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Study Session 1: Ethical and Professional Standards

For those who struggle with Ethics

Would it be helpful if there’s a video that walks you through actual ethics questions, going through the thought process and how to separate the right answer from those that only look like the right answer?

The #1 struggle I have heard in my 5 years here is inability to tell what’s a violation, what isn’t.

I mean, all of you can read through the text on your own, but so far no prep material has effectively put words to describe what’s goes on in your brain as you read through the question and answer choices.

Is this something people would pay for?

GIPS: Third-party Verifiers

1. Can more than one third-party-verifier verify the GIPS compliance of a firm or is only one verifier permissible for the entire firm?

2. If a GIPS-compliant firm owns <50% of a non-GIPS-compliant firm, does the non-GIPS-compliant firm’s financial statements have to be transformed into compliant data for the GIPS-compliant firm to claim compliance? (Assume this event is any time after 1 January, 2000)

Ethics final review

As a final review, would you reread the ethics handbook, or resolve the CFAI & Kaplan Qbanks, given that you already solved them twice before?

Ethics violation question - professionalism, diligence

 A central bank fines a commercial bank it supervises for not following statutory regulations regarding non-performing loan provisions on three large loans as a result of the bank’s loan provisioning policy. Louis Marie Buffet, CFA, sits on the Board of Directors of the commercial bank as a non-executive director, representing minority shareholders. He also chairs the internal audit committee of the bank that determines the loan provisioning policy of the bank.

Soft Commissions situation - need help

When it comes to brokerage, I understand that an advisor needs to direct that brokerage to the benefit of the client when best execution is not obtained. However, the CFAI books do not clarify, and seem to even somewhat dodge, the question “If a client is getting best execution already, but the advisor is still receiving soft dollars, do the soft dollars need to be used in the best interest of that specific client? Or can they be used for the benefit of a different client?”

Ethics: duty to employer

Hi there

Help me understand this.

I came across this question.

William Conrad, CFA is due to leave his current employment as a stockbroker in order to set up his own business. Whenever he talks to clients he signs off by telling them that he will shortly be leaving the firm, and that he will be unable to talk about his new venture until after his resignation becomes effective. Has William violated the Code and Standards?

The answer is

No, as he has done nothing to induce the clients

Curriculum - Standard II A examples 2 and 7

Looking at the outcome of example 2 under Standard IIA in the curriculum, should the outcome of example 7 not specify that Roger failed to prevent the transfer of material non-public information and hence is in violation of Standard IIA?

Ethics Audio Book


Can any one please guide if I can get the audio book version of the CFA Standards of Practice Handbook? Since anyways it is just textual I am thinking of using my commute time to listen to it so that I dont have to utilize my normal reading time.


Schweser ethics confusion

Hi, there is a question/solution in the Ethics section that has me confused. I thought the answer would surely be “Material Nonpublic Information,” but the solution says that it is “Loyalty.” The solution explanation says that he expresses his analysis on his blog before telling it to his employer, but the question content doesn’t make that clear, IMO.

Ethics question

I understand that the code requires that Charterholders  and candidates disclose whether or not they receive referral fees.  That being said, must specific amounts be disclosed?  Or is it sufficient to state that referral fees are received.  

In other words, which of the following would suffice?

1) I am paid referral fees by company A for each and every one of my clients that purchases a product from company A as a result of my referral.