Guidance for Standard I: Professionalism

Standard I sets the baseline for professional behaviour: obey the law and the Standards, keep judgment independent, tell the truth, behave with integrity and be competent for the job. At Level III these duties are tested through the decisions of portfolio managers, consultants and chief investment officers who work across jurisdictions and face pressure from brokers, issuers, colleagues and clients. This module shows how to apply each part of Standard I and which firm procedures prevent violations.

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What you will learn

1. Apply Standard I(A) Knowledge of the Law across jurisdictions, following the stricter of applicable law and the Code and Standards, and dissociate from violations.

Comply with every law, rule and regulation that governs the professional activity, plus the Code and Standards.
When the Standards and applicable law differ, follow the stricter of the two.
Never knowingly participate in or assist a violation; continuing a task after learning of a violation can count as participation.
Dissociate: escalate in writing, refuse to take part, remove your name, ask for reassignment and, as a last resort, resign.
The Standards do not require reporting to regulators or to CFA Institute, but local law may, and reporting is encouraged.

2. Judge whether gifts, compensation, travel and pressure from issuers, brokers, colleagues or clients compromise independence and objectivity, and recommend safeguards.

Test: could the benefit reasonably be expected to compromise independence or objectivity? Proof of influence is not needed.
Benefits from those seeking future business are more dangerous than thanks from clients for past service.
Issuer-paid research needs a flat, pre-agreed fee unrelated to conclusions, with clear disclosure.
Pay your own travel where commercial transport exists; decline luxury extras.
Firms need gift limits, pre-approval, registers, independent analyst pay and an escalation route.

3. Identify misrepresentation, misconduct and competence failures, and recommend procedures that prevent them.

Misrepresentation includes omissions and misleading statements, not only outright falsehoods.
Never guarantee uncertain returns; stating the terms of a genuinely guaranteed product is acceptable.
ESG, net-zero and AI labels must match the actual investment process.
Misconduct covers dishonesty, fraud and deceit and conduct reflecting on professional integrity, not private life in general.
Standard I(E) requires competence suited to the role; build it or bring it in before taking on a new asset class.

Module at a glance

I(A): comply with every applicable law and the Standards; when they differ, follow the stricter.
Never knowingly assist a violation; escalate in writing, then dissociate, resigning as a last resort.
I(B): refuse benefits that could reasonably be expected to compromise objectivity; giver, purpose and value decide.
Issuer-paid research needs a flat, pre-agreed, disclosed fee; pay your own travel where you can.
I(C): misrepresentation includes omissions, guarantees of uncertain returns, unsupported ESG or AI labels and plagiarism.
I(D): dishonesty, fraud and deceit are misconduct; private matters are not, unless they reflect on professional integrity.
I(E): act with and maintain the competence your role requires, especially before launching new strategies.

This free module has 3 lessons, 14 practice questions with full explanations.

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