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Study Session 1: Code of Ethics and Standards of Professional Conduct

Level III Topics by CFAI Study Session

One of my favorite features of the new site is the ability to “tag” topics using one of the CFAI study sessions. For example, if you post a topic on ethics you can select Study Session 1: Code of Ethics and Standards of Professional Conduct so that your topic will show up in the filter for that study session. This will allow you and other members of AF to quickly access posts for a specific study session. To tag a new topic with a study session, simply choose that study session from the Filed Under categories above the Save button on the new forum topic page.

Number of questions in am

May I ask a stupid question? How many questions AM in total?

I am not sure that I missed the last question carelessly or notfrown


Q10 - CFAi Q Bank - record retention and knowledge of law

hi all

an Ethics question related to record retention: 

Bukenya then reviews Jacaranda’s record-keeping policy. Currently, the policy requires retention of hard copies of all supporting documentation for investment recommendations and decisions made during the last five years.

and here is an exurpt of the anwer: 

while the Standard (for rention time frame] recommends files be retained for a minimum of seven years, Jacaranda is still in compliance with the Standard in that it meets local requirements.

Ethics / GIPS Inconsistencies

I’ve been tripped up a few times with the inconsistencies between ethics and GIPS. Let’s get a thread going to capture these. 

Here’s two that come to mind:

Benchmarks in performance presentation:

  • Ethics: No requirement to provide the benchmark in performance presentation
  • GIPS: You are required to provide a description of the benchmark: must disclose if a custom or a combination of benchmarks was used. 

Terminated accounts:

CFAI 2019 PM Mock Question 2

The text says 1) local law is part of Europe regulation. 2) local law is embedded in the Singapore regulation.

Why does the firm need to comply with Europe regulation? 

How do you know whether the Europe regulation is stricter than Singapore regulation?

What to use to study Ethics

Don’t really feel like reading the 160 pages on guidance. Fortunately i have some options. Should I use;

Sue Kim Case Scenario

In the solution of Sue Kim Case Scenario question 39, it says Disclosure that fully explains the referral fee arrangement has not been properly provided, in violation of Standard VI(C)–Referral Fees. Akagi is required to disclose in writing, and prior to the execution of any agreement, referral fee agreements, including the nature and the value of the benefit.

However, Standard VI(C)–Referral Fees does not required to disclose in writing.

Ashraf Omar Case Scenario

One week prior to the IPO, Sahara’s board of directors approves and implements an employee share option plan (ESOP). Existing staff members are allocated 10% of the upcoming IPO at a 25% discount to the IPO price. Omar acquires his allocation with the intention of selling his shares at a profit after trading commences. The details of the ESOP are highlighted in the IPO prospectus.

Q. Does Omar’s participation in the ESOP most likely violate any of the Standards of Professional Conduct?

Ethics question

Super Performance recently hired Ron Anderson, CFA, who previously worked as an independent investment adviser. Anderson wants to keep his existing clients for himself, and has obtained written consent from Super Performance to do so.

For the above case, does Ron need to obtain written consent from his clients as well?

Sensitive ethics case

According to the Code & Standards, materials which were used for investment decision must be kept for 7 yrs in minimum if applicable laws and regulations do not exist. But, if I (my company) have an NDA with a disclosing party including a clause ”disposal of confidential information” saying receiving party (myself) must destroy such information upon the request from the disclosing party, which should I follow? CFA Code or the NDA? L3 ethics cases are complex and the Institute tests candidates by asking these type of ambiguity.