經(jīng)濟學理論綜述13個ethics

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Ethics

?Gillsie

CFALevelIII

June,1999

ETHICS

InGeneral

MEMBERS(Regular&AffiliatemembersofAIMR&itsconstituent ystsocieties,holdersoftheCFAcharter,&CFACandidatesareREQUIREDtoconductthemselvesinaccordancewiththeAIMRCodeofEthics&StandardsofProfessionalConduct.

MemberswhofailtocomplywiththeseobligationsmaybesubjectedtodisciplinarysanctionbythofernorsofAIMR,actingthoughitsProfessionalStandardsCommittee.

ProfessionalStandardsareNEEDEDinthefieldofFinancial ysis&investmentmanagementbecause

PublicneedsCOMPETENT,OBJECTIVE&TRUSTWORTHYinvestmentadviceandfinancialmanagement

TherearecertainFUNDAMENTALStandardsofConductthatcanbecommonlyappliedtoallwhoareengagedintheprofessionoffinancial ysis&investmentmanagement

ABODYofKNOWLEDGEexiststhat sengagedintheprofessionalpracticeoffinancialysisandinvestmentmanagementshouldKNOW,UNDERSTAND,&APPLY

AIMRhastakenonthemissionto

EstablishEDUCATIONALStandards,includingthecompilationoftheBodyofKnowledge,forthefieldofinvestmentmanagementandresearch,conductexaminationsdesignedtomeasurea ’sunderstandingoftheBodyofKnowledge,andtoawardtheCFAdesignationto sdemonstratingcompetencyinfinancialysisandinvestmentmanagement

PromoteHIGHETHICAL&PROFESSIONALStandardsforfinancial ysts&investmentprofessionalsworldwide.

AIMRCodeofEthics

ConductyourselfwithINTEGRITY&DIGNITY,andactinanETHICALmannerinyourdealingswiththepublic,s,customers,employers,employeesandfellowprofessionals

ConductyourselfandencouragefellowinvestmentprofessionalstoconductthemselvesinaprofessionalðicalmannerthatwillREFLECTCREDITonyourselfandtheprofessionasawhole

ActCOMPETENTLYandstrivetoimprovecompetence

UseProperCareandExerciseINDEPENDENTPROFESSIONALJUDGMENT

MemorizetheseKeyPhrasestoKnowtheCodeofEthics

ActwithIntegrity

BeaCredittotheProfession

BeCompetent

UseIndependentProfessionalJudgment

StandardI:FundamentalResponsibilities

3.AIMRStandardsofProfessionalConduct

I(A):Know&ComplywithLaws,Regulations,EthicalCodes,&ProfessionalStandards

I(B):DonotKnowinglyparticipateorassistothersinanyviolationofapplicableregulationsorethicalcodes

StandardII:RelationshipswithandResponsibilitiestotheProfession

II(A):UsetheCFADesignationwithDignity.RefertoMembershipinAIMR,FAF,ICFA,ortheCFAPrograminaDignified&JudiciousManner.DonotusetheCFADesignationunlessyouaretheholderofaCFACharter

II(B):DonotengageinanyactthatAdverselyreflectsuponyourhonesty,trustworthiness,orprofessionalcompetence

II(C):Donot giarize

StandardIII:Relationshipswith&ResponsibilitiestotheEmployer

III(A):MembersmustinformemployersoftheirobligationtocomplywiththeCodeofEthicsandStandardsofProfessionalConductanddeliveracopyoftheCodeandStandardstotheirSupervisor

III(B):Donotundertakeanyindependentpracticeincompetitionwithyouremployerwithoutwrittenconsentfrombothyouremployerandyourother

III(C):Disclosetoyouremployerallmattersthatcouldreasonablybeexpectedtoimpairyourabilitytorenderunbiasedandobjectiveadvice.Ifa ofinterestexists,complywithanyprohibitionsonactivitiesimposedbyyouremployer

III(D):Disclose,inwriting,allmonetaryorotherbenefitsreceivedforyourservicesotherthantheusually&customarycompensationpaidtoyoubyyourprimaryemployer

III(E):MemberswithSupervisoryresponsibilitiesmustexercisecontrolovertheirsubordinatestopreventviolationsoflaws,statutes,ortheCode&Standardsbysettingand/orrelyingonreasonableproceduresdesignedtodetect&preventsuchviolations

StandardIV:Relationshipswith&Responsibilitiesto s&Prospects

(A)InvestmentProcess

IV(A.1):HaveaReasonable&AdequateBasis,supportedbyappropriateresearch,for mendationsorinvestmentaction.Bediligenttoavoidanymaterialmisrepresentation&maintainappropriaterecordstosupportthe mendationoraction

IV(A.2):Inresearchreports:

UseReasonableJudgmenttoIncludeRelevantFactors

DistinguishbetweenFact&Opinion

IndicatethebasiccharacteristicsoftheInvestment

IV(A.3):Usecaretoachieve&maintainindependence&objectivityinmakinginvestment mendationsortakinginvestmentaction

(B)In ctionwith s&Prospects

IV(B.1):Membershavetheaffirmativeresponsibilitytounderstandandcomplywiththeirfiduciaryduties.Membersmustceinterestsaheadoftheirown

IV(B.2):Beforemakinganyinvestment mendationortakinginvestmentactionfora,amembermust:

Makeinquiryintothe’sfinancialsituation,investmentexperience,andinvestmentobjectives(shouldbedoneatleastonceperyeartomakesuretheprofileiscurrent)

Considertheappropriatenessandsuitabilityofinvestment mendationsoractionforthewithrespecttohisneeds,objectives,andtheeffectontheportfolio

Distinguishbetweenfact&opinioninpresenting mendations

Discloseto sthegeneralprinciplesandformatoftheinvestmentprocessbywhichsecuritiesareselectedandportfoliosareconstructed.

Promptlydiscloseanychangesthatmightsignificantlyaffecttheprocess

IV(B.3):DealFairly&Objectivelywithall swhendisseminatinginvestmentmendations,materialchangesinprior mendations,andintaking

investmentaction

IV(B.4):PriorityofTransactionsshouldbegivento sandemployersoverthoseinwhichyouhaveabeneficialinterest. altransactionsshouldnotadverselyaffecttheinterestofs

IV(B.5):Preservethe ityof &Employerinformationunlessitconcernsillegalactivities

IV(B.6):MembersmaynotMisrepresent:

Theservicesthattheyortheirfirmsarecapableofperforming

Theirortheirfirm’squalifications

Theiracademicorprofessionalcredentials

Bymakingorimplyinganyguaranteesregardinginvestment es,excepttocommunicateaccurateinformationregardingthetermsoftheinvestmentandtheissuer’sobligations

IV(B.7):Discloseto sandProspectsallmattersthatcouldreasonablybeexpectedtoimpairyourabilitytorenderunbiased&objectiveadvice

IV(B.8):Disclosetosanyconsiderationyouhavepaidtoothersformendingyourservicestothat

StandardV:Relationshipswith&ResponsibilitiestotheInvestingPublic

V(A):DonotTrade,orcauseotherstotrade,inasecuritywhenpossessingmaterialnon-publicinformationonthesecurityifsuchtradingwouldbreachadutyoriftheinformationwasmis-appropriatedorrelatestoatenderoffer.Makeareasonableefforttohavethe makeapublicannouncementofmaterialnon-publicinformationthatit(oritsagents)havedisclosedtoyou,orthatyouknowwasdisclosedtosomeoneinamannerthatrepresentsabreachoffiduciaryduty

V(B):Makeeveryefforttoassurethatinvestmentperformanceinformationpresentedtosortothepublicisfair,accurateandcomplete

KeyConceptstoMEMORIZE

Know&ComplywithAllRules

DonotKnowinglyaidandabetotherstobreaktherules

UsetheCFAdesignationcorrectly

Behonest,eveninyour allife

Donot giarize

InformyouremployerabouttheCodeandtheStandards

Donotdo‘outside’workwithoutyouremployer’sapproval

Disclose sofinteresttoemployers, s&prospects

Discloseall efroman‘outside’job

Supervisorsmustadequa ysupervisetheirsubordinates

Backup mendationswithgoodreasons

Donotmakemisrepresentations

KeepGoodRecords

Putallrelevantfactsinresearchreports

Distinguishfactsfromopinions

Indicatethebasiccharacteristicsofinvestments

Maintainindependence&objectivity

Know&carryoutyourfiduciaryduties

Knowwhatissuitableforyour s

lyour syourbasicmethodology

Treat sfairly

Transactionprioritybelongstothe &employer

Keep &employerinformation

Donotgiveguarantees

Disclosereferralfees

Donotusematerialnon-publicinformation

Presentyourinvestmentperformancefairly&accura y

AmplificationsoftheStandardsofProfessionalConduct

StandardI:FundamentalResponsibilities

I(A):Know&ComplywithLaws,Regulations,EthicalCodes,&ProfessionalStandards

Know&Complywithallapplicablelaws®ulationsofANY ernment,regulatoryorganization,orprofessionalassociation erningthemember’sprofessionalactivities,includingtheAIMRCodeofEthics.Membersthatworkwithorwithinothercountriesmaybesubjecttovariedsecuritieslaws®ulations.MembersmustcomplywiththelawsandregulationsoftheirHOMEcountrywhenresiding&workinginforeigncountries,orintradingforeignsecurities.

Plus,themembermustcomplywiththelocallaws®ulationswhileresidingabroadortradingforeignsecurities.Whenthelaws®ulationsaredifferent,themembermustcomplywiththeMOREstrictlaws®ulationstowhichheissubject.TheCodeofEthicsandStandardsofProfessionalConductshould ernamember’sactionsintheabsenceofaspecificlocallaworregulatoryrequirement.IftheCode&Standardrequireahigherdutythanthelaw,theCode&Standardsshouldguidethemember.

ComplianceProcedures

MaintainCurrentFilesofapplicablelaws®ulationsanddistributesuchinformationtoemployees

Establishprocedures,wherebyemployeesareregularlyinformedaboutchangesintheselaws®ulations

Regularlyreviewwrittencomplianceproceduresofthefirmtomakesuretheyreflectcurrentlawandprovideadequateguidancetoemployees

I(B):DonotKnowinglyparticipateorassistothersinanyviolationofapplicableregulationsorethicalcodes

MembersareresponsibleforviolationswhichtheyKNOWINGLYparticipatein.Althoughmembersarepresumedtoknowallapplicablelaws®ulations,AIMRrecognizesthatamembermaynotrealizethereisaviolationifthememberisnotawareofallthefactsgivingrisetotheviolation.

ComplianceProcedures

WhenMember sa ,fellowemployee,oremployeris ngsomethingillegalorunethical,thefollowingstepsshouldbetaken:

ConsultCounseltodeterminethelegalityofconduct

Disassociateoneselffromtheillegalorunethicalactivityandfromthosecommittingit.Urgethefirmtopersuadethoseengagedintheillegalorunethicalactivitytostopsuchactions

Reportthosewhoareengagingintheillegalorunethicalactivitiestotheappropriate ,ifrequiredbylaorbyregulatoryagencyregulationstodoso.Thiscouldbenecessarytoprovedisassociation.Counselcangiveadviceastowhetherthisisrequired.

Inaction,combinedwith associationwiththoseinvolvedinillegalconductmaybeconstruedasparticipationorassistanceintheillegalconduct

Code&StandardsdoNOTREQUIREthatmembersreportlegalviolationstotheappropriate ,butsuchdisclosuremaybeprudentundercertaincircumstances

Whenquestionarisesre:meaningofaruleofregulationorwhetherornotacertainpracticeispermissible,theprofessionalshouldconsultwithhisimmediatesupervisorforaresolutionoftheproblem.Ifnotsatisfied,consultwithlegalcounsel(normallythefirm’scomplianceofficial,butinsomecases,outsidecounselshouldfirstbeconsulted)

Whenmembercommitsanillegalact,hemaynotclaimignoranceasanexcuse.HeisstillresponsiblewhensuchillegalitieswouldbeevidenttosomeonefamiliarwiththeHandbook,thefirm’scompliancemanual,orregulationsdeemedtobecommon

knowledgetoareasonablyinformedprofessional.Theprofessionalshouldbefamiliarenoughwiththerulesofconductforhisjob,soastobeabletorecognizewhenanactmaybeinviolationofacceptablenormsofconduct.Atthatpoint,counseladviceshouldbesoughtbeforeengaginginthequestionableact.

Ifadviceofcounselissoughtanditturnsouttobeerroneous,thefactthattheprofessionalmadeagoodfaitheffortnottoviolatetheCode,Standards,orLawmaybeusedasadefenseagainstchargesthatheviolatedthisStandardprovided:

Theadvicewassoughtfromsomeonethatwascompetenttorenderit(specialistintherelevantlaw)

Allrelevantfactsweretoldtocounsel

Advicewasfollowedwithoutmaterialdeviations

ProfessionalhadNOreasontobelievethatcounsel’sadvicewaserroneous

StandardII:RelationshipswithandResponsibilitiestotheProfession

II(A):UsetheCFADesignationwithDignity.RefertoMembershipinAIMR,FAF,ICFA,ortheCFAPrograminaDignified&JudiciousManner.DonotusetheCFADesignationunlessyouaretheholderofaCFACharter

MembersofAIMR,FAF,ICFAmayreferencetheseorganizationsinadignifiedandjudiciousmanner.Anaccurateexnationoftherequirementsthathavebeenmettoobtainmembershipmaybeincluded.

HoldersoftheCFAdesignationmayuse“CharteredFinancialyst”ortheCFAmarkinadignified&judiciousmanner.Anaccurateexnationofrequirementsthathavebeenmettoobtaindesignationmaybeincluded

CandidatesmayreferencetheirparticipationintheCFAprogramaslongasitismadeclearthattheyaremerelycandidates.OnlythoseawardedtheCFAchartermayusetheinitials“CFA”aftertheirname.Thereisnospecialentitlementorpartialdesignationtosomeonewhohaspassedoneormoreexaminations,butwhohasnotbeenawardedthecharter

ComplianceProcedures

Onletterheads,businesscardsandindirectorylistings,onlythemark,CFA,orthewords“CharteredFinancial yst”shouldappearafterthecharterholder’sname.

Thedesignationcannotappearintypelargerthantheholder’sname

AnydescriptionorexnationoftheCFAdesignation,AIMRorICFAshouldbelimitedtoaconcisedescriptionoftherequirementsneededtoobtainitand/oraconcisedescriptionoftheorganization

Noclaimofsuperiorperformance,abilityorknowledgebyvirtueofhavingaCFAdesignationsshouldbegivenorimplied

CandidatesmaystatethattheyareLevelI,II,orIIIcandidates,butshouldnotciteadateofcompletion.Tobeacandidaterequirestheindividualbeenrolledtotakethenextscheduledexam.

TheFirm’scompliance,publicrelations,andmarketingdepartmentsshouldbemadeawareofthisStandardinwriting,aswellasadescriptionofAIMR,ICFA,FAFandtherequirementsoftheCFAdesignation

“CFA”isaofAIMRandthereforeshouldneverbeusedasanoun,orinpluralizedform.A isnota“CFA”,the isthe“holderoftheCFAdesignation”Firmsdonothave15CFAs,theyhave15holdersoftheCFAdesignation

II(B):DonotengageinanyactthatAdverselyreflectsuponyourhonesty,trustworthiness,orprofessionalcompetence

ThisStandardgoesbeyondactscommittedinaprofessionalcapacity.Thisconcerns allyintegrity&individualbehaviorthatreflectontheentireprofession.PotentialViolationsinclude:

CriminalConvictionsforfeloniesorsimilarviolations,evenifnotrelatedtoprofessionalactivities

Repeatedconvictionsformisdemeanors,nomatterhowinconsequential,thatmightsuggestadisrespectforthelaw.

Engagingindishonestbusinessschemes

ForExample:

Excessivedrinkingatlunchandsubsequentintoxicationatwork.Thisisaviolationsinceitreflectspoorlyonthemember’sconductandprofessionalism,aswellasonhisorherfirmandtheinvestmentindustryingeneral

Paddingexpenseaccounts.Withorwithoutcriminalcharges,thisisaviolation,becausethememberengagedinintentionallydishonestbehavior.

ComplianceProcedures

Generally,itisamatterofthemember’sowncharacter&integritytoensurecompliance.Theinformationrequiredbyregulatoryagencies,suchastheSEC,stockexchanges,andtheInvestmentManagementRegulatoryOrganization,providesfurtherincentivestomaintainahighlevelofethicalconduct.

Plus,membersshouldencourageemployerstoadoptaclearindicatingthatalbehavior,whichreflectspoorlyontheindividual,theinstitution,orthe

investmentindustry,willnotbetolerated

Memberswhoaresupervisorsshouldconductbackgroundchecksonpotentialemployeestoensuretheyarenotineligibletoworkintheinvestmentindustrybecauseofpastlawinfractions.

II(C):Donot giarize

? isaviolationoftheCode&Standards.Alloutsidesourcesusedinreportsshouldbeacknowledged,identifyingthesource,itsauthor,andpublisher.TheonlyexceptionistheuseofFactualInformationpublishedbyRecognizedFinancial&StatisticalReportingSources.ThestandardappliestoORAL,WRITTEN&ELECTRONICcommunications.Violationsinclude:

Usingpartsofreports/articlespreparedbyotherseitherverbatimorwithslightwordingchangeswithoutacknowledgingthesource

Citingspecificquotationsto“Leading ysts”or“InvestmentExperts”withoutspecificallyreferringtothembyname

Presentingstatisticalestimatesorforecastsmadebyotherswiththesourceidentifiedbutwithoutanyofthecaveatsthatappearedinthesource

Usingachartorgraphpreparedbyotherswithoutstatingthesource

Copyingproprietaryspreadsheetsoralgorithmswithoutseekingthecooperationorauthorizationoftheircreators

ComplianceProcedures

Maintaincopiesofanymaterialspreparedbyothersthatwerereliedoninpreparingareport.

Attributethesourceforanydirectquotationincludingtables,projections&newmethodologies(preparedbyasourceotherthanarecognizedfinancial&statisticalreportingservice)

Attributethesourcewhenparaphrasingorsummarizingmaterialpreparedbyothers

StandardIII:Relationshipswith&ResponsibilitiestotheEmployer

III(A):MembersmustinformemployersoftheirobligationtocomplywiththeCodeofEthicsandStandardsofProfessionalConductanddeliveracopyoftheCodeandStandardstotheirSupervisor

HoldersoftheCFAdesignation,CFAcandidates,&AIMRmembersmustinformtheirIMMEDIATEsupervisorinwritingthattheyarerequiredtoconformtotheCodeofEthics&StandardsofProfessionalConduct.TheyareobligatedtodeliveracopyoftheCode&StandardstotheirSupervisor.

ComplianceProcedures

Notifyone’simmediatesupervisorinwritingabouttheneedtoabidebyAIMRCodeofEthics&StandardsofProfessionalConduct.ThisisnotnecessaryONLYifthesupervisorhasstated,inwriting,thatthefirm’spoliciesalreadyincludeAIMR’sCodeandStandards

AlongwiththecopyoftheCode&Standardsdeliveredtosupervisor,makeawrittenrequestthattheCode&Standardsbeadoptedanddisseminatedthroughoutthefirm.Maintainawrittenrecordofnotification.

Memberswhoaresupervisorsshouldinformnewemployeesaboutthehighdegreeofethicalconductexpectedofthem.

III(B):Donotundertakeanyindependentpracticeincompetitionwithyouremployerwithoutwrittenconsentfrombothyouremployerandyourother

Donotundertakeindependentpracticeincompetitionwithyouremployerthatmayresultinsomecompensationorotherbenefit,unlessyouhavewrittenconsentfrombothyouremployerandtheoutsideentitytodoso.Ifamembercontemtesperformingservicesforanentityotherthanhisemployerthatcouldresultincompensation,byrenderingaservicecurrentlyavailablebytheemployer,awrittenstatementmustbemadedescribing:

TheTypesofServicesoffered

TheExpectedDuration

TheCompensation

Noserviceshouldberendereduntilthe giveswrittenacknowledgementindicatingheorshehasreadandunderstoodthewrittendisclosure.Ifmembernstoleaveacurrentemployer,hehasadutytoactonlyinthebestinterestoftheemployeruntilemploymentisterminated.Thus,theemployeemustrefrainfrom nganythingthatwouldinjuretheemployer,depriveitofprofit,ordepriveitfromusingtheemployee’sskillsuntiltheemploymentterminates.Violationsinclude:

Misappropriatingthetradesecretsoftheemployer

Misusing information

Engaginginaconspiracytobringaboutmassresignationofotheremployees

Coaxingcustomerstoleavetheemployerpriortoceasingemploymentwiththeemployer

Self-dealing(appropriatingforoneselfabusinessopportunityorinformationthatbelongstotheemployer)

TakingtheEmployer’scustomerlists,records,orfileswithoutwrittenpermissionoftheemployer

TakingpropertyoftheEmployerorInterferingwiththeemployer’sbusiness

Deviatingfromanyunderstandingthathasbeenreachedandagreeduponbetweenthemember&employer,ormember&

III(C):Disclosetoyouremployerallmattersthatcouldreasonablybeexpectedtoimpairyourabilitytorenderunbiasedandobjectiveadvice.Ifaofinterestexists,complywithanyprohibitionsonactivitiesimposedbyyouremployer

Membersmustdiscloseanymaterialfactthatcouldreasonablybeexpectedtointerferewiththeirdutytotheiremployerortheirabilitytoactinanunbiasedandobjectivemanner. sofinterestexistwithanysituationthatwouldinterferewiththememberrenderingunbiasedinvestmentadvice,orcausethemembernottoactintheemployer’sbestinterest.

Manyfirmshavepoliciesthatrestrict altradingandprohibitemployeesfromholdingoutsidetrusteepositionsorcorporatedirectorships.Membersshouldabidebyemployerguidelines

III(D):Disclose,inwriting,allmonetaryorotherbenefitsreceivedforyourservicesotherthantheusually&customarycompensationpaidtoyoubyyourprimaryemployer

InformEmployersINWRITINGofcompensationforservicesthatareinadditiontothecompensationreceivedfromtheemployer.Theemployerisentitledtohavefullknowledgeofamember’scompensationarrangementsinordertoassessthetruecostofservices,andtheirlikelyeffectsontheemployee’sloyaltiesandobjectivity.

Theuseofpayment-in-kindandexpensereimbursementusedasameansofconcealingcompensationisdiscouraged

Ifamemberisproposingtoenterintoanagreementtoperformworkforafeepaidbysomeentityotherthantheprimaryemployer,hemustfileawrittenreportwiththeprimaryemployeroutlining:

Sourceofcompensation

Descriptionofthecompensation

Amountofcompensation

Durationofagreement

Noarrangementmaybeenteredintowithouttheemployer’sapproval

III(E):MemberswithSupervisoryresponsibilitiesmustexercisecontrolovertheirsubordinatestopreventviolationsoflaws,statutes,ortheCode&Standardsbysettingand/orrelyingonreasonableproceduresdesignedtodetect&preventsuchviolations

Memberswithsupervisoryresponsibilitiesmustestablishproceduresdesignedtopreventviolationsoflaws,regulations,complianceprocedures,orprovisionsoftheCode&Standards

Supervisorresponsibilityappliestoanymemberwhohasemployeessubjecttotheircontrolorinfluence.Memberswithsupervisoryresponsibilityareexpectedtounderstandwhatconstitutesanadequatecompliancesystemfortheirfirmandtomakereasonableeffortstoseethatappropriateproceduresareestablished, ed&communicatedtosubordinates,monitored&en d.Theymustexercisetheirresponsibilitywithrespecttoboth swhoholdanddonotholdtheCFAdesignation

Supervisorsmustmakeeveryefforttodetectimproperworkconduct,fraudulentbehavior,&misleadingstatementsorpracticesonthepartofsubordinates.Membermaynotbeinviolationifheisunabletodetectviolationsthatoccurevenafterreasonableprocedureshavebeenadoptedandstepshavebeentakentoinstituteaneffectivecomplianceprogram

OnceasupervisorlearnsanemployeehasormayhaveviolatedthelaworCode&Standards,hemustpromptlyinstituteaninvestigationtodeterminetheextentofwrong- ng.Itisnotenoughtorelyonanemployee’sstatementabouttheextentofwrong- ng,orasassurancebytheemployeethatitwillnotreoccur.Themembermustreportthemisconducttotheirsuperiorandtakestepstoensuretheviolationwillnotberepeated.

Ifamemberisinasupervisorypositioninafirmwithaninadequatecompliancesystem,heshould mendcorrectiveactiontoseniormanagement.Ifcorrectivestepsarenot edandthememberwouldnotbeabletodischargesupervisorresponsibilitiesduetoaninadequatecompliancesystem,themembershouldrefusetoacceptsupervisorresponsibility,inwriting,untilreasonableproceduresareadopted

ComplianceProcedures

IdentifysituationsinwhichaviolationofthelaworCode/Standardscouldoccur

Establishcomplianceproceduresdesignedtopreventsuchviolations

Disseminatetheprocedures&toappropriate nel

Periodicallyupdateprocedurestoensuremeasuresareadequateunderthelaw

En thoseprocedures

Reviewactionsofemployeesinordertopreventviolations

Whenviolationsoccur,promptactionistakentoinvestigateandmeasurestakentopreventre-occurrence.

StandardsofReasonablenessshouldbeusedtojudgetheactionsofsupervisors

ImportantLegalCasesintheAreaofSupervision

Petritesv.J.C.Bradford&Co.

SinceJCBradford’ssupervisoryproceduresdidNOTmeetstockexchangerules,thefirmsufferedaliability

Alm,Kane,Rogers&Co.SECRelease

Thefirm’ssupervisoryprocedureswerefoundtobeINFORMALandnotdesignedtopreventoruncoverthesolicitationofbusinessbasedoninsideinformation.Plus,thefirm’scompliancemanualprovidedNOguidelinesindicatingonwhatbasissalesmencouldsolicittrades.Consequently,thefirmwasguiltyincertainrelatedmatters.

SECv.FirstBostonCorporation

Firm’sheadtrader&supervisorwere lygiveninsideinformationaboutsomebadnewspertainingtoastock.Tradestookcebasedonthisinformation.Thefirmhadtodisgorgeitsprofitsfromthetrade,payafine,andreviewitsrestrictedlist&methodofseparatinginformationbetweendepartments.

StandardIV:Relationshipswith&Responsibilitiesto

s&Prospects

(A)InvestmentProcess

IV(A.1):HaveaReasonable&AdequateBasis,supportedbyappropriateresearch,for mendationsorinvestmentaction.Bediligenttoavoidanymaterialmisrepresentation&maintainappropriaterecordstosupportthe mendationoraction

Bediligentthoroughininvestigationswhenmaking mendations,orwhenundertakinginvestmentactionsforothers

Haveareasonable&adequatebasis,supportedbyappropriateresearch,for mendations&investments

Avoidmaterialmisrepresentationsinanyresearchreportorinvestment mendations

Maintainfiles&recordstosupportthereasonablenessof mendationsandinvestmentdecisions

Membersshouldnotuseanyinformationfromasourcehehasreasonto isnotaccurate

Itwouldbeunprofessionaltocomparefinancialratiospreparedunderdifferentaccountingruleswithoutsomeattempttomakethemcomparable.Plus,itisunprofessionalnottoinform sofunusualrisksthatmayexistincertainforeignsecurities