Code of Ethics and Standards of Professional Conduct

Every CFA Institute member and CFA Program candidate agrees to follow one Code of Ethics and seven Standards of Professional Conduct, and the profession backs that promise with its own disciplinary process. This module maps the framework: what the six Code principles ask of you, how the Professional Conduct Program investigates and sanctions misconduct, which obligations apply to members and candidates, and how the seven Standards and their sub-sections are organised, including the changes that took effect in 2024. The seven modules that follow examine each Standard in depth.

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What you will learn

1. Describe the structure of the CFA Institute Code of Ethics and Standards of Professional Conduct and explain the six principles of the Code in plain terms.

The Code has six broad principles; the Standards set out seven groups of specific, enforceable duties.
Clients' interests and the integrity of the profession come before personal interests.
Reasonable care and independent professional judgment apply to all professional activities.
Members and candidates should promote the integrity of capital markets for the benefit of society.
Members and candidates must maintain their own competence and help others improve theirs.

2. Describe the CFA Institute Professional Conduct Program, including how matters come to its attention, how they are investigated and the sanctions that can be imposed.

Matters arise from self-disclosure, written complaints, public sources such as regulatory actions, and exam monitoring.
After investigating, staff may take no action, issue a cautionary letter or propose a sanction.
A member or candidate may reject a proposed sanction and have a hearing panel of the Disciplinary Review Committee decide.
Member sanctions range from private reprimand and censure to suspension and revocation of the charter.
Candidate sanctions include suspension or prohibition from the CFA Program and voided exam results.

3. Explain the obligations the Code and Standards impose on members and candidates, including annual disclosure, the treatment of conflicting laws and employer policies, and the encouragement to report violations.

The Code and Standards bind all CFA Institute members and CFA Program candidates in all professional activities.
Members file an annual Professional Conduct Statement disclosing litigation, investigations and complaints related to professional conduct.
When local law and the Code and Standards differ, follow the stricter requirement; employer policies cannot lower the Standards.
Reporting other members' violations to CFA Institute is encouraged but not required by the Standards.
Members must not knowingly participate in violations and must dissociate from them.

4. Identify the seven Standards of Professional Conduct and their sub-sections, and summarise the changes that took effect on 1 January 2024.

Standard I has five sub-sections (A-E); III has five (A-E); II has two; IV, V and VI have three each; VII has two.
New in 2024: Standard I(E) Competence makes competence an enforceable duty, scaled to the role.
Revised in 2024: Standard V(B) requires disclosure of the nature of services and their costs to the client.
Revised in 2024: Standard VI(A) is now Avoid or Disclose Conflicts; avoidance is preferred, disclosure where avoidance is not reasonable.
Disclosures of conflicts must be prominent, in plain language and effective.

Module at a glance

The Code's six principles set the spirit; the seven Standards set enforceable minimum duties.
Clients and the integrity of the profession come before personal interests.
The Professional Conduct Program investigates, then closes, cautions or proposes a sanction; hearing panels decide contested cases.
Sanctions range from reprimand and censure to suspension and revocation, or suspension and prohibition for candidates.
Members file an annual Professional Conduct Statement; the stricter of law, firm policy and the Standards applies.
Reporting others' violations to CFA Institute is encouraged, not required.
2024 changes: new I(E) Competence, costs and services in V(B), Avoid or Disclose Conflicts in VI(A).

This free module has 4 lessons, 13 practice questions with full explanations.

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