CFA Notes - Ethics II

Note

I. Investment Analysis, Recommendations and Actions

（1）Diligence and Reasonable Basis

Members and Candidates must：
1. Exercise diligence, independnce and thoroughness in analyzing investments, making investment recommendations and taking investment actions；
2. Having a reasonable and adequate basis, supported by appropriate research and investigation, for any investment analysis, recommendation, or action

（2）Communication with Clients and Prospective Clients

Members and Candidates must：
1. Disclose to clients and prospective clients the basic format and general principles of the investment processes they used to analyze investments, select securities, and construct portfolios and must promptly disclose any changes that might materially affect those processes；
2. Disclose to clients and prospective clients significant limitations and risks associated with the investment process；
3. Use reasonable judgment in identifying which factors are important to their investment analysis, recommendations, or actions and include those factors in communications with clients and prospective clients；
4. Distinguish between fact and opinion in the presentation of investment analyses and recommendations.

（3）Record Retention

Members and Candidates must develop and maintain appropriate records to support their investment analyses, recommendationsm, actions, and other investment related communications with clients and prospective clients.

i. Example

1. Personal notes from meetings with covered company；
2. Computer-based model output and analyses；
3. Nots from clients meetings to review IPS；
4. Outside research reports

II. Conflicts of Interest

（1）Disclosure of Conflicts

Members and Candidates must make full and fair disclosure of all matters that could reasonably be expected to impair their independence and objectivity or interfere with respective duites to their clients, prospective clients, and employer. Members and Candidates must ensure that such disclosures are prominent, are delivered in plain language, and communicate the relevant information effectively.

（2）Priority of Transcations

Investment transactions for clients and employers must have priority over investment transcations in which a Member or Candidate is the beneficial owner.
"Personal transcations" include those made for a member/ candidate's own account, for immediate family accounts（直系亲属账户）, and for accounts in which member/ candidate has a direct/ indirect interest（e.g., trust, retirement account）.

（3）Referral Fees

Members and Candidates must disclose to their employer, clients, and prospective clients, as appropriate, any compensation, consideration, or benefit received from or paid to others for the recommendation of products or services.

III. Responsibilities As a CFA Institute Member or CFA Candidate

（1）Conduct Participants in CFA Institute Programs

Members and Candidates must not engage in any conduct that compromises the reputation or integrity of CFA Institute or the CFA designation or the integrity, validity, or security of CFA Institute programs.

Integrity, validity, or security includes：
1. Providing confidential program or exam inforamtion to candidates or the public；
2. The Standard does not cover expressing opinions regarding CFA Institute, the CFA Program, or other CFA programs.

（2）Reference to CFA Institute, the CFA Designation, and the CFA Program

When referring to CFA Institute, CFA Institute membership, the CFA designation, or candidacy in the CFA Program, Members and Candidates must not misrepresent or exaggerate the meaning or implications of membership in CFA Institute, holding the CFA designation, or candidacy in the CFA Program.

i. Candidate

1. Application for registration in CFA has been accepted and the person is enrolled to sit for exam；
2. The registered person has sat for examination but exam results have yet been received

ii. Member

1. Pass Level I of CFA exam；
2. $48$ months professional work experience；
3. Pay annual dues

iii. Charterholder

1. 4 years of qualified investment work experience；
2. Pass the CFA Program exams for level I, II and III.

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