Ethics and Standards - Introduction

Reference: Standards of Practice Handbook U. 10th ed.: CFA Institute, 2010.

The CFA Institute is organized primarily to promote higher standards to practitioners in the investment industry. By not simply meeting minimum legal requirements, the CFA Institute and its members aim to increase public confidence and acceptance of the investment profession. Although today's exam tests competence in many areas (including accounting, economics, quantitative methods, asset valuation, portfolio management and more), the core intent of the CFA Program and the CFA Institute is to promote the highest ethical standards among investment professionals.

Although only 15% of the exam focuses on ethics, this is single-handedly the most important topic on your upcoming exam. If your average score on other topics is close to the minimum passing score, your score on ethics-related questions is essential in determining whether you pass or fail.

The Code and Standards is designed to be relevant and constant over time; however, the CFA Institute periodically updates its principles to stay current with significant developments in investment management. The global financial crisis of 2008 triggered such a review. A new section entitled "Why Ethics Matters" was added to the 10th edition, which highlights that investment professionals need to be aware of how their actions impact the global economy and marketplace. Additionally, given the worldwide and diverse nature of today's CFA Institute membership, the language and examples in the Handbook were clarified and simplified to improve understanding for all.



Code of Ethics


Related Articles
  1. Career Education & Resources

    How Hard are the CFA Exams?

    Learn about the difficulty of the CFA exams with a description of the tests, some statistics on pass rates and suggestions that can help you pass the exams.
  2. Investing News

    The High Cost of North Carolina's anti-LGBT Law

    A controversial law in North Carolina that bans LGBT workplace rights has spurred protest from companies, musicians and artists. What is the financial toll?
  3. Retirement

    Merrill Edge vs. Edward Jones: Comparing Small Business 401(k) Providers

    Read about 401(k) plans for small businesses offered by two national providers, one delivering service online and the other through local financial advisors.
  4. Investing Basics

    Six Things Bad Financial Advisors Do

    So you've gone to the trouble and expense of hiring a financial advisor. Here's how to decide whether they're doing you right or wrong.
  5. Investing News

    Natixis Global Asset Management: Investment Manager Highlight (NTXFY)

    Read about the investment operations of Natixis Global Asset Management, a multiaffiliate manager with $870 billion in worldwide assets under management.
  6. Investing News

    Mesirow Financial: Investment Manager Highlight

    Read about the investment management operations of Mesirow Financial, an employee-owned financial services firm with $96.8 billion in assets under management.
  7. Investing News

    Henderson Global Investors: Investment Manager Highlight (HGG.L)

    Read about the global operations of Henderson Global Investors, a London-based asset manager with more than $136 billion in assets under management.
  8. Investing News

    Pictet Asset Management: Investment Manager Highlight

    Read about Pictet Asset Management, a privately held Swiss investment management company with more than $150 billion in assets under management.
  9. Investing News

    Affiliated Managers Group: Investment Manager Highlight (AMG)

    Read about the multiaffiliate business model employed by Affiliated Managers Group, a global investment manager with $611 billion in assets under management.
  10. Investing News

    Pioneer Investments: Investment Manager Highlight (UCG, SAN)

    Read about the business operations of Pioneer Investments, a global investment firm with more than $243 billion in assets under management.
RELATED TERMS
  1. Chartered Financial Analyst - CFA

    A professional designation given by the CFA Institute (formerly ...
  2. Ethical Investing

    Using one's ethical principles as the main filter for securities ...
  3. Social Responsibility

    The idea that a company should embrace its social responsibilities ...
  4. Social Impact Bond - SIB

    A contract with the public sector or governing authority, whereby ...
  5. Impact Investing

    Investing that aims to generate specific beneficial social or ...
  6. Socially Responsible Investment ...

    Socially responsible investing looks for investments that are ...
RELATED FAQS
  1. What are the differences between a Chartered Financial Analyst (CFA) and a Certified ...

    Understand the differences between a Chartered Financial Analyst and a Certified Financial Planner. Learn how each approaches ... Read Answer >>
  2. How do I become a Chartered Financial Analyst (CFA)?

    Understand what it means to hold the Chartered Financial Analyst designation. Learn how a candidate can work to become a ... Read Answer >>
  3. What types of positions might a Chartered Financial Analyst (CFA) hold?

    Understand what types of positions a Chartered Financial Analyst can hold. Learn what is available to those who have only ... Read Answer >>
  4. Who benefits the most from prepaid expenses?

    Learn who benefits most when expenses are prepaid. Individuals and businesses often make payments, such as rent or insurance, ... Read Answer >>
  5. If I am looking to get an Investment Banking job. What education do employers prefer? ...

    If you are looking specifically for an investment banking position, an MBA may be marginally preferable over the CFA. The ... Read Answer >>
  6. Can I still pass the CFA Level I if I do poorly in the ethics section?

    You may still pass the Chartered Financial Analysis (CFA) Level I even if you fare poorly in the ethics section, but don't ... Read Answer >>
Hot Definitions
  1. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  2. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  3. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  4. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  5. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  6. Economies Of Scale

    Economies of scale is the cost advantage that arises with increased output of a product. Economies of scale arise because ...
Trading Center