The annual Professional Conduct Statement is not a formality. Self-disclosure on that form is one of only four ways an investigation into a member or candidate begins.
All CFA Institute members, including charterholders, and all candidates for the CFA and Certificate in Investment Performance Measurement (CIPM) designations must comply with the Code and Standards. Firms are encouraged, not required, to adopt them. A firm or nonmember whose own code meets the principles may claim compliance and must state that the claim has not been verified by CFA Institute. The separate Asset Manager Code applies to firms and covers six areas: loyalty to clients, the investment process, trading, compliance, performance, and disclosure.
The CFA Institute Board of Governors holds oversight of the Professional Conduct (PC) group. PC staff investigate allegations. The Disciplinary Review Committee (DRC), a volunteer committee of charterholders, serves on hearing panels, imposes sanctions, and partners with staff on conduct policy. The Bylaws and Rules of Procedure supply the enforcement framework.
Common mistakes
- Treating VI(A) as disclosure-only. Since 2023 the standard requires avoiding conflicts or disclosing them, and disclosures must be prominent and in plain language.
- Confusing consent regimes. Standard IV(B) demands written consent from all parties; Standard VI(C) referral fees require disclosure to employer, clients, and prospects, not consent.
- Misreading the confidentiality exceptions. Illegal client activity and client permission permit disclosure; only a legal requirement compels it.
Bottom line
- Bound parties: CFA Institute members, charterholders, and CFA and CIPM candidates; firms adopt voluntarily
- Enforcement: Board of Governors oversees PC staff, who investigate; DRC volunteer charterholder panels decide contested cases
- Four inquiry sources: annual Professional Conduct Statement self-disclosure, written complaints, public and media sources, exam monitoring and score analysis
- Outcomes: no sanction, cautionary letter, or discipline; rejected sanctions go to a DRC panel
Exam shortcut
Read the stem for the party harmed: employer points to Standard IV, client to Standard III, market to Standard II, the designation itself to Standard VII. "Written consent" in a vignette is IV(B); "disclose" alone is VI(A) or VI(C). If the stem mentions fees, costs, or the price of advice, the 2023 test is V(B)(1).
The full lesson (about 1,680 words, 11 min read) adds 2 worked examples, all 5 common mistakes, a self-check, free in the app.
Learning objectives
- code of ethics
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