CFA Institute has published new guidance on the expected conduct of members related to what constitutes professional activities under the Code of Ethics and Standards of Professional Conduct, and actions considered harassment.
The CFA Institute Code of Ethics and Standards of Professional Conduct (Code and Standards) establish the ethical and professional expectations for CFA Institute members. Periodically, CFA Institute publishes guidance and examples developed by the Standards of Practice Council (SPC), which is the committee of volunteers tasked with maintaining the Code and Standards and its related guidance, that reinforce that expected conduct.
Recognizing Professional Activities
The CFA Institute Code of Ethics highlights the importance of acting with integrity and respect within the global capital markets. But people may try to separate their conduct decisions between what is related to their personal activities and those related to work activities. This new guidance discusses how the applicability of the Code and Standards to a person’s work-related (or professional) activities may be broader than initially considered.
Members often engage in investment-related activities that go beyond simply being in the office or meeting with clients. For example, they may participate as speakers at industry conferences and/or serve on investment committees of outside foundations. As CFA charterholders, they may also be active in a CFA® Society attending events or helping organize events. These are some examples of where adhering to the Code and Standards would continue to be expected of members. The new guidance provides an aid to better understand the potential scope of what may be classified as professional activities related to the investment industry.
As a professional membership association, CFA Institute does not intend to monitor the activities of all aspects of a member’s or candidate’s life. A determination of whether an action or incident is related to an individual's professional activities will be dependent on the facts and circumstances of the situation. Any reported violation of the Code and Standards will be judged individually in determining whether a Professional Conduct investigation and disciplinary action is warranted.
Actions of Harassment
Standard I(D) Misconduct requires members to avoid conduct that reflects adversely on their professional reputation and integrity. Harassing others conflicts with the requirements of this Standards. To clearly call out such conduct as violations, the SPC added Example 8 (sexual in nature) and Example 9 (non-sexual in nature) to provide guidance for these types of situations.
Actions considered to be harassing in nature are often perceived to be between members of opposite genders. The new examples address this misconception, as misconduct may occur between individuals of the same gender. It is the impact of the action on the recipient that leads the actions into being considered inappropriate.
Other Guidance and Examples
CFA Institute has also added updates to other topics and encourages members to review them:
- Importance of committing to one’s professional competence: Ethics and the Investment Industry Update.
- Permissibility, but not the requirement, to incorporate environmental, social, and governance factors into one’s investment strategy: Standard III(C) Suitability Update.
- Permissibility of sharing limited information with approved agencies to support vulnerable investors and clients: Standard III(E) Confidentiality Update.
Future Areas for Updates
The SPC’s goal is to continually provide members with relevant and applicable guidance for meeting the ethical and professionalism expectations of the Code and Standards. Toward that end, the SPC currently has a consultation open related to potential ethical issues from the growing use of artificial intelligence tools in the industry.
About the Author(s)
Mr. Doggett is a director of professional standards for CFA Institute. His responsibilities include providing member guidance in applying the ethics and standards of practice policies, supporting related educational and public awareness activities, and working with the Standards of Practice Council of CFA Institute on its initiatives. Previously, Mr. Doggett, as a member of the CFA Institute Financial Reporting Policy Group, represented membership interests regarding reporting and disclosures initiatives, including XBRL.
Prior to joining CFA Institute, Mr. Doggett worked in the financial information sector with SNL Financial. There his work focused on the real estate and energy industries, directing the development and maintenance of a financial data storage system. Mr. Doggett regularly provided insights to the media on events and performance of the Real Estate Investment Trust industry.
Mr. Doggett holds a BA in economics from the University of Virginia. He was awarded the CFA designation in 2006 and is a member of CFA Virginia.