Professional Documents
Culture Documents
SPC
• Professionalism
• A. Knowledge of the Law
o Exam tests on conflicts. What happens when there are conflicts?
• Must comply with more strict law(could be in a different country)
• Even if permissible under Codes and Standards
o CANNOT participate in any violation and must disassociate from any such
violation, including leaving the employer if necessary
• Always escalate to compliance dept or supervisor
o Code and Standards vs. Local Law
o –Know and comply with the laws, regulations in countries that
business is conducted
o –Adhere to the most strict rules
o •Participation or Association with Violations
o –Disassociate or separate from any illegal or unethical activity
o –Approach supervision or compliance department
o Recommended Procedures
• Maintain current materials
• Keep up with changes in applicable laws, rules, and regulations
• Seek advice of counsel or compliance department when in doubt
• Should document any violation when disassociating from
prohibited activities
B.Independence and Objectivity
• Interpret these guidelines very broadly
• Distinguish between gifts that are designed to influence your
decision vs gifts from clients rewarding your performance or
regular business entertainment gifts
• Shares in oversubscribed IPO NOT allowed
• Disclose gifts to employer in any case
• Limit gifts – token items only
• Firms should have formal written policies on Independence and
Objectivity of research
1C. Misrepresentation
o Must not make any misrepresentations relating to investment
analysis, recommendations, actions, or other professional activities
o Misrepresentation includes guaranteeing investment performance
and plagiarism
o •In particular, plagiarism should be broadly defined
o Recommended Procedures
• Maintain records of all materials used to generate reports or
products and cite sources
• Obtain a written list of the firm’s available services and a
description of the firm’s qualifications
1D. Misconduct
o The "mother rule" - anything that would embarrass your mother
o Typically will involve violations of other standards.
o Personal activities are ok as long as they do not involve dishonesty,
fraud or misrepresentation
o Recommended Procedures
• Develop and adopt a code of ethics and make clear that
unethical behavior will not be tolerated
• •Give employees a list of potential violations and sanctions,
including dismissal
• •Check references of potential employees
IIIC Suitability
• When in an advisory relationship with a client:
• Make inquiry into a client’s financial situation and reassess and
update this information regularly
• Determine that an investment is suitable to the client’s financial
situation
• Judge the suitability of investments in the context of the client’s
total portfolio
• If managing a portfolio to a specific mandate or strategy or style,
investment recommendations must be consistent with stated
objectives
• Recommended Procedures
• Put the client needs and circumstances and the client’s
investment objectives into a written IPS
• Consider the type of client and whether there are separate
beneficiaries, investor objectives, investor constraints
• Review investor’s objectives and constraints periodically to
reflect any changes in client circumstances
• Periodically means at least annually
VC - Record Retention
• Develop and maintain appropriate records to support investment
analysis, recommendations, and actions, and other investment-
related communications with clients and prospective clients
• Maintain research records supporting the reasons for investment
conclusions and actions
• Records are property of the firm
• If no other regulatory standards are in place, CFA Institute
recommends at least 7-year holding period