Our decision and behavior can harm or benefit a variety of stakeholders.
Examples of stakeholders: colleagues, clients, employers, the communities in which we live and work, the investment profession, and other financial market participants.
Ethics encompasses a set of moral principles and rules of conduct that provide guidance for our behavior.
Code of ethics: beliefs about obligatory and forbidden conduct in a written set of principles.总纲领
Standards of conduct: benchmarks for the minimally acceptable behavior of community members and can help clarify the code of ethics.具体细则
Ethics and professionalism
A profession is an occupational community that has specific education, expert knowledge, and a framework of practice and behavior that underpins community trust, respect, and recognition.
How professions establish trust?
Professions normalize practitioner behavior.
Professions provide a service to society.
Professions are client focused.
Professions have high entry standards.
Professions possess a body of expert knowledge.
Professions encourage and facilitate continuing education.
Professions monitor professional conduct.
Professions are collegial.
Professions are recognized oversight bodies.
Professions encourage the engagement of members.
Professionalism in investment management
Trust is especially important in the investment industry for several reasons
the nature of the client relationship
specialized knowledge and access to information
the nature of investment products and services
Ethical behavior builds and fosters trust.
Ethical behavior by all market participants can lead to:
broader participation in the markets.
protection of clients' interests.
more opportunities for investment professionals and their firms.
CFA Institute as an investment management professional body
CFA Institute is the largest body for investment management professionals.
The mission of CFA Institute is "to lead the investment profession globally, by promoting the highest standards of ethics, education, and professional excellence for the ultimate benefit of society.'
Challenges to ethical conduct
Overconfidence bias高估自己的品质和道德水准
Definition: people tend to believe that they are ethical people and that their ethical standards are higher than average.
Situational influences低估外部环境带来的影响
Definition: external factors (environmental or cultural elements), that shape our thinking and behavior.
Examples: the bystander effect, large financial rewards and prestige, loyalty, promotions
We tend to focus on short-term interests and ignore the longer-term risks, thus the likelihood of suffering ethical lapses and making poor decisions increases.
Ethical vs legal standards
Ethical vs. Legal standards
Legal and ethical conduct are NOT always the same.
Ethical vs. Legal standards
The law is not always the best mechanism to reduce unethical behavior:
laws typically follow market practices.滞后性
a new law may reduce existing activity while simultaneously creating a different but problematic activity.带来新问题
laws vary across countries or jurisdictions.不同国家不同
laws are also subject to interpretation and compliance by market participants.不同的解释
Ethical conduct goes beyond legal standards.
Ethical decision-making frameworks
Identify: relevant facts, stakeholders and duties owed, ethical principles, conflicts of interest.
Reflect: was the outcome as anticipated? why or why not?
Code of Ethics and Standards of Professional
Enforcement of the Code and Standards
Enforcement of The Code and Standards
Structure of the professional conduct program The CFA Institute Board of Governors(CFA协会治理委员会) maintains oversight and responsibility for the Professional Conduct Program(PCP, 职业行为计划).
The Disciplinary Review Committee(纪律审查委员会) is responsible for enforcement of the Code and Standards.推进落实PCP，确保Code and Standards的事实
The DRC is a volunteer committee of CFA charterholders
Professional Conduct Staff(职业行为调查工作人员)conducts professional conduct inquiries under the direction of the CFA Institute Designated Officer(CFA协会指定官员).
Circumstances that can prompt an inquiry启动调查的动因
Self disclosure by members and candidates on the annual Professional Conduct Statement(PCS, 职业行为陈述表).自我披露
Written complaints received by Professional Conduct Staff.他人举报
Evidence of questionable conduct through public source.媒体舆论揭露
A violation report by a CFA examination proctor for breaching the examination rules监考人员举报
Analysis of scores and exam materials after the exam, and monitor social media to detect disclosure of confidential exam information.
Investigation results调查结果的处理
No discipline sanction没有处分
Issue a cautionary letter警告信
A disciplinary sanction纪律处罚
Public censure唯一公开的
Suspension of membership and the use of the CFA designation
Revocation of the CFA charter
Suspension from further participation in the CFA Program
Disagreement on investigation results不服上诉
If the member or candidate does not accept the proposed sanction, the matter is referred to a hearing panel(听证陪审团) composed of DRCmembers.
The hearing panel's conclusion is FINAL!只有一次机会
Code of Ethics and Standards of Professional Conduct
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.
将投资专业的诚信和客户的利益置于个人利益之上.
Use reasonable care and exercise independent professional judgment when conducting investment analysis, making investment recommendations, taking investment actions, and engaging in other professional activities.
ractice and encourage others to practice in a professional and ethical manner that will reflect credit on themselves and the profession.
履行并鼓励其他人履行职业道德规范,彰显其自身和行业的信誉.
Promote the integrity and viability of the global markets for the ultimate benefit of society.
促进全球资本市场的诚信和发展,最终造福社会.
Maintain and improve their professional competence and strive to maintain and improve the competence of other investment professionals.
保持和加强自身专业能力以及努力保持和加强其他投资专业同仁的能力.
Standards of professional conduct
Individual Professionalism专业性
Integrity in Capital Markets对资本市场诚信
Responsibilities to Clients对客户的责任
Responsibilities to Employers对雇主的责任
Ethics Involved in Investment Analysis, Recommendations, and Actions投资要求
Possible Conflicts of Interests利益冲突
Responsibilities as a CFAInstitute Member or CFA Candidate对CFA的责任
Guidance for Standard I-VII
Standard I(A): Knowledge of the law知法守法，与我无关
Content
Members and Candidates must understand and comply with all applicable laws, rules, and regulations (including the CFA Institute Code of Ethics and Standards of Professional Conduct) of any government, regulatory organization, licensing agency,or professional association governing their professional activities.知道自己专业相关的法律法规，必须掌握应当知道的法律知识
In the event of conflict, Members and Candidates must comply with the more strict law, rule, or regulation.出现冲突时遵守最严格、要求最多的
Members and Candidates must not knowingly participate or assist in and must dissociate from any violation of such laws,rules, or regulation.
Guidance
Relationship between the code and standards and applicable law遵守法律、法规、CFA行为准则
Applicable law is the law that governs the member's or candidate's conduct.
Must follow the more strict of the applicable law or the Code and Standards.出现冲突时遵守最严格、要求最多的
例外：GIPS与法规有冲突时看法规；投资相关日志保留时间，没有规定时默认7年，有规定时只看法律
Association with violations by others只要及时脱离，就没有违反准则
Inaction may be construed as participation.不作为等于违反
Report to supervisor or compliance department.
Must dissociate from the illegal/unethical activity.必须及时离开违法实体
E.g.,removing member's or candidate's name from research report, asking for a different assignment, etc.报告中除名,要求调离现有工作,拒绝接受新的客户,辞职
In extreme case, dissociation may require resignation.
It is encouraged (not required) to report violations by fellow members and candidates to CFA Institute.
No requirement to report violations to government authorities.不必须向政府报告
Should consult legal and compliance advisers when there is doubt whether a violation occurred.
Investment products and applicable laws
Understand and comply with the laws and regulations of the countries of origination and expected sale.遵守本国和所在国法律
Review whether associated firms responsible for distributing products also abide by the laws and regulations.监督所在国机构
Others
No requirement to be experts on all the applicable laws.无需成为法律专家
Standard I(B): Independence and Objectivity独立客观，威逼利诱
Content
Members and Candidates must use reasonable care and judgment to achieve and maintain independence and objectivity in their professional activities.
Members and Candidates must not offer, solicit,or accept any gift, benefit, compensation, or consideration that reasonably could be expected to compromise their own or another's independence and objectivity.
Guidance
Buy-side clients may influence sell-side analyst's independence because:
portfolio managers have significant positions in the security under review.
a downgrade may affect the manager's compensation.
bad performance may affect the manager's professional reputation.
Influence during manager (or custodians) selection process挑选投资经理和托管方，找第三方一起管理公司的过程中
In a hiring capacity, should not solicit gifts, contributions, or other compensation; and refuse gifts, donations, and other offered compensation that may be perceived to influence decision-making process.受贿行贿都违反
When working to earn a new investment allocation,members and candidates should not offer gifts, contributions,or other compensation to influence the decision of the hiring representative.(e.g., pay-to-play)
Performance measurement and attribution进行业绩归因和业绩统计的过程中,受到威逼利诱
Performance analysts must not allow internal or external influence to affect their independence and objectivity.
Investment banking relationships研究部门,受到投行部门威逼利诱
Analysts must not be pressured to issue favorable report on current or prospective clients by their firms.
Having analysts work with investment banking colleagues is appropriate only when the conflicts are adequately managed and disclosed.
"Firewalls(防火墙)" are used to minimize conflicts of interest. (e.g., separate reporting structures, compensation arrangements)避免不同部门之间的利益冲突
Public companies分析师,受到上市公司威逼利诱
Analysts must not be pressured to issue favorable reports by the companies they follow.
Credit rating agency opinions评级机构,受到威逼利诱
Members and candidates must prevent influences from the company requesting the rating
Issuer-paid research中小公司付费请分析师出研究报告
Analysts must disclose potential conflicts of interest.必须披露
A flat fee(固定费用)not linked to recommendations should be determined prior to writing the reports.
Travel funding差旅费
Best practice is to pay by themselves or pay by their firms.原则上自己付钱然后报销
May accept modestly arranged travel when commercial transportation is unavailable (e.g , the destination is remote),but disclosure is needed.迫不得已时接受对方公司的差旅服务
Gifts
Modest gifts are acceptable, but special care must be taken to resist pressures to act in conflict with the interests of their clients.
Best practice is to reject any offer of gift or entertainment that could be expected to threaten their independence and objectivity.
A gift from a client is acceptable but should be disclosed to their employers prior to accepting such gift or benefit.
Recommendation
Create a restricted list(限制清单)只陈述事实不发表观点
Restrict special cost arrangements.
For example, members should encourage issuers to limit use of corporate aircraft to situations in which commercial transportation is not available.
Limit gifts
The standard does not preclude customary and ordinary business-related entertainment as long as its purpose is not to influence members and candidates.
Restrict investments
Strict limits should be imposed on personnel investment on IPOs or private placement
Standard I(C): Misrepresentation曲解误导、不当引用
Content
Members and Candidates must not knowingly make any misrepresentations relating to investment analysis,recommendations, actions, or other professional activities.
Guidance
A misrepresentation is any untrue statement or omission of a fact or any statement that is otherwise false or misleading.
Impact on investment practice
Members and candidates must not misrepresent both their and their employer's qualifications or services.吹牛
Misrepresentations resulting from the use of third-party information become the responsibility of the members and candidates.
Members and candidates must disclose their intended use of external managers and must not represent those managers' investment practices as their own.
Performance reporting
Members and candidates must ensure that performance is accurate and complete, e.g.,cherry picking is not allowed.
The standard prohibits members and candidates from making any return guarantee on volatile investments.
When performance benchmark is required, select the most appropriate benchmark.
Valuations for illiquid or non-traded securities, shops for values is not allowed.
Social media
When communicating through social media channels,members and candidates should provide only the same information.
The perceived anonymity granted through social media platforms may entice individuals to misrepresent their qualifications or abilities or those of their employer.
Omissions模型遗漏因子、情形
The omission of a fact or outcome can be misleading, especially in the use of models and technical analysis.
Outcomes from models shall not be presented as fact.模型结果不能作为客观事实
Develop strict policies for composite development to prevent cherry picking.
The omission of any accounts appropriate for the defined composite may misrepresent to clients the success of the manager's implementation of its strategy.
Plagiarism(抄袭)
The standard prohibits plagiarism.
Plagiarism practices include:
take a research report done by another firm or person,change the names, and release as one's own original analysis.
use excerpts from articles or reports prepared by others either verbatim or with only slight changes in wording without acknowledgment.直接抄和略加修改而不引用都是抄袭
prepare research reports based on multiple sources of information without acknowledging the sources.
Members or candidates may use research conducted or models developed by others within the same firm without committing a violation. The firm may issue future reports without providing attribution to the prior analysts.
Standard I(D): Misconduct渎职欺诈
Content
Members and Candidates must not engage in any professional conduct involving dishonesty, fraud, or deceit or commit any act that reflects adversely on their professional reputation,integrity, or competence.
Guidance
The standards are primarily aimed at conduct related to a member's or candidate's professional life.
Conduct that, although not illegal, but negatively affects a member's or candidate's trustworthiness or competence, is a violation.
The lack of diligence (sufficient effort) in providing professional services may be a violation.
Do not seek the standards as a method of settling personal,political, or other disputes unrelated to professional ethics.
Any act that involves lying, stealing, or other dishonest conduct is a violation if the offense reflects adversely on a member's or candidate's professional activities.
Personal bankruptcy may violate the standard if it involves fraudulent or deceitful business conduct.
Standard II(A): Material Nonpublic Information重大非公开信息
Content
Members and Candidates who possess material nonpublic information that could affect the value of an investment must not act or cause others to act on the information.自己不能使用，也不能给别人使用，又义务保证信息不泄露
Guidance
What is "material" information?"重大且非公开"的信息的判断标准
The information is "material" if:
its disclosure would have an impact on the price of a security;会对资本市场(例如股价)有将产生影响
investors would want to know the information before making an investment decision.非公开
the source of the information is reliable.来源可靠
Examples: earnings, merger & acquisition, innovative products, changes in management, legal disputes, etc.
What constitutes "nonpublic" information?
Information is "nonpublic" until it has been disseminated to the marketplace in general.
Information that is made available to a select group of people remains nonpublic.
Members and candidates may use insider information legitimately for the specific purpose of conducting due diligence for such activities as mergers, security underwriting,credit ratings, etc.
Mosaic theory(马赛克理论)
Members and candidates do not violate the standard when they reach a material conclusion about a corporate action or event through an analysis of public information and nonmaterial nonpublic information.汇总非公开的非重大信息进行判断
Social media
Information from internet and social media platforms may not be considered public.Example: social media that requires membership in order to access the published content.
Members and candidates should verify that material information obtained from these sources can also be accessed from a source that is available to the public(e.g.,webpages, press releases).
Using industry experts
Members and candidates may speak with experts regarding economic conditions, industry trends, and technical issues relating to products and services.
Members and candidates are prohibited from taking investment actions based on material nonpublic information provided by industry experts.
Investment research reports
When a particularly well-known analyst issues a report or makes changes to his or her recommendation, that information alone may have an effect on the market and thus may be considered material. Therefore, such a report would have to be made public at the time it was distributed to clients.
Recommendation
Achieve public dissemination
Members and candidates should make reasonable efforts to achieve public dissemination of material information.最好促进公司让信息逐渐公开
If public dissemination is not available, members and candidates must communicate the information only to their supervisory and compliance personnel of their firm.
Standard II(B): Market manipulation操纵市场
Content
Members and Candidates must not engage in practices that distort prices or artificially inflate trading volume with the intent to mislead market participants.
Guidance
Information-based manipulation操作信息
Spreading false rumors to induce trading.
Transaction-based manipulation通过交易，如坐庄、关联账户
Securing a controlling and dominant position in a financial instrument to manipulate the price of a related derivative or the underlying asset.
The standard is not intended to preclude transactions undertaken on legitimate trading strategies.
Standard III: (A) Loyalty, Prudence, and Care对客户忠诚审慎谨慎
Content
Members and Candidates have a duty of loyalty to their clients and must act with reasonable care and exercise prudent judgment.
Members and Candidates must act for the benefits of their clients and place their client's interests before their employer's or their own interests.
Guidance
Understanding the application
A minimum benchmark for the duties of loyalty, prudence,and care that are required of all members and candidates regardless of whether a legal fiduciary法定受托责任 duty applies.
Fiduciary duties are often imposed by law or regulation when an individual or institution is charged with the duty of acting for the benefit of another party.
Identifying the actual investment client
Special cases: if an actual client or group of beneficiaries does not exist,investment should be consistent with the stated mandate说明文件.
Developing the client's portfolio
Members and candidates should ensure:
investment recommendations and transactions are suitable to clients'objectives and circumstances.
particular care must be taken on the potential conflict between the members and candidates or their firms and clients'interests.
investment decisions are judged in the context of the total portfolio, rather than by individual investment.
Soft dollar/commission(软美元) policies
Soft dollar is the practice that an investment manager uses client brokerage to purchase research services.如投研服务，这种“软美元”实际属于客户
Brokerage is client's asset, its uses must benefit client.
"Directed brokerage"(客户指定经纪费) is a practice that a client directs a manager to use the client's brokerage to purchase services or goods for the client.
When selecting broker for clients, members must seek "best transaction cost" and "best execution"
Proxy voting(代理投票) policies
A cost-benefit analysis must be made prior to any proxy voting.
Voting proxies may not be necessary in all instances.
Recommendation
Regular account information(at least quarterly)
Client approval
Firm policy
Follow all applicable rules and laws
Establish the investment objectives of the client
Consider all the information when taking actions
Diversify
Carry out regular reviews
Vote proxies and so on
Standard III: (B) Fair Dealing公平对待客户
Content
Members and Candidates must deal fairly and objectively with all clients when providing investment analysis, making investment recommendations, taking investment action, or engaging in other professional activities.
Guidance
"Fair" is not "Equal"公平≠同等
The standard does not state "equally" because:
communicating with all clients on a uniform basis presents practical problems due to differences in timing and methods of communications with clients.
each client has unique needs and objectives.
firms may differentiate their services to clients, but different levels of services should be disclosed, and must not disadvantage any client.
Investment recommendations
No discrimination against any client when disseminating investment recommendations.如果提供服务，那么要一视同仁
Particular care should be taken that updated recommendation reaches those clients who have acted on the earlier advice可以对VIP提供更好的服务
Clients who place orders contrary to a current recommendation should be advised before the order is accepted.修改判断时及时通知所有人
Investment action
If security issue is oversubscribed(超额认购), the issue should be prorated(按比例) to all subscribers.
Members and candidates should be prohibited from participating in "hot issue"""
Family-member accounts are treated similarly to the accounts of other clients.
Standard III: (C) Suitability投资策略适合客户
Content
When Members and Candidates are in an advisory relationship with a client, they must:
make a reasonable inquiry into a client's or prospective client's investment experience, risk and return objectives,and financial constraints prior to making any investment recommendation or taking investment action and must reassess and update this information regularly.
determine that an investment is suitable to the client's financial situation and consistent with the client's written objectives, mandates, and constraints before making an investment recommendation or taking investment action.
judge the suitability of investments in the context of the client's total portfolio.
When Members and Candidates are responsible for managing a portfolio to a specific mandate, strategy, or style, they must make only investment recommendations or take only investment actions that are consistent with the stated objectives and constraints of the portfolio.
Guidance
Developing and updating investment policy statement (IPS)
The IPS(投资政策声明) addresses the client's risk tolerance,return requirements, investment constraints, the roles and responsibilities of the parties to the advisory relationship.
Based on the IPS, members and candidates can develop an appropriate strategic asset allocation.
Updating the IPS should be repeated at least annually and also prior to material changes.至少一年更新一次
Understanding the client's risk profile
Consider whether leverage is suitable for clients.
Need for diversification
The unique characteristics (or risks) of an individual investment may become partially or entirely neutralized when it is combined with other individual investments within a portfolio.
An investment with high relative risk may be a suitable investment in the context of the entire portfolio.
Addressing unsolicited(主动提出) trading requests
When a client makes an unsuitable trade request:
if it has only a minimum impact on the entire portfolio,first educating clients on the effects of the request, then may execute the trade.
if it has a material impact on the portfolio, updating client's IPS may be necessary. If clients decline to modify their IPS while insisting the trade be made, determining whether continuing the relationship with the client.
Managing to an index or mandate
Investing in a manner consistent with the mandate.
Members and candidates are not responsible for determining the suitability of the fund for investors.
Determining suitability for clients applies to situations where members and candidates have an advisory relationship with clients.
Recommendation
Investment policy statement
Client identification
Type of client, the existence of separate beneficiaries
Investor constraints
Liquidity needs, investable funds, time horizon, etc.
Performance measurement benchmark
Standard III: (D) Performance Presentation公允介绍投资表现
Content
When communicating investment performance information,Members and Candidates must make reasonable efforts to ensure that it is fair, accurate, and complete.
Guidance
Do not misrepresent past performance.
Provide complete performance information: no cherry-picking,including liquidated/terminated accounts.
Do not state or imply that clients will obtain a return that was generated in the past.
Do not make return guarantee on volatile investment.
Recommendation
Compliance without applying GIPS standards
Consider audience sophistication when presenting performance
Use performance of the weighted composite of similar portfolios.
Include terminated accounts as part of historical performance.
Make all disclosures and maintain records.
Standard III: (E) Preservation of Confidentiality对客户信息保密
Content
Members and Candidates must keep information about current,former, and prospective clients confidential unless:
the information concerns illegal activities on the part of the client.
disclosure if required by law.
the client or prospective client permits disclosure of the information.
Guidance
Status of clients
Must continue to maintain the confidentiality of client records even after the client relationship has ended.
Compliance with laws
If applicable law requires to maintain confidentiality, even if the information concerns illegal activities on the part of the client, members and candidates should not disclose a client's information.
Professional conduct investigated by CFA Institute
When permissible under applicable law, members and candidates shall consider the PCP an extension of themselves when requested to provide information.
Standard IV:(A) Loyalty对雇主忠诚
Content
In matters related to their employment, Members and Candidates must act for the benefit of their employer and not deprive their employer of the advantage of their skills and abilities, divulge confidential information, or otherwise cause harm to their employer.
Guidance
Independent practice关于兼职
“Undertaking independent practice” means engaging in competitive business, as opposed to making preparations to begin such practice.
If planning to engage in independent practice, notifying employer the types of services provided, the duration of the services, and the compensation.
Do not proceed without consent from employer获得雇主同意
Leaving an employer关于离职
If planning to leave employer, act in the best interest of employer until the resignation is effective.辞职生效后才可以
Employee is free to make preparations to leave as long as such preparations do not breach his duty of loyalty.用个人时间
No prohibition on use of experience or knowledge gained at former employer可以带走学到的知识和技能
No prohibition on engaging in competitive conduct unless a “non-compete agreement（竞业禁止协议，不能去同行业其它雇主工作）” was signed.
The member or candidate must not take records or files to a new employer without the written permission of the previous employer.正式离职后得到客户允许，可以将用户信息带到新雇主
Members and candidates are free to use public information after departing to contact former clients without violating Standard IV（A） as long as there is no specific agreement not to do so只能通过公共方式和联系
Activities that might constitute a violation
Misappropriation of trade secrets
Misuse of confidential information
Solicitation招揽 of the employer's clients prior to cessation of employment
Self-dealing假公济私
Misappropriation of clients lists, records or work performed on behalf of the firm
Use of social media社交
Firm-approved business related social media accounts would be considered the firm's assets, transfer or delete the accounts upon resignation.离职后删除之前的客户联系方式
Best practice is to maintain separate accounts for personal and professional social media activities.最好是用工作账号
Whistleblowing（揭发）
Members and candidates must act contrary to employer's interests in order to comply with duties to the market and clients （e.g.， when employer is engaged in illegal or unethical activity）。
Such action is permitted only if the intent is aimed at protecting clients or integrity of the market, not for personal gain.
Nature of employment
Members and candidates must determine whether they are employees or independent contractors.合同工
Duties within an independent contractor relationship are governed by terms of agreement.
Standard IV:(B) Additional Compensation Agreement工作以外收入
Content
Members and Candidates must not accept gifts, benefits,compensation,or consideration that competes with or might reasonably be expected to create a conflict of interest with their employer's interest unless they obtain written consent from all parties involved.
Guidance
Compensation and benefits include direct compensation by the client, and any indirect compensation or benefits received from third parties.
"Written consent" includes any form of communication that can be documented (e.g.,email).必须获得书面同意
Employer is entitled to know all compensation or benefit arrangements to assess the motivations and true cost of the services(e.g., the nature of the compensation, amount, and duration of agreement).
Standard IV:(C) Responsibility of Supervisor作为上司的责任
Content
Members and Candidates must make reasonable efforts to ensure that anyone subject to their supervision or authority complies with applicable laws, rules, regulations, and the Code and Standards
Guidance
System for supervision
Establish an effective and adequate compliance system.
"Adequate" means meeting industry standards, regulatory requirements, the requirements of the Code and Standards,the circumstances of the firm.
Bring inadequate compliance system to the attention of senior management and recommend corrective action.
Once compliance system is established, ensure the procedures are monitored and enforced.
If a compliance system is absent or inadequate, decline in writing to accept supervisory responsibility (or promotion)until the firm adopts reasonable procedures.缺少规章制度时，以书面形式拒绝任命
When delegating supervisory duties to subordinates, instruct about methods to promote compliance.
Once a violation occurs, a supervisor should:发现违规时 respond promptly to assess the extent of wrongdoing.
conduct a thorough investigation. place appropriate limitations on the wrongdoer until investigation is complete. increase the monitoring to ensure violation will not be repeated.
Once a violation occurs, inadequate actions include: relying on employee's statement about the extent of the violation.
relying on employee's assurances that the wrongdoing wil not reoccur simply reporting the misconduct up the chain of command.
simply warning the employee to cease the activity.
Supervision includes detection
If the supervisor makes a reasonable effort to detect violations, but fails to detect a violation that occurs, she is in compliance with the standard.
If no effort is made to detect and prevent violations, the supervisor is in violation of the standard even if no violations by her subordinates have occurred.主动去检查下属是否违规
Standard V:(A) Diligence and Reasonable Basis有理有据
Content
Members and Candidates must:
exercise diligence, independence, and thoroughness in analyzing investments, making investment recommendations,and taking investment actions.
have a reasonable and adequate basis, supported by appropriate research and investigation, for any investment analysis, recommendation, or action.
Guidance
Defining diligence and reasonable basis
The nature of diligence and level of research rely on:
the investment philosophy.
the product or service being offered.
the role of the member and candidate in the investment decision-making process.
the support and resources provided by employer.
Using secondary and third-party research
Secondary research is research conducted by colleagues.
Third-party research is research conducted by entities outside the firm (brokerage firm, research firm, etc.).
Members and candidates must make diligent efforts to determine the source and soundness of the research.
Criteria in determining soundness include: assumptions, rigor of the analysis, timeliness of theresearch, evaluation of objectivity, and independence.
Members and candidates may rely on others in the firm to determine the soundness of secondary and third-party research, unless having reason to question its validity.
Members and candidates should verify that firm has a policy about the timely and consistent review of approved research providers.
Using quantitatively oriented research
Members and candidates need to understand parameters used in models and quantitative research.
They are not required to become experts in every technical aspect of model, but they must understand assumptions and limitations of the model and how the results were used in the decision-making process.
Members and candidates should make reasonable efforts to test the output of investment models and other pre-programed analytical tools they use.
They should ensure that their analyses incorporate a broad range of assumptions sufficient to capture the underlying characteristics of investments.
Developing quantitatively oriented techniques
Members and candidates who create quantitative models must show a higher level of diligence in reviewing new products.
They must understand technical aspects of the products.A thorough testing of model and resulting analysis should be completed before product distribution.
Members and candidates need to consider the source and time horizon of the data used in models.
Members and candidates may need to test the models by using volatility and performance expectations that represent scenarios outside the observable databases.
They need to pay particular attention to the assumptions and rigor of the analysis to ensure that the model incorporates a wide range of possible input expectations,including negative market events.
Selecting external advisors and sub-advisors
Members and candidates must review external advisors as diligently as reviewing individual funds and securities.
Criteria for reviewing external advisor include its:
established code of ethics.
compliance and internal control procedures.
quality of the published return information.
investment process and adherence to its stated strategy.
Group research and decision making
The conclusions represent the consensus of the group.
When disagreeing with the view of group, members and candidates need not decline to be identified with the report,provided that the group's opinion has a reasonable and adequate basis and is independent and objective.
Standard V:(B) Communication with Clients与客户沟通要全面、如实、及时
Content
Members and Candidates must:
disclose to clients and prospective clients the basic format and general principles of the investment processes they use to analyze investments, select securities, and construct portfolios and must promptly disclose any changes that might materially affect those processes.
disclose to clients and prospective clients significant limitations and risks associated with the investment process
Members and Candidates must:
use reasonable judgment in identifying which factors are important to their investment analyses, recommendations,or actions and include those factors in communications with clients and prospective clients.
distinguish between fact and opinion in the presentation of investment analyses and recommendations.
Guidance
Informing clients of the investment process内容
Address factors that have positive and negative influences on recommendations, include significant risks and limitations of investment process.
Keep clients informed promptly about changes to the investment process, especially newly identified significant risks and limitations.
Disclose the basic characteristics of an investment.
Different forms of communication方式
Forms of communication include: in-person description, telephone conversation, media, broadcast, internet, etc.
Treat all clients fairly when communicating with clients.
If information is communicated in capsule form (e.g., a recommended stock list), notify clients that additional information and analyses are available.
Identifying risks and limitations
Types of risks that may be disclosed include: leverage risk, market-related risks, country risk, industry risk, security-specific risk, credit risk, etc.
Limiting factors of investments include: liquidity, capacity, etc.
No disclosure of risks or limitations unknown at the time recommendations are made may not breach Standard V(B),but may violate Standard V(A). (ex ante basis)
Report presentation
Include those elements important to the analyses and conclusions of the report.
A research report may emphasize certain areas, touch briefly on others, and omit certain aspects deemed unimportant.
Distinction between facts and opinions
Violations often occur when reports fail to separate the past from the future by not indicating that earnings estimates,changes in the outlook for dividends, or future market price information are opinions subject to future circumstances.
Recommendations and conclusions of report are opinions.
Standard V:(C) Record Retention保留记录
Content
Members and Candidates must develop and maintain appropriate records to support their investment analyses,recommendations, actions, and other investment related communications with clients and prospective clients.
Guidance
Records may be maintained either in hard copy or electronic form.形式
Examples of supporting documents include:内容
personal notes from meetings with covered company.
computer-based model outputs and analyses.
notes from clients' meetings to review IPS.
outside research reports.时间
If no regulatory requirement, CFA Institute recommends maintaining records at least 7 years.
Records are property of employer所有权
When leaving employer, cannot take the records without employer's consent.
Cannot use historical recommendations or reports created at former employer when supporting documentation is unavailable.
Must re-create supporting records with information gathered through public sources or covered company, not from memory or sources obtained from former employer.
Standard VI:(A) Disclosure of Conflict利益冲突披露
Content
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 duties 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.
Guidance
Disclosure of conflicts to clients向客户
Relationship between an issuer推荐的股票 and the member/candidate
Board service我作为董事会成员
Consulting service我提供咨询服务
Beneficial ownership of stock股价上涨我受益
Relationship between an issuer and the member/candidate's firm
investment banking relationship我的公司帮助股票销售
broker/dealer market-making activities我的公司帮助股票做市
Fee or compensation arrangements that would conflict with clients'interest我的费用受益
referral fee
incentive fees
Rebates
bonuses based on short term performance
Disclosure of conflicts to employers向雇主
Circumstances that generate conflicts with clients should be disclosed to employer as well.向客户披露的也要向雇主披露
Any potential conflict situation that could prevent clear judgment about or full commitment to the execution of a member's or candidate's duties to the employer.
Cross-departmental conflicts部门间的披露
A sell-side analyst working for a broker/dealer may be encouraged to write favorable reports.
The buy-side analyst is likely to be faced with similar conflicts as banks exercise their underwriting and security-dealing powers.
The marketing division may ask an analyst to recommend the stock of a certain company in order to obtain business.
Conflicts with stock ownership我持有股票
Most prevalent conflict requiring disclosure is a member's or candidate's ownership of stock in companies that he or she recommends to clients or that clients hold.
The easiest method for preventing a conflict is to prohibit members and candidates from owning any such securities,but this approach is overly burdensome.
Conflicts arising from personal investing are discussed more fully in the guidance for Standard VI(B)
Conflicts as a director我作为董事会成员
Serve as a director poses three basic conflicts of interests:
duties owed to clients vs. duties owed to shareholders.
may receive securities as compensation for serving on the board.
opportunity to receive material nonpublic information involving the company.
Recommendation
If firm does not permit disclosure, consider dissociating from the activity.
Firms are encouraged to include compensation information in promotional materials.
Standard VI:(B) Priority of Transaction交易优先权
Content
Investment transactions for clients and employers must have priority over investment transactions in which a Member or Candidate is the beneficial owner.
Guidance
Avoiding potential conflicts
Investment managers can make money from personal investments as long as:
client is not disadvantaged by the trade.
professionals does not benefit personally from trades undertaken for clients.
professional complies with regulatory requirements.
The same three criteria should be applied in the transaction when enter a personal transaction that runs counter to current recommendations.
Personal trading secondary to trading for clients
Prevent personal transactions from adversely affecting the interests of clients or employers.
Standards for nonpublic information
Members and candidates are prohibited from conveyingnonpublic information to any person whose relationship tothe member or candidate makes the member or candidate abeneficial owner of the person's securities.
Impact on all accounts with beneficial ownership
Personal transactions include those made for the member's or candidate's own account, for family (including spouse直系亲属,children) accounts, and for accounts in which the member or candidate has a direct or indirect pecuniary与金钱相关的，如信托 interest, such as a trust or retirement account.
Recommendation
The firm's compliance procedures
Limited participation in equity IPOs
Restrictions on private placements
Establishing blackout/restricted periods
Reporting requirements include: disclosure of holdings in which the employee has a beneficial interest.
providing duplicate confirmations of transactions. preclearance procedures.
Standard VI:(C) Referral Fee推荐费介绍费
Content
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.
Guidance
Disclosure allows clients and employers to evaluate full cost of service and any potential biases.
Disclosure is to be made prior to entering into any formal agreement for services.
Disclose the nature of the consideration or benefit (e.g., flat fee or percentage basis, one-time or Continuing benefit, benefit in the form of provision of service or other noncash benefit and its estimated money value).
Standard VII:(A) Conduct as Participants in CFA Institute Programs规范CFA参与者
Content
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.
Guidance
Confidential Program information
CFA Institute program rules, regulations, and policies prohibit candidates from disclosing confidential material gained during the exam process.
All aspects of the exam, including questions, broad topical areas, and formulas, tested or not tested, are considered confidential.
CFA Institute actively polices blogs, forums, and related social networking groups for confidential information.
Additional CFA Program restrictions考场纪律
Violating any of the testing policies, such as the calculator policy, personal belongings policy, or the Candidate Pledge,constitutes a violation of Standard Vll(A).
Additional CFA Program restrictions (Cont.)
Examples of information that cannot be shared by members involved in developing, administering, or grading the exams include but are not limited to:
questions appearing on the exam or under consideration.出卷人
deliberation related to the exam process.监考人
information related to the scoring of questions.评卷人
Expressing an opinion
Standard Vll(A) does not cover expressing opinions regarding CFA Institute, the CFA Program, or other CFA Institute programs.
When expressing a personal opinion, a candidate is prohibited from disclosing content-specific information,including any actual exam question and the information as to subject matter covered or not covered in the exam.
Standard VII:(B) Reference to CFA Institute,the CFA Designation, and the CFA Program
Content
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.
Guidance
CFA Institute membership会员
To maintain status of member
Complete and remit PCS annually.
Pay membership dues annually.
Failure to comply with the requirements above results in an inactive member status.
Using the CFA designation持证人
To earn the right to use the CFA designation
Completion of the CFA Program
Required years of acceptable work experience
Must satisfy CFA Institute membership requirements to
maintain the right to use the designation.
Do not misrepresent or exaggerate the meaning or implications of holding the CFA designation.
Must not use a pseudonym (假名,笔名) to hide identify.
Referring to candidacy in the CFA program考生
A person is a candidate in the CFA Program if:
application for registration in the CFA Program has been accepted by CFA Institute.
the person has sat for the exam but exam results have not yet been received.
Do not imply achievement of any type of partial designation.不能说自己某部分考得好
Okay to say "passed all levels on first attempt".
Introduction to the Global Investment Performance Standards
Introduction to GIPS
Introduction to GIPS
Misleading practices of performance presentation
Representative accounts报喜不报忧
Survivorship bias
Varying time periods
Why the GIPS standards were created?
GIPS aim to avoid misrepresentation of performance of investment firms and to give clients relevant information to evaluate past performance.
Parties affected by GIPS
Firms
The GIPS apply to any firm that actually manages assets and asset owners.
Asset managers and their prospective clients, asset owners and their oversight bodies
Complete and fair record, strengthened firm's internal controls
Enhancing credibility
Information to oversight bodies
Composites组合群
An aggregation of one or more portfolios managed according to a similar investment mandate, objective, or strategy.
Prevent from cherry-picking.
Must include all actual, fee-paying, discretionary portfolios managed in accordance with the same investment mandate,objective, or strategy.
Groupings must be done according to pre-identified criteria.
Fundamentals of compliance
Definition of firm
The scope should include all geographical (country, regional,etc.) offices operating under the same brand name,regardless of the actual name of the individual company.
Verification
Firms that claim compliance with the GIPS self-regulate their claim of compliance.
Firms may voluntarily hire an independent third party to verify its claim of GIPS compliance.
Verification is performed on entire firm, not specific composites.
