参考精讲课程

--Instructor:BriefEthics&ProfessionalSS2-tativeSS4-SS7-FinancialReportingandSS13-EquitySS15- AlternativeBriefBriefØStudySession1:EthicalandProfessionalReading1:EthicsandTrustintheInvestmentReading2:CodeofEthicsandStandardsofProfessionalReading3:GuidanceforStandardsⅠ-Reading4:IntroductiontotheGlobalInvestmentPerformanceStandards(GIPS)Reading5:TheGIPSBriefBriefØReading3:GuidanceforStandardsⅠ-ØReading5:TheGIPSØReading1:EthicsandTrustintheInvestmentØReading2:CodeofEthicsandStandardsofProfessionalØReading4:IntroductiontotheGlobalInvestmentPerformanceStandards(GIPS)BriefBriefBriefØØ区 ØØ最好阅读CFAProgram Ø考点比较固定 Ø一定要多做题，推 BriefBrief锲而不舍，金石可镂EthicsandTrustintheInvestmentØExplainethicsanddescribetheroleofethicsindefiningaprofessionØIdentifychallengestoethicalØDescribetheneedforhighethicalstandardsintheinvestmentindustryØDistinguishbetweenethicalandlegalØDescribeandapplyaframeworkforethicaldecisionmakingDefinitionofØOurdecisionandbehaviorcanharmorbenefitavarietyofstakeholders.Examplesofstakeholders:colleagues,clients,employers,thecommunitiesinwhichweliveandwork,theinvestmentprofession。MoralPrinciples(EthicalPrinciples)arebeliefsregardingwhatisgood,acceptable,orobligatorybehaviorandwhatisbad,unacceptable,orforbiddenDefinitionofØSpecificcommunitiesorsocietalgroupscodifytheirbeliefsaboutobligatoryandforbiddenconductinawrittensetofprinciples,oftencalledacodeofethics.ØStandardsofconductserveas arksforminimallyacceptablebehaviorofcommunitymembersandcanhelpclarifythecodeofethics.EthicsandØAprofessionhasseveralcharacteristicsthatdistinguishitfromordinaryoccupations.Aprofessionisbasedonspecializedknowledgeandbasedonservicetopracticedbymemberswhoshareandagreetoadheretoacommoncodeofethics.EthicsandØThecodeofethicscommunicatesthesharedprinciplesandexpectedbehaviorsofitsmembers.ØThecodeofethicsinformsandprovidessomeassurancetothepublicthattheprofession'smemberswillusetheirspecializedskillsandknowledgeinserviceofChallengestoEthicalØSeveralchallengespeopletendtobelievethattheyareethicalpeopleandthattheirethicalstandardsarehigherthanaverage.Overconfidencebiasleadsustoplacetoomuchimportanceoninternaltraitsandintrinsicmotivations.decisionmakersoftenfailtorecognizeand/orsignificantlyunderestimatetheeffectofsituationalChallengestoEthicalSituationalinfluencesareexternalfactors(environmentalorculturalelements),thatshapeourthinking,decisionmakingandbehavior.ThebystanderLargefinancialrewardsandprestige(short-termself-interestsvs.long-termrisks)Astrongcomplianceculturecan eanothersituationalinfluencethatblindsemployeestootherimportantconsiderations.TheImportanceOfEthicalConductInTheInvestmentIndustryØTheinvestmentindustryservessocietybymatchingthosewhosupplycapital,ormoney,withthosewhoseekcapitaltofinance,orfund,theiractivities.ØTrustisespeciallyimportantintheinvestmentforseveralthenatureoftheclientspecializedknowledgeandaccesstothenatureofinvestmentproductsandTheImportanceOfEthicalConductInTheInvestmentIndustryØEthicalbehaviorbuildsandfostersØEthicalbehaviorbyallmarketparticipantscanleadbroaderparticipationintheprotectionofclients’moreopportunitiesforinvestmentprofessionalsandtheirfirms.EthicalVS.LegalØLegalandethicalconductareNOTalwaystheEthicalVS.LegalØThelawisnotalwaysthebestmechanismtoreduceunethicalbehavior:lawstypicallyfollowmarketanewlawmayreduceexistingactivitywhilesimultaneouslycreatinganopportunityforadifferent,butsimilarlyproblematic,activity.lawsvaryacrosscountriesorLawsarealsosubjecttointerpretationandcompliancebymarketparticipants.ØEthicalconduct legalØEthicalDecision-MakingIdentify:Relevantfacts,stakeholdersanddutiesowed,ethicalprinciples, sofinterest.Consider:Situationalinfluences,additionalguidance,alternativeactions.DecideandReflect:Was easanticipated?WhyorwhyØImportance:ØEthicsandChallengestoethicalImportanceofethicalconductininvestmentEthicalVS.LegalEthicaldecision-makingØExam ØDescribethestructureoftheCFAInstituteProfessionalConductandtheprocessfortheenforcementoftheCodeandStandards.ØStatethesixcomponentsoftheCodeofEthicsthesevenStandardsofProfessionalTheStructureoftheProfessionalConductØTheCFAInstituteBoardof ernors(CFA maintainsoversightandresponsibilityfortheProfessionalConductProgram(PCP)(职业行为计划).ØTheDisciplinaryReviewCommittee(纪 )responsibleforenforcementoftheCodeandØProfessionalConductStaff(职业行为工作人员)conductprofessionalconductinquiriesunderthedirectionoftheCFAInstituteDesignatedOfficer(CFA指定).TheEnforcementoftheCodeandCircumstancesthatcanpromptanØSelfdisclosure(自我披露)bymembersandcandidatesontheannualProfessionalConductStatement(PCS)(职业行为陈述表ØWrittencomplaints( )receivedbyProfessionalConductStaffØEvidenceofquestionableconduct(不当行为 )mediaoranotherpublicTheEnforcementoftheCodeandCircumstancesthatcanpromptaninquiryØAviolationreport( 考试规定报告byaCFAexaminationproctorforbreachingtheexaminationrules ysisofscoresandexammaterials(分析试卷)aftertheexam,andmonitorsocialmedia(监测社交 )todetectdisclosureof examinformationTheEnforcementoftheCodeandØNodisciplinesanction(无纪律处分)ØIssueacautionaryletter(警告信)ØAdisciplinarysanction(纪律处分)PubliccensureSuspensionofmembershipandtheuseoftheCFARevocationoftheCFAcharter(收回 SuspensionfromfurtherparticipationintheCFATheEnforcementoftheCodeandØIfthememberorcandidatedoesnotaccepttheproposedsanctionthematterisreferredtoahearingpanel(听证陪审团)composedofDRCmembersandCFAInstitutememberØThehearingpanel’sconclusionisFINAL!(必须接受听证陪审CodeofEthics道德规范ØActwithintegrity,competence,diligence,respect,andinanethicalmannerwiththepublic,clients,prospectiveclients,employers,employees,colleaguesintheinvestmentprofession,andotherparticipantsintheglobalcapitalmarkets.CodeofEthics道德规范ØPlacetheintegrityoftheinvestmentprofessionandtheinterestsofclientsabovetheirown alinterests.将投资行业的诚信和客户利益置于个人利益之上ØUsereasonablecareandexerciseindependentprofessionaljudgmentwhenconductingysis,makinginvestment mendations,takinginvestmentactions,andengaginginotherprofessional时，应保持合理的谨慎，做出独立的专业判断CodeofEthics道德规范ØPracticeandencourageotherstopracticeinaprofessionalandethicalmannerthatwillreflectcreditonthemselvesandtheprofession.的信誉ØPromotetheintegrityandviabilityoftheglobalmarketsfortheultimatebenefitofsociety.提升资本市场诚信 ，实现社会终极利益CodeofEthics道德规范ØMaintainandimprovetheirprofessionalcompetenceandstrivetomaintainandimprovethecompetenceofotherinvestmentprofessionals.专 的胜任能力IntegrityofCapitalDutiestoDutiesto mendations,andsofResponsibilitiesasaCFAInstituteMemberorCFAØImportance:ØThestructureoftheCFAInstituteProfessionalConductTheenforcementoftheCodeandThesixcomponentsoftheCodeofEthicsandthesevenStandardsofProfessionalConductØExam熟悉六大道德规范(CodeofEthics)

ØDemonstratetheapplicationoftheCodeandØDistinguishbetweenconformitiesand mendpracticesandproceduresdesignedtopreventviolationsStandardI(A)KnowledgeoftheØMembersandCandidatesmustunderstandandcomplywithallapplicablelaws,rules,andregulations(includingtheCFAInstituteCodeofEthicsandStandardsofProfessionalConduct)ofany ernment,regulatoryorganization,licensingagency,orprofessionalassociationerningtheirprofessionalStandardI(A)KnowledgeoftheØIntheeventof ,MembersandCandidatesmustcomplywiththemorestrictlaw,rule,orregulation.ØMembersandCandidatesmustnotknowinglyparticipateorassistinandmustdissociatefromanyviolationofsuchlaws,rules,orregulation.StandardI(A)KnowledgeoftheØRelationshipbetweentheCodeandStandardsandApplicableLawApplicablelawisthelaw ernsthemember’sMustfollowthemorestrictoftheapplicablelawortheCodeandStandards.StandardI(A)KnowledgeoftheGuidanceØAssociationwithViolationsbyConfronttheReporttosupervisororcomplianceMustdissociatefromtheillegal/unethicalactivity:removingmember’sorcandidate’snamefromresearchreport,askingforadifferentassignment,etc.Inextremecase,dissociationmayrequireStandardI(A)KnowledgeoftheØAssociationwithViolationsbyothersInactionmaybeconstruedasItisencouraged(notrequired)toreportviolationsbyfellowmembersandcandidatestoCFAInstituteNorequirementtoreportviolationsto ShouldconsultlegalandcomplianceadviserswhenthereisdoubtwhetheraviolationoccurredStandardI(A)KnowledgeoftheGuidanceØInvestmentProductsandApplicableUnderstandandcomplywiththelawsandregulationsofthecountriesoforiginationandexpectedsaleReviewwhetherchannelfirmsresponsiblefordistributingproductsalsoabidebythelawsandStandardI(A)KnowledgeoftheGuidanceØNorequirementtobeexpertsonalltheapplicableStandardI(A)KnowledgeoftheØMembersandStayinformedaboutchangesinapplicableRegularlyreviewfirm’scomplianceMaintainfilesofapplicablelawsandimportantØDevelopand/oradoptacodeofProvideinformationonapplicableEstablishproceduresforreportingStandardI(A)KnowledgeoftheMichaelAllenworksforabrokeragefirmandisresponsibleforanunderwritingofsecurities.AcompanyofficialgivesAlleninformationindicatingthatthefinancialstatementsAllenfiledwiththeregulatoroverstatetheissuer'searnings.Allenseekstheadviceofthebrokeragefirm'sgeneralcounsel,whostatesthatitwouldbedifficultfortheregulatortoprovethatAllenhasbeeninvolvedinany StandardI(A)KnowledgeoftheAlthoughitis mendedthatmembersandcandidatesseektheadviceoflegalcounsel,therelianceonsuchadvicedoesnotabsolveamemberorcandidatefromtherequirementtocomplywiththelaworregulation.Allenshouldreportthissituationtohissupervisor,seekanindependentlegalopinion,anddeterminewhethertheregulatorshouldbenotifiedoftheerror.MaryKim,CFA,practicesintheestablishedcountryofOldasiaandintheemergingcountryofNewasia.Byregulation,Oldasiaprohibitslicensedinvestmentadvisorsfromtradinginsecuritiesaheadoftheirclients.Newasiahasnolawsorregulationsinthisarea.MaryKimmay:tradeaheadofherclientsinNewasianottradeaheadofherclientsineithertradeaheadofherclientsinNewasiaonly,aslongasshehasmadefulldisclosuretoherclientsthatshereservestherighttodothis.BisUnderStandardI(A),MaryKim,asaCFAcharterholder,mustapplytheCFAInstituteCodeandStandardsorthecontrollinglaw,whicheverisstricter.BecauseStandardVI(B)requiresmemberstoputclienttradesaheadoftheirowntransactions,MaryKimmustfollowthestandardintheabsenceof erninglaw,orwherethelawislessstrictthanthestandard.ØImportance:☆☆ØRelationshipbetweentheCodeandStandardsandApplicableLawAssociationwithViolationsbyInvestmentproductsandApplicableØExam

ØDemonstratetheapplicationoftheCodeandØDistinguishbetweenconformitiesand mendpracticesandproceduresdesignedtopreventviolationsØMembersandCandidatesmustusereasonable.careandjudgmenttoachieveandmaintainindependenceandobjectivityintheirprofessionalactivities.ØMembersandCandidatesmustnotoffer,solicit,oracceptanygift,benefit,compensation,orconsiderationthatreasonablycouldbeexpectedtocompromisetheirownoranother'sindependenceandobjectivity.ØBuy-sideclientsmayinfluencesell- independencePortfoliomanagershavesignificantpositionsinthesecurityunderreviewAdowngrademayaffectthemanager’sBadperformancemayaffectthemanager’sprofessionalGuidanceØSelectionofFundmanagerandMembersandcandidatesresponsibleforhiringandretainingoutsidemanagersandthird-partycustodiansshouldnotacceptbenefitsthatimpairtheirdecisions.Anexampleisthepay-to- 参与)”GuidanceØInvestmentBanking ystsmustnotbepressuredtoissuefavorablereportoncurrent/prospectiveclientsbytheirfirms. ystsworkwithinvestmentbankingcolleaguesisappropriateonlywhenthe sare ymanagedanddisclosed. )”areusedtominimize sofGuidanceØPerformanceMeasurementand ystsmustnotallowinternalorexternalinfluencetoaffecttheirindependenceandobjectivity.ØPublic ystsmustnotbepressuredtoissuefavorablereportsbythecompaniestheyfollow.GuidanceØCreditRatingAgencyMembers/candidatesmustpreventinfluencesfromthecompanyrequestingtherating.ØIssuer-paidystsmustdisclose sofAflatfee(固定费用)thatisnotlinkedtomendationsshouldbedeterminedpriortowritingthereports.GuidanceBestpracticeisformembersandcandidatestopaybyMayacceptmodestlyarrangedtravelwhencommercialtransportationisunavailable(e.g.thedestinationisremote),butdisclosureisneeded.GuidanceØExceptiontoModestgiftsareAgiftfromaclientisacceptable,butmembersandcandidatesshoulddisclosetotheiremployerspriortoacceptingsuchgift/benefit.ØProtecttheintegrityofØCreatearestrictedlist(限 ØRestrictspecialcostForexample,members/candidatesshouldencourageissuerstolimittheuseofcorporateaircrafttosituationsinwhichcommercialtransportationisnotavailable.ØLimitThestandarddoesnotprecludecustomaryandordinarybusiness-relatedentertainmentaslongasitspurposeisnottoinfluencemembers/candidates.ØRestrictStrictlimitsshouldbeimposedon nelinvestmentonIPOsorprivateplacement.WalterFritzisan coverstheminingindustry.HehasconcludedthatthestockofMetals&Miningisoverpricedatitscurrentlevel,butheisconcernedthatanegativeresearchreportwillhurtthegoodrelationshipbetweenMetals&Miningandtheinvestmentbankingdivisionofhisfirm.Infact,aseniormanagerofHiltonBrokeragehasjustsenthimacopyofaproposalhisfirmhasmadetoMetals&Miningtounderwriteadebtoffering.Fritzneedstoproduceareportrightawayandisconcernedaboutissuingaless-thanfavorablerating. ysisofMetals&Miningmustbeobjectiveandbasedsolelyonconsiderationofcompanyfundamentals.Anypressurefromotherdivisionsofhisfirmisinappropriate. couldhavebeeneliminatedif,inanticipationoftheoffering,HiltonBrokeragehadplacedMetals&Miningonarestrictedlistforitssalesforce.LuisRodriguez,CFA,isan ystatXYZInvestments.Hecoversacompanythatislocatedinaregionthatisnoteasilyaccessible.Thecompanyinvites ystsfortheirannual ystmeetingandpaysforthetransportationtotheremotelocation.Rodriguezis:allowedtoacceptthepaymentfortransportationbecausethetripwasallbusinessandwasoutoftheway.allowedtoacceptthepaymentfortransportationaslongasitdoesnotexceed$100.notallowedtoacceptthepaymentfortransportationthisisaconsidereda“perk”andmayinfluencehisindependentAisStandardI(B)IndependenceandObjectivity. ystsshouldpayfortheirowntravel modationsifthelocationisaccessiblebynormalmeans.Inthissituationpaymentisacceptablebecausethelocationisoutofthewayandthepurposeofthetripisallbusiness.ØImportance:☆☆ØInfluencesfrominternalInfluencesfromexternalØExam

StandardI(C)ØDemonstratetheapplicationoftheCodeandØDistinguishbetweenconformitiesand mendpracticesandproceduresdesignedtopreventviolationsStandardI(C)ØMembersandCandidatesmustnotknowinglymakeanymisrepresentationsrelatingtoinvestment mendations,actions,orotherprofessionalStandardI(C)Amisrepresentationisanyuntruestatementoromissionofafactoranystatementthatisotherwisefalseormisleading.ØImpactonInvestmentMembers/candidatesmustnotmisrepresentboththeirandtheiremployer’squalifications(资质)orservicesMisrepresentationresultingfromtheuseofthird- etheresponsibilityoftheStandardI(C)GuidanceØPerformanceMembers/candidatesmustensurethatperformanceisaccurateandcomplete,e.g.CherrypickingisnotThestandardprohibitsmembers/candidatesfrommakinganyreturnguaranteeonvolatileinvestmentsWhenperformanceben arkisrequired,selectthemostappropriateben StandardI(C)GuidanceØTheomissionofafactor ecanbemisleading,especiallyintheuseofmodelsandtechnical esfrommodelsshallnotbepresentedasOmissionsregardingthetruerelationshipbetweenamember/candidateandothercompaniesconstituteaStandardI(C)Guidance ThestandardsModelsand ysisdevelopedbyothersatamember/candidate’sfirmarethepropertyofthefirmandcanbeusedwithoutattributionInformationfromrecognizedfinancialandstatisticalreportingservicesmaynotbecitedStandardI(C)ØProvidingawrittenlistofthefirm’savailableservicesandadescriptionofthefirm’squalificationsØVerifyoutside ØMaintainØAttributequotations,includingprojections,table,statistics,model/productideas,etc.ØAttributesummariesofmaterialpreparedbyStandardI(C)AnthonyMcGuireisanissuer-paid ysthiredbypubliclytradedcompaniestoelectronicallypromotetheirstocks.McGuirecreatesawebsitethatpromoteshisresearcheffortsasaseeminglyindependent yst.McGuirepostsaprofileandastrongbuy mendationforeachcompanyonthewebsiteindicatingthatthestockisexpectedtoincreaseinvalue.Hedoesnotdisclosethecontractualrelationshipswiththecompanieshecoversonhiswebsite,intheresearchreportsheissues,orinthestatementshemakesaboutthecompaniesininternetchatrooms.StandardI(C)McGuirehasviolatedStandardI(C)becausethewebsiteismisleadingtopotentialinvestors.Evenifthemendationsarevalidandsupportedwiththoroughresearch,hisomissionsregardingthetruerelationshipbetweenhimselfandthecompanieshecoversconstituteamisrepresentation.McGuirehasalsoviolatedStandardVI(A)-Disclosureof sbynotdisclosingtheexistenceofanarrangementwiththecompaniesthroughwhichhereceivescompensationinexchangeforhisservices.JamiePyles,aportfoliomanagementtraineeforamoneymanagementfirm,callsprospectiveclients, lingthemthatheonthelastfiveyearsofperformanceofhisfirm,hecanguaranteetheclientatleasta75%return.Heinformsthemthathisfirmcanprovidealloftheservicesthattheywilleverneed.WhatistheminimumnumberofmisrepresentationsJamiehasmadetotheprospectiveclients?AisThereareatleastthreemisrepresentations.First,thatJamieisaportfoliomanager,whenhe'sreallyatrainee.Second,thatthefirmcanprovidealloftheservicestheywilleverneed.Third,thathecanguaranteea75%return.ØImportance:☆☆ØImpactoninvestmentØExam资质或能提供的服务；3）删除事实信息；4），等有关的误StandardI(D)ØDemonstratetheapplicationoftheCodeandØDistinguishbetweenconformitiesand mendpracticesandproceduresdesignedtopreventviolationsStandardStandardI(D)ØMembersandCandidatesmustnotengageinanyprofessionalconductinvolvingdishonesty,fraud,ordeceitorcommitanyactthatreflectsadverselyontheirprofessionalreputation,integrity,orcompetence.StandardI(D)ØThestandardareprimarilyaimedatconductrelatedtoØDonotseekthestandardsasamethodofsettling political,orotherdisputesunrelatedtoprofessionalethicsØAnyactthatinvolveslying,stealing,orotherdishonestconductisaviolationStandardI(D)GuidanceØConductthat,althoughnotillegal,butnegativelyaffectsamember’sorcandidate’strustworthinessorcompetence,isaviolationØThelackofdiligence(sufficienteffort)inprovidingprofessionalservicesmaybeaviolation albankruptcymayviolatethestandardifitinvolvesfraudulentordeceitfulbusinessconduct.StandardI(D)CarmenGarciamanagesamutualfunddedicatedtosociallyresponsibleinvesting.Sheisalsoanenvironmentalactivist.Astheresultofherparticipationinnonviolent s,Garciahasbeenarrestedonnumerousoccasionsfortrespassingonthepropertyofalargepetrochemicalplantthatisaccusedofdamagingtheenvironment.StandardI(D)Generally,StandardI(D)isnotmeanttocoverlegaltransgressionsresultingfromactsofcivildisobedienceinsupportof albeliefsbecausesuchconductdoesnotreflectpoorlyonthemember'sorcandidate'sprofessionalreputation,integrity,orcompetence.WhichofthefollowingactionsmostlikelyviolatesStandardI(D)Misconduct?Amember’smarketforecastshavebeenwronginthreeconsecutivequarters,promptingaformalcomplaintfromaALevelIcandidateisejectedfromaho forattemptingtopassabadcheck.Amemberpursuesanemploymentopportunitywithacompetingfirm,primarilyasameansofsecuringasalaryincreasefromhercurrentemployer.BisAnyactivitythatreflectsadverselyonamember’sprofessionalreputation,integrity,orcompetenceisaviolationofStandardI(D)Misconduct.Aslongasthememberhasareasonableandadequatebasisfor simplybeingwrongdoesnotcallthemember’sintegrityorcompetenceintoquestion.AmembercanpursueanemploymentopportunitywithacompetitoraslongasthememberabidesbytheStandardsrelatedtoDutiestoØImportance:☆☆ØConductrelatedtoprofessionalConductunrelatedtoprofessionalØExam StandardII(A)MaterialNonpublicØDemonstratetheapplicationoftheCodeandØDistinguishbetweenconformitiesand mendpracticesandproceduresdesignedtopreventviolationsStandardII(A)MaterialNonpublicØMembersandCandidateswhopossessmaterialnonpublicinformationthatcouldaffectthevalueofaninvestmentmustnotactorcauseotherstoactontheinformation.StandardII(A)MaterialNonpublicØWhatis“Material”Theinformationis“material”if1)itsdisclosurewouldhaveanimpactonthepriceofasecurity;or2)investorswouldwanttoknowtheinformationbeforemakinganinvestmentdecision;3)thesourceoftheinformationisExamples:earnings,merger&acquisition,innovativeproducts,changesinmanagement,legaldisputes,newdebtratings,etc.StandardII(A)MaterialNonpublicGuidanceØWhatConstitutes“Nonpublic”Informationis“nonpublic”untilithasbeendisseminatedtothemarketplaceingeneralInformationthatismadeavailabletoaselectgroupofpeopleremainsnonpublicMembers/candidatesmayuseinsiderinformationforthespecificpurposeofconductingduediligenceforsuchactivitiesasmergers,securityunderwriting,creditratings,etc.StandardII(A)MaterialNonpublicGuidanceØMosaicTheory(马赛克理论Members/candidatesdonotviolatethestandardwhentheyreachamaterialconclusionaboutacorporateactionoreventthroughan ysisofpublicinformationandnonmaterialnonpublicinformationStandardII(A)MaterialNonpublicGuidanceØSocialInformationfrominternetandsocialmediaplatformsmaynotbeconsideredpublicExample:socialmediathatrequiresmembershipinordertoaccessthepublishedcontentMembers/candidatesshouldverifythatmaterialinformationobtainedfromthesesourcescanalsobeaccessedfromasourcethatisavailabletothepublic(e.g.,w ges,pressreleases)StandardII(A)MaterialNonpublicGuidanceØUsingIndustryMembers/candidatesmayspeakwithexpertsregardingeconomicconditions,industrytrends,andtechnicalissuesrelatingtoproductsandservicesMembers/candidatesareprohibitedfromtakinginvestmentactionsbasedonmaterialnonpublicinformationprovidedbyindustryexpertsStandardII(A)MaterialNonpublicØAchievePublicMembers/candidatesshouldmakereasonableeffortstoachievepublicdisseminationofmaterialinformationIfpublicdisseminationisnotavailable,onlytotheirsupervisoryandcompliance neloftheirfirmStandardII(A)MaterialNonpublicØAdoptComplianceandDisclosureØFirewallisusedforpreventingthecommunicationofmaterialnonpublicinformationwithinfirms Aprohibitiononalltypesofproprietaryactivitywhenafirmpossessesmaterialnonpublicinformationisnotappropriate,e.g.marketmaking(造市、做市)StandardII(A)MaterialNonpublicFrankBarnes, andcontrollingshareholdertheSmartTownclothingchain,decidestoacceptatenderofferandsenthefamilybusinessatapricealmostdoublethemarketpriceofitsshares.Hedescribesthisdecisiontohissister(SmartTown'streasurer),whoconveysittoherdaughter(whoownsnostockinthefamilycompanyatpresent),who lsherhusband,Staple.Staple,however, hisstockbroker,AlexHalsey,whoimmedia ySmartTownstockforhimself.StandardII(A)MaterialNonpublicTheinformationregardingthependingsaleisbothmaterialandnonpublic.StaplehasviolatedStandardH(A)bycommunicatingtheinsideinformationtohisbroker.Halseyalsohasviolatedthestandardbybuyingthesharesonthebasisofmaterialnonpublicinformation. ystisallowedtotradeoninformationthathehaspredicted,suchasacorporateactionorevent,usingperceptiveassemblyand ysisofmaterialpublicinformationornonmaterial,non-publicinformation.Thisiscalledthe:assessmentdeductionmosaicCisThisdeductivereasoningislegal(doesnotconstitutetradingwithinsideinformation)andiscalledthemosaictheory.ØImportance:☆☆ØWhatismaterialandnonpublicMosaicSocialmediaandusingindustryØExam StandardII(B)MarketØDemonstratetheapplicationoftheCodeandØDistinguishbetweenconformitiesand mendpracticesandproceduresdesignedtopreventviolationsØMembersandCandidatesmustnotengageinpracticesthatdistortpricesorartificiallyinflatetradingvolumewiththeintenttomisleadmarketparticipantsØInformation-BasedExample:SpreadingfalserumorstoinducetradingbyExample:SecuringacontrollinganddominantpositioninafinancialinstrumenttomanipulatethepriceofarelatedderivativeortheunderlyingassetTheStandardisnotintendedtoprecludetransactionsundertakenonlegitimatetradingstrategiesStandardII(A)MaterialNonpublicInanefforttopumpupthepriceofhisholdingsinMoosehead&BelfastRailroadCompany,SteveWeinberglogsontoseveralinvestorchatroomsontheinternettostartrumorsthatthecompanyisabouttoexpanditsrailnetworkinanticipationofreceivingalargecontractforshipStandardII(A)MaterialNonpublicWeinberghasviolatedStandardII(B)bydisseminatingfalseinformationaboutMoosehead&Belfastwiththeintenttomisleadmarketparticipants.SteveWaters,aCFAcandidate,hasdecidedtoenterintoalongpositionofFarmcostock.SinceFarmcoisthinlytraded,WatersisconcernedtheorderwilloverwhelmtheliquidityofFarmcoandthepricewillsurge.Watersengagesinaseriesofblocktradesinorderto plishthepurchase.Watershasengagedin:AisWatersisnotinviolationofStandardII(B),MarketManipulation.Transaction-basedmanipulationincludes,butisnotlimitedto,transactionsthatartificiallydistortpricesorvolume.Information-basedmanipulationincludes,butisnotlimitedto,spreadingfalserumorsaboutafirminordertoinduceotherstotrade.ØImportance:☆☆ØØExamSTANDARDIII:DUTIESTOStandardIII(A)Loyalty,Prudence,andØDemonstratetheapplicationoftheCodeandØDistinguishbetweenconformitiesand mendpracticesandproceduresdesignedtopreventviolationsStandardIII(A)Loyalty,Prudence,andØMembersandCandidateshaveadutyofloyaltytotheirclientsandmustactwithreasonablecareandexerciseprudentjudgment.Membersandcandidatesmustactforthebenefitsoftheirclientsandplacetheirclient’sinterestsbeforetheiremployer’sortheirowninterestsStandardIII(A)Loyalty,Prudence,andØIdentifyingtheActualInvestmentSpecialüForpensionfundortrusts,theclientisnotthe entitywhohiresthemanager,butratherthebeneficiariesoftheplanortrustüWhenmanagingpoolsofclients’assets,theshouldcomplywithterms StandardIII(A)Loyalty,Prudence,andGuidanceØ theClient’süInvestment mendationsandtransactionsaresuitabletoclients’objectivesandcircumstancesüParticularcaremustbetakenonthepotentialbetweenthemembers/candidatesortheirfirmandclients’interestsüInvestmentdecisionsarejudgedinthecontextoftotalportfolio,ratherthanbyindividualStandardIII(A)Loyalty,Prudence,andGuidanceØ mission(软)SoftdollaristhepracticethataninvestmentmanagerusesclientbrokeragetopurchaseresearchservicesSoftdollarisclient’sasset,itsusesmustbene