The Standards of Practice Handbook was first published in 1982. The 9^th edition, released in 2005, contains a number of changes to the Code and Standards that came into effect on January, 2006. You must use the 9th edition to properly prepare for the ethics portion of the exam. Each of the changes to the 9^th edition of the Code and Standards are indicated, both to show how ethical standards are continually evolving and to help prepare candidates who may have used the 8th edition for past exams. Keep in mind that as of January 2006, exams no longer test candidates on previous Standards, only the Standards as they are presented in this most recent revision.

The CFA Institute has published their entire Standards of Practice Handbook, 9^th Edition as of PDF online for free. We strongly recommend savings and/or printing the handbook as a source of study for your exam as it contains examples that are quite similar to the types of questions that will appear on your exam.

Organization of this Section
Each Standard is used as the heading for a section that covers that Standard in detail and presents examples that will help make the intent of each Standard clearer. Some Standards are very clear and straightforward; other Standards are quite complicated and open to interpretation. Certain Standards that we believe are more likely to be emphasized on the exam are highlighted so candidates can focus additional attention on them while studying.


A: Code of Ethics 

The Six Components to the Code of Ethics
Members of the CFA Institute (including Chartered Financial Analyst [CFA] charterholders) and candidates for the CFA designation ("Members and Candidates") must:

1. Act with integrity, competence, diligence, respect, and in an ethical manner with the public, clients, prospective clients, employers, employees, colleagues in the investment profession, and other participants in the global capital markets.
   
2. Place the integrity of the investment profession and the interests of clients above their own personal interests.
   
3. Use reasonable care and exercise independent professional judgment when conducting investment analysis, making investment recommendations, taking investment actions, and engaging in other professional activities.
   
4. Practice and encourage others to practice in a professional and ethical manner that will reflect credit on themselves and the profession.
   
5. Promote the integrity of, and uphold the rules governing, capital markets.

Maintain and improve their professional competence and strive to maintain and improve the competence of other investment professionals.

Look Out! In the 8th edition of the Standards of Practice Handbook (which was published in 1999), the Code and Standards used either the Association for Investment Management and Research (AIMR), or CFA Institute, when referring to the governing body for the CFA Program. The name CFA Institute was adopted in 2004.

Reasoning Behind the Code of Ethics
The Code of Ethics lays out a series of guidelines that serves as the basis for creating the more specific Standards of Professional Conduct. The Code of Ethics is analogous to a company's mission statement, or the preamble to the Constitution. The 149 words comprising the Code are intended to be broad, sweeping and general and to reflect what CFA charterholders believe defines them.

The CFA examination will likely devote a couple of questions to testing whether a candidate has taken the time to memorize these six components. Therefore, ensure you memorize all six components!

Here is an easy way to glue these concepts to your memory: PEJMAR

• Priority - Your interests always come second to your clients.
• Encourage - Practice and encourage others to act professionally and ethically to reflect credit on yourself and the profession.
• Judgment - use reasonable care and judgment when performing all professional activities.
• Maintain - keep your knowledge up to date and encourage other professionals to do the same.
• Actions - employ integrity, competence, diligence, and respect in an ethical manner with everyone.
• Rules - promote the integrity of capital markets by following the rules.