Learning Outcomes
This article explains core CFA ethical requirements on professionalism, integrity, and fair dealing, including:
- Understanding the structure, purpose, and exam relevance of the CFA Institute Code of Ethics and Standards of Professional Conduct.
- Distinguishing professionalism, integrity, and fair dealing and describing how each standard directs day-to-day conduct in investment roles.
- Identifying typical workplace situations that create integrity pressures, misrepresentation risks, or unequal treatment of clients.
- Applying Standards I(A) – Knowledge of the Law and III(B) – Fair Dealing to concise exam-style scenarios and item sets.
- Determining the most appropriate course of action when observing, suspecting, or being asked to participate in unethical practices.
- Evaluating whether proposed conduct satisfies both legal requirements and the higher benchmark of CFA professional standards.
- Developing practical habits and compliance procedures that support ethical decision-making, objective judgment, and timely reporting of violations.
- Strengthening exam performance by linking ethical principles to common CFA Level I question formats and traps.
CFA Level 1 Syllabus
For the CFA Level 1 exam, you are expected to understand the requirements and application of the CFA Institute's Code of Ethics and Standards of Professional Conduct, particularly professionalism and integrity, with a focus on the following syllabus points:
- The principles of professionalism and integrity set out in the CFA Code of Ethics and Standards
- How the duty of integrity applies in your investment and client interactions
- The meaning and scope of fair dealing and the avoidance of misrepresentation
- Interpretive guidance for applying the standards to common workplace dilemmas
- How to respond to integrity pressures and report violations appropriately
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
- Which action is required by the CFA Code of Ethics under the principle of integrity?
- True or false? Knowledge of a superior's breach absolves a CFA candidate of duty to act under the standards.
- List two situations where fair dealing with clients may be at risk.
- What is the most appropriate action when pressured to overlook a colleague’s misrepresentation in marketing material?
Introduction
Professionalism and integrity underpin the CFA Institute's ethical standards. Candidates and charterholders must act with honesty, fairness, and diligence—not only to comply with rules but to protect market integrity and client confidence. This article outlines the practical requirements for integrating these standards into your work and handling common integrity challenges.
Key Term: professionalism
Adhering to standards that safeguard market trust, requiring honest, independent, and competent conduct.Key Term: integrity
Acting with honesty, fairness, and moral soundness in all professional activities, regardless of pressure.Key Term: fair dealing
Ensuring that clients, colleagues, and counterparties are treated equally in offering, servicing, and transacting.
Principles of Professionalism and Integrity
You must use independent judgment, maintain knowledge of applicable laws and regulations, and always act in good faith. Professionalism requires:
- Understanding and complying with all rules that apply to your activities—global and local.
- Refraining from actions that reflect adversely on your or the CFA profession's integrity, even if those actions may be technically legal.
Key Term: CFA Institute Code of Ethics
The CFA Institute’s foundational principles, requiring members to uphold integrity, competence, and the interests of clients and the public.Key Term: Standard I(A) – Knowledge of the Law
The requirement to understand and comply with all laws, rules, and regulations that govern your activities.
Acting with Integrity
Integrity is non-negotiable in investment roles. It applies in obvious cases, such as refraining from fraud, and subtle examples, such as refusing to present biased research.
Members and candidates:
- Must not engage in or condone any form of dishonesty, fraud, or misrepresentation.
- Must not let loyalty to an employer override the duty to act with integrity and in client interests.
- Are required to promptly address any observed or suspected breaches by colleagues or superiors.
Key Term: misrepresentation
Knowingly omitting or providing false or misleading information to clients or the market.
Fair Dealing in Practice
You must ensure equal access to investment opportunities, research, and communications for all clients. This extends to:
- Allocation of IPOs and new investments—a fair, objective policy is essential.
- Timely and simultaneous dissemination of investment recommendations and research to all clients.
- Avoiding preferential treatment, even in pressure situations from valuable or vocal clients.
Key Term: Standard III(B) – Fair Dealing
The standard that requires members and candidates to deal fairly and objectively with all clients when providing investment analysis, recommendations, or taking investment action.
Responding to Integrity Pressures
The Standards require you to act—even if doing so is personally uncomfortable or may jeopardize relationships with colleagues or superiors. You should:
- Disassociate from any activity or behaviour that breaches integrity, including misrepresentation.
- Report violations through established compliance channels. If no action is taken and applicable laws allow, escalate the matter appropriately.
- Be able to show you have taken proactive steps if misconduct is discovered.
Worked Example 1.1
A portfolio manager is pressured by her supervisor to delay reporting an error in a client’s account to avoid reputational damage in the quarterly disclosure. What should she do according to the CFA standards?
Answer:
She must promptly report the error to the client and not conceal it. Delaying disclosure to avoid embarrassment compromises integrity and breaches fair dealing and honesty.
Worked Example 1.2
You discover marketing material from your firm exaggerates the historical performance of a fund. Your manager tells you to ignore the issue as “everyone does this.” What is your professional obligation?
Answer:
You are required under the Code and Standards to take steps to have the misrepresentation corrected. Disassociating from the activity and, if needed, escalating or reporting the issue is also required if management inaction persists.
Worked Example 1.3
A colleague brags about giving priority treatment to a high-fee client by sending them research recommendations before other clients. What CFA standard is being violated, and what action should you take?
Answer:
This practice breaches Standard III(B) – Fair Dealing. You should first counsel your colleague, and if the behaviour continues, report the violation to compliance or appropriate authorities.
Exam Warning
The Code and Standards require action if you know of violations. Ignoring or rationalizing pressure from colleagues or superiors is not a defence and does not absolve you from responsibility.
Revision Tip
Remember that the principle of integrity is absolute—the ends do not justify the means in CFA conduct standards. When in doubt, choose the action that best preserves fairness and truth.
Summary
Professionalism and integrity lie at the core of CFA ethics. You must put client and market interests first, refuse to mislead or misrepresent, deal equitably with all, and never let pressure justify compromising your principles. Ignoring or excusing breaches is itself a violation. Apply these principles reflexively in all your work.
Key Point Checklist
This article has covered the following key knowledge points:
- Act with integrity and honesty at all times as an investment professional
- Know and comply with all laws, rules, and the CFA Code and Standards
- Avoid, and take action to correct, any misrepresentation or unfair dealing
- Apply fair dealing by sharing investment opportunities and information equally with clients
- Disassociate from and report violations of professional standards
- Remember: integrity is never optional, regardless of external pressure
Key Terms and Concepts
- professionalism
- integrity
- fair dealing
- CFA Institute Code of Ethics
- Standard I(A) – Knowledge of the Law
- misrepresentation
- Standard III(B) – Fair Dealing