Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
CFA Institute Code of Ethics and Standards of Professional Conduct
Daniela Llamas
Gillian Morrow
Antonio Alexander
Karsen Cambriello
MBAA-502-BX
Professor Petenkemani
November 9, 2021
1
At the inception of the CFA Institute in the 1960s, integrity and professional ethics
in the global investment industry was the focus. The CFA Institute Code of Ethics and
Standards of Professional Conduct served as a model for global investment
professionals upholding integrity in the workspace. Translated into 23 languages the
Code of Ethics and Standards of Professional Conduct The CFA institute believes that
“the investment industry should work for the ultimate benefit of society, and that cannot
be achieved without the highest possible standards and ethics” (Code of Ethics and
Standards of Professional Conduct 2014). Candidates and members are required to
uphold these standards at all times and violations will result in disciplinary sanctions.
Diversity and discrimination are major ethical issue being discussed in our society today,
by applying the CFA Institute’s Code of ethics and seven standards of professional
conduct to this issue there are considerable violations.
The CFA Institute Code of Ethics states that candidates and members must “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. . . Practice and
encourage others to practice in a professional and ethical manner that will reflect credit
on themselves and the profession and to maintain and improve their professional
competence and stove to maintain and improve the competence of other investment
professionals.” (Code of Ethics and Standards of Professional Conduct 2014). Applying
the code of ethics to the everyday workspace the CFA institute came up with seven
standards of professional conduct; professionalism, integrity of capital markets duties to
2
clients, duties to employers, investment analysis recommendations and actions, conflict
of interest, and responsibilities as a CFA institute member of CFA candidate.
The first standard of professional conduct is professionalism, and is divided into
four subsections. First, knowledge of the law, all members must understand and comply
with all laws, of any government or regulatory organization or professional association
governing their professional activities, including the CFA Institute Code of Ethics and
Standards of Professional conduct. “In the event of conflict, members and candidates
must comply with the more strict law, rule or regulation” (Code of Ethics and Standards
of Professional Conduct 2014 p.1). Second, independence and objectivity, members
and candidates must not offer, solicit or accept any gift, benefits or compensation that
could be expected to compromise their own independence and objectivity. Third
misrepresentation, members and candidates but not knowingly make any
misrepresentations relating to investment analysis or other professional activities. Lastly
misconduct, members and candidates must not engage in professional activities
involving dishonesty, fraud or deceit. Members and candidates must “place the integrity
of the investment profession and the interests of clients above their own personal
interests”(Code of Ethics and Standards of Professional Conduct 2014 p.1).
In the New York Times article by Daniel Victor titled When the Boss Wants You to
Do Something Unethical, Victor describes why unprofessional conduct in the workplace
still continues with higher management’s knowledge or not. Victor spoke with Bryan
Stikeleather, a professor at the University of South Carolina who has studied financial
incentives for whistle-blowing, and he said that “Any time the firm’s senior management
is financially benefiting from the misconduct, they may not want to know that it is
3
occurring” (Victor, 2017) Investment banks were found to be operating without
professionalism where they were not honoring their word to customers and
stakeholders, there was deception and violations. The investment banks were
knowingly providing clients ambiguous intentionally advice misleading their investment
recommendations. Former executive director of Goldman Sachs Gregg Smith described
the toxic environment at the company that led to a 550-million-dollar settlement for
defrauding customers and his ultimate resignation. In the New York Times published
article Why I am Leaving Goldmen Sachs Smith says
Today, if you make enough money for the firm, you will be promoted to a
position of influence. . . I attended derivatives sales meetings where not one
