Ethical and Professional Standards
What you must know
The Code of Ethics and the Standards of Professional Conduct (seven Roman-numeral Standards with lettered sub-Standards), the Asset Manager Code of Professional Conduct, and GIPS. Internalise that the Standards are minimums of expected conduct, that the Code can reach personal behaviour which harms the profession's reputation, and that GIPS is a voluntary, firm-wide standard for performance reporting.
Traps that cost marks
- A Roman numeral denotes a whole Standard; a letter denotes a sub-Standard (III(B) Fair Dealing, VI(C) Referral Fees). Questions frequently mislabel.
- Separate client-originated benefits (disclose to employer, obtain consent) from issuer-originated benefits (refuse if they could reasonably compromise independence). A broker-paid trip to a diligence conference is travel funded by the broker; the test is whether it could reasonably compromise objectivity.
- Fair dealing (III(B)): no selective disclosure of a recommendation change; family accounts receive the same price and timing as everyone else, never better.
- Performance presentation (III(D)): never link simulated or backtested results to actual results; GIPS compliance is claimed firm-wide, never for a single composite.
- Misrepresentation and plagiarism (I(C)): using another's statistics or analysis without attribution is plagiarism; recognising the source does not remove the need for attribution.
Worked rule of thumb
For any gift or benefit question, run three screens in order: (1) who is the source, client or non-client? (2) could it reasonably compromise independence or objectivity? (3) what does my employer's policy permit? If screen (2) fails, decline or obtain written permission and disclose. A $40 book from a client is fine with disclosure; an all-expenses trip funded by a broker to whom you direct order flow requires written consent and disclosure and is refused if it is really a reward for allocations.