I believe Paul Johnson broke the Code of Ethics for a CFA in his exchange with me. The code follows:
"THE CODE OF ETHICS
Members of the Association for Investment Management and Research shall:
* Act with integrity, competence, dignity, and in an ethical manner when
dealing with the public, clients, prospects, employers, employees, and
fellow members.
* Practice and encourage others to practice in a professional and ethical
manner that will reflect credit on members and their profession.
* Strive to maintain and improve their competence and the competence of
others in the profession.
* Use reasonable care and exercise independent professional judgment.
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Statement of
THE STANDARDS OF PROFESSIONAL CONDUCT
Standard I: Fundamental Responsibilities
Members shall:
A. Maintain knowledge of and comply with all applicable laws, rules, and
regulations (including AIMR's Code of Ethics and Standards of
Professional Conduct) of any government, governmental agency, regulatory
organization, licensing agency, or professional association governing
the members' professional activities.
B. Not knowingly participate in or assist any violation of such laws,
rules, or regulations.
Standard II: Relationships with and Responsibilities to the Profession
A. Use of Professional Designation.
1.Membership in AIMR, the Financial Analyst Federation (FAF), or the
Institute for Chartered Financial Analysts (ICFA) may be referenced by
members of these organizations only in a dignified and judicious manner.
The use of the reference may be accompanied by an accurate explanation
of the requirements that have been met to obtain membership in these
organizations.
2.Holders of the Chartered Financial Analyst (CFA) designation may use
the professional designation "Chartered Financial Analyst," or the
abbreviation "CFA," and are encouraged to do so, but only in a dignified
and judicious manner. The use of the designation may be accompanied by
an accurate explanation of the requirements that have been met to obtain
the designation.
3.Candidates may reference their participation in the CFA Program, but
the reference must clearly state that an individual is a candidate for
the CFA designation and may not imply that the candidate has achieved
any type of partial designation.
B. Professional Misconduct. Members shall not engage in any professional
conduct involving dishonesty, fraud, deceit, or misrepresentation or
commit any act that reflects adversely on their honesty,
trustworthiness, or professional competence.
C. Prohibition against Plagiarism. Members shall not copy or use, in
substantially the same form as the original, material prepared by
another without acknowledging and identifying the name of the author,
publisher, or source of such material. Members may use, without
acknowledgment, factual information published by recognized financial
and statistical reporting services or similar sources.
Standard III: Relationships with and Responsibilities to the Employer
A. Obligation to Inform Employer of Code and Standards. Members shall:
1.Inform their employer, through their direct supervisor, that they are
obligated to comply with the Code and Standards and are subject to
disciplinary sanctions for violations thereof.
2.Deliver a copy of the Code and Standards to their employer if the
employer does not have a copy.
B. Duty to Employer. Members shall not undertake any independent
practice that could result in compensation or other benefit in
competition with their employer unless they obtain written consent from
both their employer and the persons or entities for whom they undertake
independent practice.
C. Disclosure of Conflicts to Employer. Members shall:
1.Disclose to their employer all matters, including beneficial ownership
of securities or other investments, that reasonably could be expected to
interfere with their duty to their employer or ability to make unbiased
and objective recommendations.
2.Comply with any prohibitions on activities imposed by their employer
if a conflict of interest exists.
D. Disclosure of Additional Compensation Arrangements. Members shall
disclose to their employer in writing all monetary compensation or other
benefits that they receive for their services that are in addition to
compensation or benefits conferred by a member's employer.
E. Responsibilities of Supervisors. Members with supervisory
responsibility, authority, or the ability to influence the conduct of
others shall exercise reasonable supervision over those subject to their
supervision or authority to prevent any violation of applicable
statutes, regulations, or provisions of the Code and Standards. In so
doing, members are entitled to rely on reasonable procedures to detect
and prevent such violations.
Standard IV: Relationships with and Responsibilities to Clients and
Prospects
A. Investment Process.
A.1 Reasonable Basis and Representations. Members shall:
a. Exercise diligence and thoroughness in making investment
recommendations or in taking investment actions.
b. Have a reasonable and adequate basis, supported by appropriate
research and investigation, for such recommendations or actions.
c. Make reasonable and diligent efforts to avoid any material
misrepresentation in any research report or investment recommendation.
d. Maintain appropriate records to support the reasonableness of such
recommendations or actions.
A.2 Research Reports. Members shall:
a. Use reasonable judgment regarding the inclusion or exclusion of
relevant factors in research reports.
b. Distinguish between facts and opinions in research reports.
c. Indicate the basic characteristics of the investment involved when
preparing for public distribution a research report that is not directly
related to a specific portfolio or client.
A.3 Independence and Objectivity. Members shall use reasonable care and
judgment to achieve and maintain independence and objectivity in making
investment recommendations or taking investment action.
B. Interactions with Clients and Prospects.
B.1 Fiduciary Duties. In relationships with clients, members shall use
particular care in determining applicable fiduciary duty and shall
comply with such duty as to those persons and interests to whom the duty
is owed. Members must act for the benefit of their clients and place
their clients' interests before their own.
B.2 Portfolio Investment Recommendations and Actions. Members shall:
a. Make a reasonable inquiry into a client's financial situation,
investment experience, and investment objectives prior to making any
investment recommendations and shall update this information as
necessary, but no less frequently than annually, to allow the members to
adjust their investment recommendations to reflect changed
circumstances.
b. Consider the appropriateness and suitability of investment
recommendations or actions for each portfolio or client. In determining
appropriateness and suitability, members shall consider applicable
relevant factors, including the needs and circumstances of the portfolio
or client, the basic characteristics of the investment involved, and the
basic characteristics of the total portfolio. Members shall not make a
recommendation unless they reasonably determine that the recommendation
is suitable to the client's financial situation, investment experience,
and investment objectives.
c. Distinguish between facts and opinions in the presentation of
investment recommendations.
d. Disclose to clients and prospects the basic format and general
principles of the investment processes by which securities are selected
and portfolios are constructed and shall promptly disclose to clients
and prospects any changes that might significantly affect those
processes.
B.3 Fair Dealing. Members shall deal fairly and objectively with all
clients and prospects when disseminating investment recommendations,
disseminating material changes in prior investment recommendations, and
taking investment action.
B.4 Priority of Transactions. Transactions for clients and employers
shall have priority over transactions in securities or other investments
of which a member is the beneficial owner so that such personal
transactions do not operate adversely to their clients' or employer's
interests. If members make a recommendation regarding the purchase or
sale of a security or other investment, they shall give their clients
and employer adequate opportunity to act on their recommendations before
acting on their own behalf. For purposes of the Code and Standards, a
member is a "beneficial owner" if the member has
a. a direct or indirect pecuniary interest in the securities;
b. the power to vote or direct the voting of the shares of the
securities or investments;
c. the power to dispose or direct the disposition of the security or
investment.
B.5 Preservation of Confidentiality. Members shall preserve the
confidentiality of information communicated by clients, prospects, or
employers concerning matters within the scope of the client-member,
prospect-member, or employer-member relationship unless a member
receives information concerning illegal activities on the part of the
client, prospect, or employer.
B.6 Prohibition against Misrepresentation. Members shall not make any
statements, orally or in writing, that misrepresent
a. the services that they or their firms are capable of performing;
b. their qualifications or the qualifications of their firm;
c. the member's academic or professional credentials.
Members shall not make or imply, orally or in writing, any assurances or
guarantees regarding any investment except to communicate accurate
information regarding the terms of the investment instrument and the
issuer's obligations under the instrument.
B.7 Disclosure of Conflicts to Clients and Prospects. Members shall
disclose to their clients and prospects all matters, including
beneficial ownership of securities or other investments, that reasonably
could be expected to impair the members' ability to make unbiased and
objective recommendations.
B.8 Disclosure of Referral Fees. Members shall disclose to clients and
prospects any consideration or benefit received by the member or
delivered to others for the recommendation of any services to the client
or prospect.
Standard V: Relationships with and Responsibilities to the Public
A. Prohibition against Use of Material Nonpublic Information. Members
who possess material nonpublic information related to the value of a
security shall not trade or cause others to trade in that security if
such trading would breach a duty or if the information was
misappropriated or relates to a tender offer. If members receive
material nonpublic information in confidence, they shall not breach that
confidence by trading or causing others to trade in securities to which
such information relates. Members shall make reasonable efforts to
achieve public dissemination of material nonpublic information disclosed
in breach of a duty.
B. Performance Presentation.
1.Members shall not make any statements, orally or in writing, that
misrepresent the investment performance that they or their firms have
accomplished or can reasonably be expected to achieve.
2.If members communicate individual or firm performance information
directly or indirectly to clients or prospective clients, or in a manner
intended to be received by clients or prospective clients, members shall
make every reasonable effort to assure that such performance information
is a fair, accurate, and complete presentation of such performance.
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Standards of Practice Handbook
Experience has shown that the working investment professional can best
understand and apply AIMR's Code of Ethics and Standards of Professional
Conduct if they are accompanied by practical illustrations describing
application of individual standards. The Standards of Practice Handbook
was developed with this type of illustration in mind. The Seventh
Edition of the Standards of Practice Handbook contains detailed analysis
of the Standards, as well as three topical studies on fiduciary duty,
insider trading, and personal investing. The 7th edition of The Handbook
can be obtained from PBD. To order your copy for $30, call PBD at
800-789-AIMR (outside the U.S., call 770-442-8633, ext. 298), fax your
order to 770-442-9742, or e-mail your order to aimrpubs@pbd.com" |
