Page 11 - FINAL CFA II SLIDES JUNE 2019 DAY 1

LOS 1b: Explain the ethical responsibilities READINGS 1 AND 2: CFA INSTITUTE CODE OF ETHICS AND STANDARDS OF
required by the Code and Standards, including the PROFESSIONAL CONDUCT GUIDANCE FOR STANDARDS I–VII
sub-sections of each Standard.

III. DUTIES TO CLIENTS

A. Loyalty, Prudence, and Care: Must always act with reasonable care and exercise prudent judgment –for the
nd
rd
st
benefit of your clients; clients 1 , employer 2 , yourself 3 !
B. Fair Dealing (and objectively) with all clients.

C. Suitability (When in advisory relationship with a client or prospective client, you must):
a. Make a reasonable inquiry his/her’ investment experience, risk and return objectives, and financial constraints
1
before any recommendation (action); and you must reassess and update this regularly.
b. You must take client’s written objectives, mandates, and constraints before any advice;
c. Judge the suitability of investments in the context of the client’s total portfolio

If responsible for managing a portfolio to a specific mandate, strategy, or style, only make advice that is consistent
with the stated objectives and constraints of the portfolio.

D. Performance Presentation: You must make reasonable efforts to ensure that it is fair, accurate, and complete.

E. Preservation of Confidentiality: Unless:
1. 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.