A. Conduct as Mem. and Cand. in the CFA Program

B. Reference to CFA Inst., the CFA Desig. and CFA Program

I.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 not knowingly participate or assist in and must disassociate from any violation of such laws, rules, or regulations.

I.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.

I.C. Misrepresentation

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

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.

II.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.

II.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.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.

III.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.

III.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 of investments in the context of the client's total portfolio.

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

III.D. Performance Presentation

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

III.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 this information.

IV.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.

IV.B. Additional Compensation Agreements

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.

IV.C. Responsibilities of Supervisors

Members and Candidates must make reasonable efforts to detect and prevent violations of applicable laws, rules, regulations, and the Code and Standards by anyone subject to their supervision or authority.

V.A. Diligence and Reasonable Basis

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.

V.B. Communication with Clients and Prospective Clients

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

2. 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.

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

V.C. Record Retention

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

VI.A. Disclosure 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.

VI.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.

VI.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.A. Conduct as Member and Candidate in the CFA Program

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 the CFA examinations.

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