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CIPMReviewCourse
Reading:Ethics
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CIPMEthics=CFAEthics
CodeofEthics:Guidingprinciples
StandardsofProfessionalConduct:Rulesbased,
actionableitems.
Readtheentiredocument.
Remember:Justbecausesomethingislegal,
doesntmeanitsethical.
Readalltheexamples;dolotsofpractice
problems
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GeneralGuidelines
Correctcourseofactionisalwaysbasedonthefacts
andcircumstancesofeachcase.
QuestionswilllikelynotrequirerecitationoftheCode
andStandards,orspecificnumberingofaStandard.It
willallberecitingofconcepts,orapplication.
Likelyanswerscouldbe:
A)Theperson/eventisnotinviolationoftheStandards.
B)Theperson/eventviolatedStandardI.A.KnowledgeoftheLaw.
C)Theperson/eventviolatedStandardII.B.FairDealing.
Selectingappropriatecourseofaction,givenasituation.
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EthicalRulesofThumb
Theleastrigidandmostrigidcourseofactionis
oftennotthebest.
Disclosesituation/discusswithoffendingparty.
Reporttosupervisor.
Consultlegalcounsel.
Refuseopportunityorcompensation.
Dissociatefromactivity.
Quitjob.
Reporttoregulators.
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CodeofEthics
Actwithintegrity,competence,diligence,respect,andinan
ethicalmannerwiththepublic,clients,prospectiveclients,
employers,employees,colleaguesintheinvestment
profession,andotherparticipantsintheglobalcapital
markets.
Placetheintegrityoftheinvestmentprofessionandthe
interestsofclientsabovetheirownpersonalinterests.
Usereasonablecareandexerciseindependentprofessional
judgmentwhenconductinginvestmentanalysis,making
investmentrecommendations,takinginvestmentactions,
andengaginginotherprofessionalactivities.
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CodeofEthics(cont)
Practiceandencourageotherstopracticeina
professionalandethicalmannerthatwillreflect
creditonthemselvesandtheprofession.
Promotetheintegrityofandupholdtherules
governingcapitalmarkets.
Maintainandimprovetheirprofessional
competenceandstrivetomaintainandimprove
thecompetenceofotherinvestment
professionals.
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StandardsofProfessionalConduct
I. Professionalism
A. KnowledgeoftheLaw:Knowwhetherlocallawor
ethicalobligationstrumpindifferentsituations.
B. IndependenceandObjectivity:Determinewhether
compensationjeopardizesindependence.
C. Misrepresentation:Dontoverstateyourability,the
CIPMcertificate,orperformance.
D. Misconduct:Mostthingsthatreflectpoorlyonyour
charactercouldalsogetyoutroublewiththeCFA
Institute,evenifitislegal.
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StandardsofProfessionalConduct
II. IntegrityofCapitalMarkets
A. MaterialNonpublicInformation:Dontuseit,or
causeotherstouseit.
Knowwhatisdefinedasmaterialandnonpublic.
Mosaictheoryisanexception
B. MarketManipulation:Playthegamefairly.
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StandardsofProfessionalConduct
III. DutytoClients
A. Loyalty,Prudence,Care:Identifyclient,considerclient(proxiesandsoft
dollars).
Note:Everyonenowhasafiduciaryduty.
B. FairDealing:Dontdisadvantagecertainclientsoverothers,butsome
preferencescanbeofferedanddisclosedaway.
C. Suitability:Eveniftimeisoftheessence,youstillhavetocheckfor
suitability/approvalfirst!
D. PerformancePresentation:Fair,accurate,andcomplete.
E. PreservationofConfidentiality:Evenforfamilymembers.Exceptionsare:
1. Illegalactivity
2. Disclosurerequiredbylaw(subpoena)
3. Clientapprovesthedisclosure
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StandardsofProfessionalConduct
IV. DutytoEmployers
A. Loyalty:Yourworkproductbelongstothefirm.
Regardingsolicitationofclients/colleagues:
Eitheryourewithus,oryoureagainstus!
B. AdditionalCompensationArrangements:
Cantcreateaconflictofinterest,andmusthavewritten
approvalfromall partiesinvolved.
C. ResponsibilitiesofSupervisors:Youareresponsiblefor
everyoneunderneathyou.
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StandardsofProfessionalConduct
V. InvestmentAnalysis,Recommendation,and
Action
A. DiligentandReasonableBasis:Again,dontrush.Do
yourhomework.
B. CommunicationwithClientsandProspects:
Think:Informedconsent.
DistinguishFactvs.Opinion.
C. RecordRetention:Supportyourinvestmentprocess
anddecisions.
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StandardsofProfessionalConduct
VI. ConflictsofInterest
A. DisclosureofConflicts:Transparency.
Shouldbeprominent,inplainEnglish
B. PriorityofTransactions:Nofrontrunning,even
ifitworksoutintheclientsfavor.
C. ReferralFees:Disclosuretoallrelevantparties.
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StandardsofProfessionalConduct
VII. ResponsibilityofCIPMMembersand
Candidates
A. Conduct:Again,personalbehaviormayreflect
poorlyontheCFAInstituteand/orthe
designation.
B. References:Dontmisrepresentorexaggerate
themeaningorimplicationsoftheorganization
ordesignation.
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