Page 44 - FINAL CFA II SLIDES JUNE 2019 DAY 1

MODULE 2.10: STANDARD VII READINGS 1 AND 2: CFA INSTITUTE CODE OF ETHICS AND STANDARDS OF
PROFESSIONAL CONDUCT GUIDANCE FOR STANDARDS I–VII
VII(B) Reference to CFA Institute,
the CFA Designation, and the CFA Program.

Guidance: You must not make promotional promises or guarantees tied to the CFA designation. Do not:
• Over-promise individual competence.
• Over-promise investment results in the future (i.e., higher performance, less risk, etc.).

CFA Institute Membership: You must satisfy these requirements to maintain membership:
• Sign PCS annually.
• Pay CFA Institute membership dues annually (If they fail to do this, they are no longer active members).

Using the CFA Designation: Do not misrepresent or exaggerate the meaning of the designation. Use of the CFA designation by a charterholder is
subject to terms of the annual Professional Conduct Statement Agreement.
1
Referencing Candidacy in the CFA Program: There is no partial designation. It is acceptable to state that a candidate successfully completed the
program in three years, if in fact he did, but claiming superior ability because of this is not permitted.

Recommended Procedures for Compliance

Make sure that members’ and candidates’ firms are aware of the proper references to a member’s CFA designation or candidacy, as this is a
common error.

Application of Standard VII(B) Reference to CFA Institute, the CFA Designation, and the CFA Program

Vignette 1: An advertisement for AZ Investment Advisors states that all the firm’s principals are CFA charterholders and all passed the three
examinations on their first attempt. The advertisement prominently links this fact to the notion that AZ’s mutual funds have achieved superior
performance.

Analysis:
• AZ may state that all principals passed the three examinations on the first try as long as this statement is true and is not linked to performance or
does not imply superior ability.
• Implying that (1) CFA charterholders achieve better investment results and (2) those who pass the exams on the first try may be more successful
than those who do not violates Standard VII(B).
MODULE QUIZ 2.10 Review examples 2-5