CFA Level I, Ethi­cal and Pro­fes­sio­nal Stan­dards, Stan­dard VII – Respon­si­bi­li­ties as a CFA Insti­tu­te Mem­ber or CFA Candidate

(A)

Mem­bers and Can­di­da­tes must not enga­ge in any con­duct that com­pro­mi­ses the repu­ta­ti­on or inte­gri­ty of CFA Insti­tu­te or the CFA desi­gna­ti­on or the inte­gri­ty, vali­di­ty, or secu­ri­ty of CFA Insti­tu­te programs.“

The pur­po­se of such stan­dards is to hold mem­bers and can­di­da­tes accoun­ta­ble to a high ethi­cal cri­ter­ion while they are invol­ved in CFA Insti­tu­te Pro­grams. So that the CFA tit­le and insti­tu­te can main­tain the public’s con­fi­dence that the CFA char­ter shows a high degree of achie­ve­ment and ethi­cal con­duct. Stan­dard VII (A) dis­cus­ses: Expres­sing an Opi­ni­on, Addi­tio­nal exam restric­tions, and pro­tec­ting the program’s con­tent and exami­na­ti­on pro­cess, or as we were all told in school – No chea­ting or pas­sing notes!

Befo­re you jump to the con­clu­si­on that the “Expres­sing an Opi­ni­on” sec­tion is going to lead to a Geor­ge Orwel­li­an dys­to­pia whe­re the CFA is an aut­ho­ri­ta­ri­an dic­ta­tor, let me assu­re you that it is only in regards to the exami­na­ti­on – and is in fact qui­te the oppo­si­te of aut­ho­ri­ta­ri­an. It expli­ci­tly sta­tes that the stan­dard does not cover expres­sing an opi­ni­on, and one is free to express dis­agree­ment with the CFA Insti­tu­te on its poli­ci­es or pro­ce­du­res, just don’t talk about the exam con­tent. Viva la Free Speech!

(B)

When refer­ring to CFA Insti­tu­te, CFA Insti­tu­te mem­bers­hip, the CFA desi­gna­ti­on, or can­di­da­cy in the CFA pro­gram, Mem­bers and Can­di­da­te must not mis­re­pre­sent or exa­g­ge­ra­te the mea­ning or impli­ca­ti­ons of mem­bers­hip in CFA insti­tu­te, hol­ding the CFA desi­gna­ti­on, or can­di­da­cy in the CFA program.”

The idea behind this stan­dard is to avoiding peop­le exa­g­ge­ra­ting the mea­ning or impli­ca­ti­ons of being a CFA mem­ber, can­di­da­te or hol­ding the desi­gna­ti­on. As this can be used in a man­ner to over empha­si­ses an individual’s abi­li­ties or for mar­ke­ting and adver­ti­se­ment pur­po­ses. This sec­tion of the stan­dards covers what it means to be a CFA mem­ber, using the CFA desi­gna­ti­on, how to cor­rect­ly refer to can­di­da­tes in the CFA pro­gram and the pro­per usa­ge of the CFA marks.

In this post we will go through some examp­le sce­n­a­ri­os that cover some of the ethi­cal princi­ples men­tio­ned in Stan­dard VII (A) + (B), fol­lo­wed by a rele­vant discussion.

Tom is taking the CFA Level II exam in his Ame­ri­can home city and is very ner­vous. His ent­i­re fami­ly is obses­sed about being char­ter hol­ders, so it makes him ner­vous as he desper­ate­ly wants to suc­ceed and sees the CFA exam as a form of vali­da­ti­on from his fami­ly. Tom’s father, a soft drink re-sel­ler is the pro­gram chair for the CFA Insti­tu­te socie­ty in their home city, and has orga­nis­ed for his cli­ents to pro­vi­de the refresh­ments to the can­di­da­tes. While Tom’s sis­ter Anne is also a char­ter­hol­der and is par­ti­ci­pa­ting in gra­ding the exam, howe­ver she is living in Aus­tra­lia. On the morning of the exam Anne calls Tom to wish him luck, due to the time dif­fe­rence Annie has alrea­dy hel­ped in gra­ding the exams and during their small chat she men­ti­ons that “I had to cor­rect so many deri­va­ti­ve rela­ted ques­ti­ons, they made up more than half of the exam!” Tom is more worried now as last night when he should have been revi­sing the con­tent on deri­va­ti­ves he ins­tead cho­se to humo­rous­ly tor­tu­re the fami­ly cat with a laser-poin­ter. After the pho­ne call he quick­ly re-reads the cru­cial infor­ma­ti­on on deri­va­ti­ves. After the exam is over he is gree­ted by his par­ents at their home whe­re they have pre­pa­red a small par­ty for him. Tom’s mum has got­ten exci­ted at the pro­spect of having two char­ter­hol­ders in the fami­ly so as a moti­va­ti­on for Tom, she has crea­ted busi­ness cards which read “Tom Thomp­son C.F.A., Level II” fol­lo­wed by the fami­ly com­pa­ny name and the CFA logo. Tom thanks his par­ents´ sup­port and sleeps easier knowing that he has ear­ned their love, this time.”

Dis­cus­sion:

In this examp­le the­re are many vio­la­ti­ons of the Code of Stan­dards. First­ly as Tom’s father is using his posi­ti­on as the pro­gram chair for the CFA Insti­tu­te socie­ty to pro­mo­te his own cli­ents rela­te to this pri­va­te busi­ness. He has com­pro­mi­sed the repu­ta­ti­on and inte­gri­ty of the CFA Insti­tu­te and vio­la­ted Stan­dard VII (A) by using his vol­un­teer posi­ti­on to bene­fit hims­elf and his cli­ents. Anne, Tom’s sis­ter also vio­la­ted Stan­dard VII (A) by reve­aling por­ti­ons of the Can­di­da­te Body of Know­ledge (CBOK) to Tom. Tom then vio­la­ted the same stan­dard by quick­ly revi­sing his know­ledge of Deri­va­ti­ves, giving hims­elf an unfair advan­ta­ge and com­pro­mi­sing the vali­di­ty of his exam. Tom’s actions also are in direct con­tra­dic­tion with the Can­di­da­tes Pledge.

If Tom had cho­sen to use the busi­ness cards his mother gifted him he would be brea­king more codes of Stan­dard VII (B). First­ly by sta­ting on the card that he is “level II” imply­ing on his busi­ness card that the­re is a desi­gna­ti­on tit­led “CFA Level II”. Can­di­da­tes may not imply that the­re are par­ti­al desi­gna­ti­on of the CFA after com­ple­ting the respec­ti­ve level’s exam, to which Tom not had not even recei­ved his results which per­tain to whe­ther he pas­sed or not. One may howe­ver, dis­play that they are par­ti­ci­pa­ting in the pro­gram and show what level they have com­ple­ted. Having writ­ten C.F.A. With peri­ods is also incor­rect, as accord­ing to the cor­rect and incor­rect use of the Char­te­red Finan­cial Ana­lyst and CFA Marks, “CFA” must inclu­de no peri­ods and always be capi­ta­li­zed. And final­ly the CFA logo is a cer­ti­fi­ca­ti­on mark for indi­vi­du­al use, and must not be in clo­se pro­xi­mi­ty to a brand or com­pa­ny name as it may give the impres­si­on that the CFA Insti­tu­te cer­ti­fies the company. 

As you can see, one see­min­gly nor­mal day in Tom’s life could have been a dis­as­ter from the point of view of fol­lowing the ethi­cal Code of Stan­dards of the CFA Insti­tu­te. Lam­bert Edu­ca­ti­on offers a wide ran­ge of con­tent that can help you pre­pa­re for their CFA® exam and achie­ve their best result. The­re are various small details that need to be con­si­de­red if you wish to get the hig­hest marks you can in the exam. Tri­cky ethi­cal ques­ti­ons can appe­ar in the next exam but with the help of Lam­bert Edu­ca­ti­on you can be pre­pa­red, just remem­ber not to tell anyo­ne about them or you’ll vio­la­te the standards!

The most important points of Ethi­cal and Pro­fes­sio­nal Stan­dards, Respon­si­bi­li­ties as a CFA Insti­tu­te Mem­ber or CFA can­di­da­te in this post can be sum­ma­ri­sed in this Mind­Map:

Did you find the Mind­Map hel­pful? All Lam­bert Edu­ca­ti­on Mind­Maps for CFA Level 1 and Level 2 can be purcha­sed in the online shop at https://daniel-lambert.de/produkt-kategorie/chartered-financial-analyst/

1 responses on "CFA Level I, Ethical and Professional Standards, Standard VII – Responsibilities as a CFA Institute Member or CFA Candidate"

  1. hel­lo that pst so interesting

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