Ethics and Standards - Standard V-C: Record Retention

Members and Candidates must develop and maintain appropriate records to support their investment analysis, recommendations, actions and other investment-related communications with clients and prospective clients.

Reasoning behind Standard V-C
This Standard was created starting with the 9th edition, taking effect in 2006. Previously, recordkeeping was mentioned in the discussion on Reasonable Basis (Standard V-A), but it has now developed to the point where a separate Standard is being written in order to reinforce its importance. In developing appropriate relationships with clients, keeping records is an exercise in "covering your tail" by substantiating, via a formal and defined recordkeeping process, why all investment decisions were made and are being made.

Key Points to Remember about Standard V-C

  • Recordkeeping procedures are the responsibility of the firm, with the individual required to assist in retaining research notes or other documents. Specific responsibilities will vary based on the role of that individual in the investment decision-making process.
  • Records may be maintained either in hard copy or in electronic form.
  • CFA Institute recommends retaining records for seven (7) years, in the absence of any local guidance or regulation.
  • Records created as part of the Member or Candidate's professional activity are the property of the Firm, NOT the individual. Thus it is an ethical violation for a member to take such property with him/her to a new affiliation, without the express written consent of the firm.
Look Out!

The concept that records are the "property of the firm, not the individual" might be tested in the case of a quantitative model. In other words, can the developer take these records (how the model was developed) to a new affiliation? Keep in mind – it's the firm's model, not the individual's model. The developer would need to completely re-create his or her work at the new affiliation to avoid a violation.

Standard VI-A: Disclosure Of Conflicts
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