Code of Ethics and Standards of Professional Conduct

1. Code of Ethics and Standards of Professional Conduct

2. Code of Ethics

3. Code of Ethics • 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

4. Standard of Professional Conduct Generalities

5. AIMR Standards Categories • Fundamental Responsibilities • Relationships with and Responsibilities to the Profession • Relationships with and Responsibilities to the Employer • Relationships with and Responsibilities to Clients and Prospects • Relationships with and Responsibilities to the Investing Public

6. Standards of Practice Handbook Framework • Purpose and Scope of the Standards • Application of the Standards • Procedures of Compliance

7. Standard of Professional Conduct Standard I- Fundamental Responsibilities

8. I - Fundamental Responsibilities • Member shall: • 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 • Not knowingly participate or assist in any violations of such laws, rules, or regulations

9. I - Purpose and Scope • Sets minimum standards of conduct in areas not specifically covered by other standards (members expected to aim higher) • Requires members to comply with laws, rules and regulations governing their conduct

10. I - Purpose and Scope (cont’d) • International application of Code and Standards: • Rule of thumb: • Must adhere to the strictest between applicable law and Code and Standards • What happens if client’s country law differs from member’s country law? Which law applies? • Depend on particular facts and circumstances of each case • In doubt, seek legal advice

11. I - Purpose and Scope (cont’d) • Second part applies when members know or should know that their conduct may contribute to violation of applicable laws, regulations or Code and Standards • Not require to report legal violations to the appropriate governmental or regulatory organizations (but disclosure may be prudent)

12. I - Applications • If members feel maybe a violation, should consult general counsel (competent and unbiased) • If members know a violation, report to supervisor and dissociate if no action taken • Even if U.S. citizen and works for U.S. based firm, must comply with strictest of country law and Code and Standards

13. I - Procedures for Compliance • Maintain current files (reference copies of applicable laws) • Keep informed (memo to employees to inform about changes in applicable laws) • Review procedures (to ensure that they reflect current law)

14. I - Procedures for Compliance (cont’d) • When members suspect client or colleague of illegal activities should: • Determine legality (consult counsel) • Dissociate from the activity (urge the firm to act to stop the activity) • Inaction + continuing association may be construed as participation or assistance in the illegal conduct

15. Standard of Professional Conduct Standard II - Relationships and Responsibilities to the Profession

16. II (A) - Use of Professional Designation • AIMR members may reference their memberships 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. • Those who have earned the right to use the Chartered Financial Analyst designation may use the marks “Chartered Financial Analyst” or “CFA” and are encouraged to do so, but only in a proper, 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 right to use the designation.

17. II (A) - Use of Professional Designation (cont’d) • Candidates in the CFA Program, as defined in the AIMR Bylaws, may reference their participation in the CFA Program, but the reference must clearly state that an individual is a candidate in the CFA Program and cannot imply that the candidate has achieved any type of partial designation.

18. II (A) - Purpose and Scope • Responsibility to use the CFA designation or refer to candidacy in the CFA Program properly and in a manner that does not mislead the investing public or others • Applies to: • Use of Chartered Financial Analysts, CFA mark or membership in AIMR • All related explanation or descriptions (letterheads, cards, oral statements, etc.)

19. II (A) - Purpose and Scope (cont’d) • To be granted CFA designation: • Complete CFA Program (3 exams, 3 years of experience, undergraduate diploma) • Commitment to abide by Professional Conduct Program (file annual Professional Conduct Statement) • Maintain active membership in AIMR (pays dues)

20. II (A) - Purpose and Scope (cont’d) • Failure to meet those requirements: • CFA designation automatically suspended • Once suspended may not: • hold themselves as CFA Charterholders • place CFA after their names • display CFA Charter in work environment

21. II (A) - Purpose and Scope (cont’d) • CFA mark must be used as an adjective not a noun and never be used in the plural or the possessive • CFA designation to people who: • passed the 3 exams • have received their Charters • are Charterholders in good standing

22. II (A) - Applications • Advertisement limited to statements of facts regarding the CFA designation and/or AIMR • Cannot say pass exams on first try (obviously cannot imply better performance for that reason!) • To be a candidate must be registered to take the next scheduled exam • There is no partial CFA designation (e.g. no CFA II) • Must pay AIMR dues to use CFA designation

23. II (A) - Procedures of Compliance • Only CFA or Chartered Financial Analyst should appear after the name • Designation should not appear in type larger than the name • May state year when designation was received and years when active Charterholders • Description of the designation should be concise

24. II (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. • Members and candidates shall not engage in any conduct or commit any act that compromises the integrity of the CFA designation or the integrity of the CFA designation or the integrity or validity of the examinations leading to the award of the right to use the CFA designation.

25. II (B) - Purpose and Scope • Extends beyond technical compliance with laws that govern professional activities • Addresses personal integrity and prohibits individual behavior that reflects adversely on the entire profession

26. II (B) - Purpose and Scope (cont’d) • Violations include (whether or not the offenses relate to member’s professional activities): • Conviction of felony or crime punishable by more than one year in prison • Misdemeanors involving moral turpitude (lying, cheating, stealing,etc.) • Dishonest activities that do not result in criminal convictions • Repeated convictions for misdemeanors or act reflecting negatively on professional competence

27. II (B) - Applications • Frequent heavy drinking at lunch violates II(B) • Frequent convictions for minor offenses (possession of illegal substances) violates II(B) • Providing information concerning CFA exams violates II(B)

28. II (B) - Procedures for Compliance • Matter of the member’s own personal integrity and moral character • Members should encourage their employers to: • make clear that bad personal behavior will not be tolerated • adopt a code of ethics to which every employees must subscribe • conduct background checks on potential employees

29. II (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.

30. II (C) - Purpose and Scope • Plagiarism: • Copying or using in subtantially the same form materials prepared by others without acknowledging the source of the material or identifying the author and publisher of such material • Exception: • Use of factual information published by recognized financial and statistical reporting services or similar sources

31. II (C) - Purpose and Scope (cont’d) • Examples: • Take research reports or study done by another and change name • Using excerpts from articles or report prepared by others without acknowledgment • Citing specific quotations without specific reference • Presenting statistical estimates with source identified but without caveats used • Using charts and graphs without their sources • Copying proprietary computerized spreadsheets

32. II (C) - Purpose and Scope (cont’d) • Plagiarism is a violation of II(C) but also risk to violates IV(A.1) - Reasonable Basis and Representations • Plagiarism applies to: • oral communications • visit with associates, clients and customers • use of audio/video media • telecommunications

33. II (C) - Purpose and Scope (cont’d) • “Recognized” source: • Source worthy of confidence or one that is reliable and generally accepted or viewed by the investment profession globally or regionally or by a particular industry segment as a recognized source (Standard & Poor’s, Moodys, etc.) • Whether the information must be attributed to primary sources depends on whom the member is representing when disseminating the information (represent firm vs expert witness)

34. II (C) - Applications • Using someone report with minor modifications or additions without acknowledgment violates II(C) • Using parts of someone else report with acknowledgment in your report does not violate II(C) • Models must be acknowledge • Copying marketing materials without permission violates II(C)

35. II (C) - Procedures of Compliance • Maintain copies • Attribute quotations • Attribute summaries

36. Standard of Professional Conduct Standard III - Relationships with and Responsibilities to the Employer

37. Employer-Employee Relationship • Employee: • Someone in the service of another who has power or right to control or direct the work • written or implied contract • actual receipt of monetary compensation is not required • Factors determining the degree of control: • extent of control and supervision • kind of occupation and nature of skills • responsibility for costs of operation • method and form of payments • length of job commitment

38. III (A) - Obligation to Inform Employer of Code and Standards • Members shall: • Inform their employer in writing, through their direct supervisor, that they are obligated to comply with the Code and Standards and are subject to disciplinary sanctions for violations thereof. • Deliver a copy of the Code and Standards to their employer if the employer does not have a copy.

39. III (A) - Purpose and Scope • Requires that member take steps to notify their employer in writing of the Code and Standards • In writing includes any form of communication that can be documented (e.g. e-mail) • “Employers” means “immediate supervisor”

40. III (A) - Purpose and Scope (cont’d) • If employer has publicly acknowledged, in writing, adoption of Code and Standards, member need not give the notification • Each member must assume responsibility for Standard III(A)

41. III (A) - Applications • Cannot assume supervisor is aware of Code and Standards, even if the supervisor is a member • Example of memo

42. III (A) - Procedures for Compliance • Members should provide a written notice to their supervisors advising them of their obligation to abide by the Code and Standards

43. III (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

44. III (B) - Purpose and Scope • Does not preclude a member form entering into an independent business while employed but must secure written permission from employer and client • “Practice” means any service that the employer currently makes available for remuneration (actual receipt of monetary compensation is not required) • “Undertaking independent practice”means engaging in competitive business, as opposed to making preparations to begin such practice

45. III (B) - Purpose and Scope (cont’d) • If members plan to leave employers, those activities might constitute a violation: • misappropriation of trade secrets, clients, and client lists • misuse of confidential information • conspiracy to bring mass resignation • solicitation of employer’s clients prior to departure

46. III (B) - Purpose and Scope (cont’d) • Business relationship: employee vs independent contractor: • Determined by the degree of control exercised by the employing entity over the member • Factors determining control: • whether the parameters of the job are set (location, hours,etc.) • whether facilities are provided • numbers of clients or employers the members works for • whether the member holds himself or herself out to other employers for additional work

47. II (B) - Applications • Performance of services on own time is not relevant (still need written consent) • If a transaction could result in compensation but get caught before the deal violation of III(B) • Except with consent of employer, may not leave with employer property (books, reports, etc.) • Independent contractor responsibilities are determined by agreement between them and clients and nature of services

48. III (B) - Procedures for Compliance • Members should not render services until receiving written consent from both employer and client • Members should not contact existing or potential clients prior to leaving their employers

49. III (C) - Disclosure of Conflicts to Employer • Members shall: • 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. • Comply with all prohibitions on activities imposed by their employer if a conflict of interest exists.

50. III (C) - Purpose and Scope • Deals with conflicts of interest in any actions or decisions of members and focuses on responsibilities to the employer • Standard IV(B.7) deals exclusively with conflicts arising from investment advice and focuses on protecting the client • Requires that members obey internal directives and use their own judgment to report any potential conflicts that are not covered by their employers guidelines • Mere appearance of conflict may create problems