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2021 Curriculum CFA Program Level III Ethical and Professional Standards

Application of the Code and Standards: Level III

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Introduction

The purpose of this reading is to provide examples of how the CFA Institute Code of Ethics and Standards of Professional Conduct (Code and Standards) can be applied in situations requiring professional and ethical judgment. Exhibit 1 presents a useful framework to help navigate the ethical decision-making process and apply the Code and Standards. The framework’s components do not need to be addressed in the sequence shown, but a review of the outcome should conclude the process. This review provides insights for improved decision making in the future.


Exhibit 1. A Framework for Ethical Decision Making

  • Identify: Relevant facts, stakeholders and duties owed, ethical principles, conflicts of interest

  • Consider: Situational influences, additional guidance, alternative actions

  • Decide and act

  • Reflect: Was the outcome as anticipated? Why or why not?


These cases involve individuals in private wealth and institutional asset management settings and discussion as to whether actions, taken or not taken, are in violation of the Code and Standards. As you work through these cases, think about how applying the ethical decision-making framework might have changed the decisions and actions of those in the scenarios. Referencing the Code and Standards will help in identifying applicable ethical principles upon which sound decisions and appropriate behavior can be based. The reading concludes with practice problems in item-set format.

 

Learning Outcomes

The member should be able to:

  1. evaluate practices, policies, and conduct relative to the CFA Institute Code of Ethics and Standards of Professional Conduct;

  2. explain how the practices, policies, or conduct does or does not violate the CFA Institute Code of Ethics and Standards of Professional Conduct.