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Unformatted text preview: Ethical & Professional Standards CFA一级培训项目 讲师:陈佳怡 1-454 陈佳怡 工作职称:金程教育高级培训师、团中央青年创业就业导师 工作背景:培训行业以及金融实战经验丰富,先后供职于平安集团上海总 部;以及任职于某国内精品投行,担任行业分析师,主导并参与了将近20 起海内外(包括香港、内地)股权融资和兼并收购的财务顾问工作。 主要著作:《在互联网浪潮下的医疗器械行业的前景分析》 2-454 Topic Weightings in CFA Level I Session NO. Content Weightings Study Session 1 Ethical and Professional Standards 15 Study Session 2-3 Quantitative Methods 10 Study Session 4-5 Economics 10 Study Session 6-9 Financial Reporting and Analysis 15 Study Session 10-11 Corporate Finance 10 Study Session 12-13 Portfolio Management 6 Study Session 14-15 Equity 11 Study Session 16-17 Fixed Income 11 Study Session 18 Derivatives 6 Study Session 19 Alternative Investments 6 3-454 Framework SS1 Ethical and Professional Standards Ethical & Professional Standards • R1 Ethics and Trusts in the Investment Profession • R2 Code of Ethics and Standards of Professional Conduct • R3 Guidance for Standards IVII • R4-5 Global Investment Performance Standards (GIPS) 4-454 Reading 1 Ethics and Trust in the Investment Profession 5-454 Framework 1. Explain ethics and professionalism 2. Reasons for adopting ethics 3. Framework for ethical decision making 6-454 Ethics Definition: The guiding beliefs or ideals characterizing a society or societal group. The study of moral principles, which can be described as the study of good and bad behavior or the study of making good choices as opposed to bad choices. Moral principles or ethical principles are beliefs regarding what is good, acceptable, or obligatory behavior and what is bad, unacceptable, or forbidden behavior. 7-454 Ethical Conduct Definition: Behavior that follows moral principles and balances self-interest with both the direct and the indirect consequences of the behavior on others. Actions that are perceived as beneficial and conforming to the ethical expectations of society. E.G. Telling the truth about the risks or costs associated with a recommended investment Governments and related entities may establish laws and/or regulations to reflect widely shared beliefs about obligatory and forbidden conduct. Differences in laws may reflect differences in beliefs and values. In some countries, the law requires that an investment adviser act in the best interests of his or her clients. Other countries require that investment professionals recommend investments that are suitable for their clients. 8-454 Code of Ethics Definition: Specific communities or societal groups in which we live and work sometimes codify their beliefs about obligatory and forbidden conduct in a written set of principles, often called a code of ethics. Role: Adopt a code of ethics to communicate the organization’s values and overall expectations regarding member behavior Serves as a general guide for how community members should act The code states that members and candidates “place the integrity of the investment profession and the interests of clients above their own personal interests.” 9-454 Standards of Conduct Some communities will also expand on their codes of ethics and adopt explicit rules or standards that identify specific behaviors required of community members. Role: Serve as benchmarks for the minimally acceptable behavior of community members and can help clarify the code of ethics The standards of professional conduct outline minimally acceptable behaviors expected of all CFA institute members and candidates. 10-454 Standards of Conduct Example: Which of the following statements is most accurate? Standards of conduct: A. Are a necessary component of any code of ethics. B. Serve as a general guide regarding proper conduct by members of a group. C. Serve as benchmarks for the minimally acceptable behavior required of members of a group. Correct Answer : C Standards of conduct serve as benchmarks for the minimally acceptable behavior required of members of a group. Some organizations will adopt only a code of ethics, which communicates the organization’s values and overall expectations regarding member behavior. 11-454 Ethics and Professionalism A job is very simply the work someone does to earn a living. A vocation is a job or occupation to which someone is particularly well suited and is very dedicated. A profession is the ultimate evolution of an occupation, resulting from the efforts of members practicing the occupation at a high level and creating a set of ethics and standards of conduct for the entire group. Based on specialized knowledge and skills Based on service to others Practiced by members who share and agree to adhere to a common code of ethics 12-454 Ethics and Professionalism Customer vs. Client A customer purchases goods or services in a single transaction or series of transactions and pays for each transaction or series of transactions. The relationship between customer and professional is based on transactions. A client enters into an ongoing relationship with a professional, hiring the professional to use his or her special knowledge for the benefit of the client, usually for a fee. The relationship between client and professional is based on trust. In exchange for the agreed-on fee, the professional accepts the duty to place the client’s interests first at all times. 13-454 Ethics and Professionalism The code of ethics informs and provides some assurance to the public that the profession’s members will use their specialized skills and knowledge in service of others. Some codes will be enhanced and clarified by the adoption of standards of conduct or specific benchmarks of behavior required of members. Principle-based standards: based on the shared principles of honesty, integrity, transparency, diligence, and placing client interests first The CFA institute code and standards Rule-based standards: narrowly defined, applying to specific groups of individuals in specific circumstances 14-454 Challenges to Ethical Conduct People tend to believe that they are ethical people and that their ethical standards are higher than average. (Overconfidence) Overconfidence can lead to faulty decision making. In general, the overconfidence bias leads us to place too much importance on internal traits and intrinsic motivations. “I’m honest and would not lie” Decision makers often fail to recognize and/or significantly underestimate the effect of situational influences. 15-454 Situational Influences Definition: External factors, such as environmental or cultural elements, that shape our thinking, decision making, and behavior. Situational influences have a very powerful and often unrecognized effect on our thinking and behavior. Factors: Money Promotions Prestige Loyalty to employer and colleagues A strong compliance culture E.G. The bystander effect, the story of Enron corporation 16-454 Situational Influences Example: Which of the following statements is most accurate? A. Large financial rewards, such as bonuses, are the most powerful situational influences. B. When decision making focuses on short-term factors, the likelihood of ethical conduct increases. C. Situational influences can motivate individuals to act in their short-term self-interests without recognizing the long-term risks or consequences for themselves and others. 17-454 Situational Influences Correct Answer : C Situational influences can motivate individuals to act in their shortterm self-interests without recognizing the long-term risks or consequences for themselves and others. Large financial rewards are powerful situational influences, but in some situations, other situational influences, such as loyalty to colleagues, may be even more powerful. 18-454 The Importance of Ethical Conduct The investment industry serves society by matching those who supply capital, or money, with those who seek capital to finance, or fund, their activities. Borrowers : those who seek capital Investors : those who supply capital Investors and society benefit when capital flows to borrowers that can create the most value from the capital through their products and services. Capital flows more efficiently between investors and borrowers when financial market participants are confident that all parties will behave ethically. 19-454 The Importance of Trust Ethics always matter, but ethics are of particular importance in the investment industry because the investment industry and financial markets are built on trust. Trust is the very foundation of the financial markets. Reasons: The nature of the client relationship no trust, no business Differences in knowledge and access to information The nature of investment products and services intangible 20-454 Effects of Ethical and Unethical Behavior Effects of ethical behavior : Lead to broader participation in the markets Protection of clients’ interests More opportunities for investment professionals and their firms Lead to higher levels of success and profitability Enjoy lower relative costs Effects of unethical behavior : Erodes and can even destroy trust Diminished trust in financial markets can reduce growth in the investment industry and tarnish the reputation of firms and individuals in the industry, even if they did not participate in the unethical behavior. 21-454 Ethical vs. Legal Standards Laws and regulations often codify ethical actions that lead to better outcomes for society or specific groups of stakeholders. Compliance with the rule reduces the risk that clients will invest in securities without understanding the risks involved, which, in turn, reduces the risk that clients will file complaints and/or take legal action if their investments decline in value. Complying with the rules also reduces the risk that regulators will initiate an investigation, file charges, or/and discipline or sanction you and/or your employer. Although laws frequently codify ethical actions, legal and ethical conduct are not always the same. Many types of conduct are both legal and ethical, but some conduct may be one and not the other. Trading while in possession of material nonpublic information; “whistleblowing” 22-454 Ethical vs. Legal Standards The law is not always the best mechanism to reduce unethical behavior. Laws typically follow market practices. Regulators’ responses typically take significant time, during which the problematic practice may continue or even grow. A new law may be vague, conflicting, and/or too narrow in scope. Laws vary across countries or jurisdictions, allowing questionable practices to move to places that lack laws relevant to the questionable practice. Laws are also subject to interpretation and compliance by market participants, who may choose to interpret the law in the most advantageous way possible or delay compliance until a later date. 23-454 Ethical vs. Legal Standards Ethical conduct goes beyond what is legally required and encompasses what different societal groups or communities, including professional associations, consider to be ethically correct behavior. Ethics requires judgment—the ability to make considered decisions and reach sensible conclusions. 24-454 Ethical vs. Legal Standards Example: Which of the following statements is most accurate? A. Increased regulations are the most useful means to reduce unethical behavior by market participants. B. Regulators quickly design and implement laws and regulations to address practices that adversely affect the fairness and efficiency of markets. C. New laws designed to reduce or eliminate conduct that adversely affects the markets can create opportunities for different, but similarly problematic, conduct. Correct Answer : C New laws designed to reduce or eliminate conduct that adversely affects the markets can create opportunities for different, but similarly problematic, conduct. 25-454 Ethical Decision-Making Frameworks One strategy to increase trust in the investment industry is to increase the ability and motivation of market participants to act ethically and help them minimize the likelihood of unethical actions. The ability to relate an ethical decision-making framework to a firm’s or profession’s code of ethics allows investment professionals to bring the principles of the code of ethics to life. Development, maintenance, and demonstration of a strong culture of integrity within the firm by senior management may be the single most important factor in promoting ethical behavior among the firm’s employees. 26-454 Ethical Decision-Making Frameworks Adopting a code that clearly lays out the ethical principles that guide the thought processes and conduct the firm expects from its employees is a critical first step. We need to exercise ethical decision-making skills to develop the muscle memory necessary for fundamentally ethical people to make good decisions despite the reality of conflicts and our natural instinct for self-preservation. Establishing an ethical framework to guide your internal thought process regarding how to act is a crucial step to engaging in ethical conduct. 27-454 Ethical Decision-Making Frameworks An ethical decision-making framework will Help professionals to determine the best course of action to fulfill their responsibilities in an ethical manner. Help a decision maker see the situation from multiple perspectives and pay attention to aspects of the situation that may be less evident with a short-term, self-focused perspective. Facilitate the decision-making process for all decisions. 28-454 Ethical Decision-Making Frameworks Ethical Decision-Making Framework 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? 29-454 Reading 2 Code of Ethics and Standards of Professional Conduct 30-454 Framework 1. Proceedings 2. The Panel 3. Comparisons of AMC and Code and Standards 4. Ethics & Professional Standards 31-454 Proceedings Primary Principles: fairness of the process to members and candidates confidentiality of the proceedings. The CFA Institute Board of Governors maintains oversight and responsibility for the Professional Conduct Program (PCP). PCP and Disciplinary Review Committee (DRC) are responsible for enforcement of the Code and Standards. Professional Conduct inquiries come from a number of sources. Self-disclosure on annual Professional Conduct Statements of involvement in civil litigation or a criminal investigation, or that the member or candidate is the subject of a written complaint. Written complaints about professional conduct received by the Professional Conduct staff. Evidence of misconduct by a member or candidate that the Professional Conduct staff received through public sources, such as a media article or broadcast. A report by a CFA exam proctor of a possible violation during the examination. 32-454 Proceedings Once an inquiry is initiated, Professional Conduct staff may requests (in writing) an explanation from the subject member or candidate and may: interview the subject member or candidate interview the complainant or other third parties collect documents and records relevant to the investigation The Designated Officer may decide: Designated Officer that no disciplinary sanctions are appropriate finds a violation to issue a cautionary letter to discipline the member or candidate Proposes a disciplinary sanction Member or Candidate Accept Reject Referred to a panel composed of DRC members 33-454 The Panel If the member or candidate does not accept the charges and proposed sanction, the matter is referred to a panel composed of DRC (Discipline Review Committee) members. Panels review materials and presentations from Professional Conduct staff and from the member or candidate. The panel's task is to determine whether a violation of the Code and Standards or testing policies occurred and, if so, what sanction should be imposed. Sanctions imposed by CFA Institute may have significant consequences; they include public censure, suspension of membership and use of the CFA designation, and revocation of the CFA charter. Candidates enrolled in the CFA Program who have violated the Code and Standards or testing policies may be suspended or prohibited from further participation in the CFA Program. 34-454 Comparisons of AMC and Code and Standards AMC The Asset Manager Code of Professional Conduct (AMC), which is designed, in part, to help asset managers comply with the regulations mandating codes of ethics for investment advisers. AMC was drafted specifically for firms. Code and Standards Aimed at individual investment professionals who are members of CFA Institute or candidates in the CFA Program. 35-454 Ethics & Professional Standards Members of CFA Institute (“Members and Candidates”) 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. • Place the integrity of the investment profession and the interests of clients above their own personal interests. • Use reasonable care and exercise independent professional judgment when conducting investment analysis, making investment recommendations, taking investment actions, and engaging in other professional activities. • Practice and encourage others to practice in a professional and ethical manner that will reflect credit on themselves and the profession. • Promote the integrity and viability of the global capital markets for the ultimate benefit of society. • Maintain and improve their professional competence and strive to maintain and improve the competence of other investment professionals. 36-454 Proceedings Which of the following is not one of the two primary principles of the CFA Institute Rules of Procedure for Proceedings Related to Professional Conduct? A. Confidentiality of proceedings B. Public disclosure of disciplinary sanctions C. Fair process to the member and candidate Correct Answer: B B is correct because the two principles of the Rules of Procedure for Proceedings Related to Professional Conduct are confidentiality of proceedings and fair process to the member and candidate. 37-454 Reading 3 Guidance for Standards I–VII 38-454 Framework 1. Professionalism 2. Integrity of Capital Markets 3. Duty To Clients 4. Duty To Employers 5. Investment 6. Conflicts of Interest 7. Responsibility as Members P.S.: Cases in this reading are quoted from <Standards of practice handbook> 2015 Eleventh edition. 39-454 Guidance for Standards I-VII Professionalism Integrity of Capital Markets Duty To Clients Standards Duty To Employers Investment Conflicts of Interest Responsibility as Members Knowledge of the law; Independence and objectivity; Misrepresentation; Misconduct Material nonpublic information; Market manipulation Loyalty, prudence and care; Fair dealing; Suitability; Performance presentation Preservation of confidentiality Loyalty; Additional compensation arrangements; Responsibility of supervisors Diligence and reasonable basis; Communication with clients; Record retention Disclosure of conflicts; Priority of transaction; Referral fees Conduct as members and candidates; Reference to CFA institute, designation 40-454 Guidance for Standards I-VII Professionalism Integrity of Capital Markets Duty To Clients Standards Duty To Employers Investment Conflicts of Interest Responsibility as Members Knowledge of the law; Independence and objectivity; Misrepresentation; Misconduct Material nonpublic information; Market manipulation Loyalty, prudence and care; Fair dealing; Suitability; Performance presentation Preservation of confidentiality Loyalty; Additional compensation arrangements; Responsibility of supervisors Diligence and reasonable basis; Communication with clients; Record retention Disclosure of conflicts; Priority of transaction; Referral fees Conduct as memb...
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  • Fall '19
  • Test, The Land, professional conduct, supervisor, CFA Institute, Chartered Financial Analyst

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