Media Contacts
Kathy Valentine
+1 (434) 951-5348
kathy.valentine@cfainstitute.org

Jessica Galehouse
+1 (434) 951-5376
jessica.galehouse@cfainstitute.org 

CFA Institute Centre for Financial Market Integrity Says Fair Value Being Used As a Scapegoat for Bad Decisions, Lack of Compliance

New York, March 17, 2008 − The CFA Institute Centre for Financial Market Integrity today reaffirmed its support for fair value as the most transparent measurement for investors to analyze financial statements. The CFA Institute Centre also said that fair value is being used as a scapegoat by corporations who have made poor decisions or were not in compliance with accounting standards.

“Putting the blame on fair value for current market conditions is misguided,” said Georgene Palacky, director of the CFA Institute Centre’s financial reporting group. “Fair value is the most transparent method of measuring financial instruments, such as derivatives, and is widely favored by investors. Recent finger pointing seems merely an attempt to shift the focus from the real causes of the financial crises involving sub-prime lending practices and lack of market discipline. Indeed, fair value accounting and disclosures, which provide investors with information about market conditions as well as forward-looking analyses, does not create losses but rather reflects a firm’s present condition.”

Palacky added that “we believe providing investors with full transparency is essential both for the global capital markets to weather today’s turmoil and to prevent future bubbles and their associated economic dislocations.  Also, the CFA Institute Centre does not agree with those who are calling for a watered down version of fair value.  This ‘shoot the messenger’ mentality will not restore investor confidence.  Rather, only when fair value is widely practiced will investors be able to accurately evaluate and price risk.”

In late 2007 the CFA Institute Centre released the final version of its global framework paper, A Comprehensive Business Reporting Model: Financial Reporting for Investors (CBRM), which provides further elaboration and in-depth recommendations for how financial data should be reported to investors. 

Ms. Palacky is available to the media to discuss the current credit environment and dispel any prevailing myths about fair value.

CFA Institute Centre for Financial Market Integrity
The CFA Institute Centre develops timely, practical solutions to global capital market issues. Established in 2004, the CFA Institute Centre builds upon the CFA Institute mission to lead the investment profession globally by setting the highest standards of ethics, education and professional excellence. It carries forward the organization’s 60-year history of standards and advocacy work, especially its Code of Ethics and Standards of Professional Conduct for the investment profession. More information may be found at www.cfainstitute.org/centre.

CFA Institute
CFA Institute is the global membership association that administers the Chartered Financial Analyst (CFA) and Certificate in Investment Performance Measurement (CIPM) curriculum and exam programs worldwide; publishes research; conducts professional development programs; and sets voluntary, ethics-based professional and performance-reporting standards for the investment industry. CFA Institute has more than 94,000 members, who include the world’s 81,000 CFA charterholders, in 131 countries and territories, as well as 135 affiliated professional societies in 56 countries and territories. More information may be found at www.cfainstitute.org. (Bloomberg users can find CFA Institute at 497458Z).