Study Notes of
Standards and Practice Handbook
0. Code of Ethics
·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.
·U reasonable care and exerci independent professional judgment when conducting investment analysis, making
investment recommendations, taking investment actions and
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engaging in other professional conducts.
·Practice and encourage others to practice in a professional and ethical manner that will reflect credit on themlves and the
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·Promote the integrity of, and uphold the rules governing, capital markets.
·Maintain and improve their professional competence and strive to maintain and improve the competence of other investment
professionals.
I.Professionalism
A. Knowledge of law
B. Independent and Objectivity
C. Misprentation
D. Misconduct
Offer gift/benefit/compensation etc. to compromi independence is violation.
C&S (Codes and Standards) do not require reporting to the government regulatory organizations for violations or CFAI for potential violations (but it’s encouraged).
Advices from legal counl do not absolve M&C (Members and Candidates) from requirement to comply.
Best ways: report to supervisor (first time), dissociate (if necessary later).
Company paid trip should be strictly for business.
Modest gifts/entertainment is OK, but should be careful. Gift from customer is OK, but all accepted need to be disclod.
Working with IBD is appropriate only when conflicts are adequately and effectively managed and disclod.
No corporate issuer should reimbur M&C for air transportation.
Frequent meeting should be paid attention to.
Non-flat fee related to curity performance should not be accepted.
Factual Information from recognized and statistical reporting rvices need not be cited.
Knowingly means either knows or should have known.
Chartroom is also included in communication related to Misreprentation.
If performance guarantee is built in to the structure of the product itlf or institution’s agreement to cover loss, M&C can tell customers.
Author and publisher should both be mentioned.
Must not misreprent abilities.
Oral communications should also avoid plagiarism.
Misreprent by unintentionally error is not a violation, but should be corrected and related parties should be informed once found.
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Source of plain-language s should also be acknowledged.
Risk relaying on cond-hand information should be avoided-best way: obtain a copy from original source.
Misconduct is related to M&C’s professional life, mostly related to dishonesty.
Personal beliefs usually do not cau a violation.
Any words like luxury high-level, etc from company should be a violation.
Reporting can be treated as dissociation.
Both offer and solicit benefit is a violation.
嘴角有痣好不好Oral communication can also violate plagiarism.
Flight and hotel paid by covering company is acceptable.
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II.Integrity of capital markets
A. Material nonpublic information
B. Market manipulation
Material non-public information: change in auditor certification or no longer qualified; government reports of economic trends (before published).
Less reliable & more ambiguous, less material,
Not necessary to wait for the slowest method to delivery information.
Aware of information lectively disclod.
Briefing or conference call / disclo to only analyst cannot be called public.
打工还是创业Guidance or interpretation of public information may be material & non-public.
Mosaic theory: should save and document the rearch.
Report of famous analyst (may influence the market) is a kind of material non-public before published.
“Looking over firewall” need approval.
Sometimes prohibition to avoid using material non-public can tell out, at this time, take only the contra side of unsolicited customer trades.
Fail to prevent transfer and misu of material non-public is a violation.
If the impact of an information is unknown (such as the direction of price change cannot be predicted), it is not considered material.
Unreliable information could not be considered.
Market manipulation: Prices & Volume; Transaction bad & Information bad.
Transaction bad: manipulate the curity itlf; manipulate an instrument to control derivatives.
Trading for tax purpo is not prohibited, such as lling and immediately buying back.
Using inaccurate/misleading information may cau market manipulating.
The best action when heard material nonpublic information is to promote public disclosure.
Legal disputes and government economic trends report can be material nonpublic before disclod.
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The departure of the fund manager is not material.
If a client who has material nonpublic information makes an trade order bad on that, M&C should decline.
