CFA & Ethics

[davelj]

[quote=pfflyer]I understand the concept- but isn’t there an enforcement arm that can strip those who act unethically and cause them to possibly lose their career?[/quote]

Yes, there’s a professional conduct committee that hears various complaints about CFA charterholders from various quarters, and then rules on them. The punishments range from suspension from the Institute to losing one’s charter permanently. I would imagine that if you lost your charter, you would have done something that probably did irreparable harm to your career. But it isn’t the CFA Institute’s mission to kick bad actors out of the field of finance altogether, rather merely to disallow their use of the charter.

This is how most “professional certification” bodies work. If you lose your CPA license, you can still practice accounting – you just can’t use the CPA designation or do audits or a handful of other things that require the CPA designation. If you get disbarred, you can still work at a law firm, lobby, be a paralegal, etc. But you can’t do certain things that require being a member of the bar. The CFA designation isn’t a license – it’s a charter (which is a fancy term for a certification). All the CFA Institute can do is not allow you to use the charter or be a member of the Institute.

FINRA and the SEC are the real enforcement arms of the brokerage and securities industries. Now, if you’re unhappy with the job they’ve done in the recent crisis (which is a very reasonable position to take), then by all means bitch and moan about them… but the CFA Institute is more like a guild than an enforcement agency.

[njtosd]

[quote=davelj]That the CFA Institute – as an ORGANIZATION – professes to care about ethics should come as no surprise. Much as the American Institute of CPAs also professes to care about ethics, despite the clear conflicts that many CPAs face and often don’t handle particularly well. (Throw the American Bar Association vis-a-vis lawyers in there as well. I could go on.)

. . .
[/quote]

I don’t know about the CFA Institute, but the American Bar Association is a voluntary group that is primarily educational in nature. It has no ability to enforce anything. Attorneys take state bar exams; professional ethics inquiries are handled by an office of the state (may or may not be the state bar association, depending on whether it’s an integrated bar). In any event, these organizations take ethics charges VERY SERIOUSLY, but they only investigate issues that are brought to their attention. So although there are lots of crooked lawyers out there, it is not the result of inattention by their bar associations (or equivalent). It’s the result of people not reporting problems (frequently because the clients who know about the transgressions aren’t squeaky clean either).

[njtosd]

[quote=davelj]That the CFA Institute – as an ORGANIZATION – professes to care about ethics should come as no surprise. Much as the American Institute of CPAs also professes to care about ethics, despite the clear conflicts that many CPAs face and often don’t handle particularly well. (Throw the American Bar Association vis-a-vis lawyers in there as well. I could go on.)

. . .
[/quote]

I don’t know about the CFA Institute, but the American Bar Association is a voluntary group that is primarily educational in nature. It has no ability to enforce anything. Attorneys take state bar exams; professional ethics inquiries are handled by an office of the state (may or may not be the state bar association, depending on whether it’s an integrated bar). In any event, these organizations take ethics charges VERY SERIOUSLY, but they only investigate issues that are brought to their attention. So although there are lots of crooked lawyers out there, it is not the result of inattention by their bar associations (or equivalent). It’s the result of people not reporting problems (frequently because the clients who know about the transgressions aren’t squeaky clean either).

[njtosd]

[quote=davelj]That the CFA Institute – as an ORGANIZATION – professes to care about ethics should come as no surprise. Much as the American Institute of CPAs also professes to care about ethics, despite the clear conflicts that many CPAs face and often don’t handle particularly well. (Throw the American Bar Association vis-a-vis lawyers in there as well. I could go on.)

. . .
[/quote]

I don’t know about the CFA Institute, but the American Bar Association is a voluntary group that is primarily educational in nature. It has no ability to enforce anything. Attorneys take state bar exams; professional ethics inquiries are handled by an office of the state (may or may not be the state bar association, depending on whether it’s an integrated bar). In any event, these organizations take ethics charges VERY SERIOUSLY, but they only investigate issues that are brought to their attention. So although there are lots of crooked lawyers out there, it is not the result of inattention by their bar associations (or equivalent). It’s the result of people not reporting problems (frequently because the clients who know about the transgressions aren’t squeaky clean either).

[njtosd]

[quote=davelj]That the CFA Institute – as an ORGANIZATION – professes to care about ethics should come as no surprise. Much as the American Institute of CPAs also professes to care about ethics, despite the clear conflicts that many CPAs face and often don’t handle particularly well. (Throw the American Bar Association vis-a-vis lawyers in there as well. I could go on.)

. . .
[/quote]

I don’t know about the CFA Institute, but the American Bar Association is a voluntary group that is primarily educational in nature. It has no ability to enforce anything. Attorneys take state bar exams; professional ethics inquiries are handled by an office of the state (may or may not be the state bar association, depending on whether it’s an integrated bar). In any event, these organizations take ethics charges VERY SERIOUSLY, but they only investigate issues that are brought to their attention. So although there are lots of crooked lawyers out there, it is not the result of inattention by their bar associations (or equivalent). It’s the result of people not reporting problems (frequently because the clients who know about the transgressions aren’t squeaky clean either).

[njtosd]

[quote=davelj]That the CFA Institute – as an ORGANIZATION – professes to care about ethics should come as no surprise. Much as the American Institute of CPAs also professes to care about ethics, despite the clear conflicts that many CPAs face and often don’t handle particularly well. (Throw the American Bar Association vis-a-vis lawyers in there as well. I could go on.)

. . .
[/quote]

I don’t know about the CFA Institute, but the American Bar Association is a voluntary group that is primarily educational in nature. It has no ability to enforce anything. Attorneys take state bar exams; professional ethics inquiries are handled by an office of the state (may or may not be the state bar association, depending on whether it’s an integrated bar). In any event, these organizations take ethics charges VERY SERIOUSLY, but they only investigate issues that are brought to their attention. So although there are lots of crooked lawyers out there, it is not the result of inattention by their bar associations (or equivalent). It’s the result of people not reporting problems (frequently because the clients who know about the transgressions aren’t squeaky clean either).

[davelj]

[quote=njtosd][quote=davelj]That the CFA Institute – as an ORGANIZATION – professes to care about ethics should come as no surprise. Much as the American Institute of CPAs also professes to care about ethics, despite the clear conflicts that many CPAs face and often don’t handle particularly well. (Throw the American Bar Association vis-a-vis lawyers in there as well. I could go on.)

. . .
[/quote]

I don’t know about the CFA Institute, but the American Bar Association is a voluntary group that is primarily educational in nature. It has no ability to enforce anything. Attorneys take state bar exams; professional ethics inquiries are handled by an office of the state (may or may not be the state bar association, depending on whether it’s an integrated bar). In any event, these organizations take ethics charges VERY SERIOUSLY, but they only investigate issues that are brought to their attention. So although there are lots of crooked lawyers out there, it is not the result of inattention by their bar associations (or equivalent). It’s the result of people not reporting problems (frequently because the clients who know about the transgressions aren’t squeaky clean either).[/quote]

I would say that’s a good description of how the CFA Institute operates as well. The problem being that they only have any authority whatsoever (which is minimal) over actual charterholders. And the percentage of folks who hold a charter is a tiny percentage (2%?) of the total number of financial services professionals. So, despite their best efforts, the CFA Institute’s ability to enforce ethics in the financial services industry at large is… practically nil.

[davelj]

[quote=njtosd][quote=davelj]That the CFA Institute – as an ORGANIZATION – professes to care about ethics should come as no surprise. Much as the American Institute of CPAs also professes to care about ethics, despite the clear conflicts that many CPAs face and often don’t handle particularly well. (Throw the American Bar Association vis-a-vis lawyers in there as well. I could go on.)

. . .
[/quote]

I don’t know about the CFA Institute, but the American Bar Association is a voluntary group that is primarily educational in nature. It has no ability to enforce anything. Attorneys take state bar exams; professional ethics inquiries are handled by an office of the state (may or may not be the state bar association, depending on whether it’s an integrated bar). In any event, these organizations take ethics charges VERY SERIOUSLY, but they only investigate issues that are brought to their attention. So although there are lots of crooked lawyers out there, it is not the result of inattention by their bar associations (or equivalent). It’s the result of people not reporting problems (frequently because the clients who know about the transgressions aren’t squeaky clean either).[/quote]

I would say that’s a good description of how the CFA Institute operates as well. The problem being that they only have any authority whatsoever (which is minimal) over actual charterholders. And the percentage of folks who hold a charter is a tiny percentage (2%?) of the total number of financial services professionals. So, despite their best efforts, the CFA Institute’s ability to enforce ethics in the financial services industry at large is… practically nil.

[davelj]

[quote=njtosd][quote=davelj]That the CFA Institute – as an ORGANIZATION – professes to care about ethics should come as no surprise. Much as the American Institute of CPAs also professes to care about ethics, despite the clear conflicts that many CPAs face and often don’t handle particularly well. (Throw the American Bar Association vis-a-vis lawyers in there as well. I could go on.)

. . .
[/quote]

I don’t know about the CFA Institute, but the American Bar Association is a voluntary group that is primarily educational in nature. It has no ability to enforce anything. Attorneys take state bar exams; professional ethics inquiries are handled by an office of the state (may or may not be the state bar association, depending on whether it’s an integrated bar). In any event, these organizations take ethics charges VERY SERIOUSLY, but they only investigate issues that are brought to their attention. So although there are lots of crooked lawyers out there, it is not the result of inattention by their bar associations (or equivalent). It’s the result of people not reporting problems (frequently because the clients who know about the transgressions aren’t squeaky clean either).[/quote]

I would say that’s a good description of how the CFA Institute operates as well. The problem being that they only have any authority whatsoever (which is minimal) over actual charterholders. And the percentage of folks who hold a charter is a tiny percentage (2%?) of the total number of financial services professionals. So, despite their best efforts, the CFA Institute’s ability to enforce ethics in the financial services industry at large is… practically nil.

[davelj]

[quote=njtosd][quote=davelj]That the CFA Institute – as an ORGANIZATION – professes to care about ethics should come as no surprise. Much as the American Institute of CPAs also professes to care about ethics, despite the clear conflicts that many CPAs face and often don’t handle particularly well. (Throw the American Bar Association vis-a-vis lawyers in there as well. I could go on.)

. . .
[/quote]

I don’t know about the CFA Institute, but the American Bar Association is a voluntary group that is primarily educational in nature. It has no ability to enforce anything. Attorneys take state bar exams; professional ethics inquiries are handled by an office of the state (may or may not be the state bar association, depending on whether it’s an integrated bar). In any event, these organizations take ethics charges VERY SERIOUSLY, but they only investigate issues that are brought to their attention. So although there are lots of crooked lawyers out there, it is not the result of inattention by their bar associations (or equivalent). It’s the result of people not reporting problems (frequently because the clients who know about the transgressions aren’t squeaky clean either).[/quote]

I would say that’s a good description of how the CFA Institute operates as well. The problem being that they only have any authority whatsoever (which is minimal) over actual charterholders. And the percentage of folks who hold a charter is a tiny percentage (2%?) of the total number of financial services professionals. So, despite their best efforts, the CFA Institute’s ability to enforce ethics in the financial services industry at large is… practically nil.

[davelj]

[quote=njtosd][quote=davelj]That the CFA Institute – as an ORGANIZATION – professes to care about ethics should come as no surprise. Much as the American Institute of CPAs also professes to care about ethics, despite the clear conflicts that many CPAs face and often don’t handle particularly well. (Throw the American Bar Association vis-a-vis lawyers in there as well. I could go on.)

. . .
[/quote]

I don’t know about the CFA Institute, but the American Bar Association is a voluntary group that is primarily educational in nature. It has no ability to enforce anything. Attorneys take state bar exams; professional ethics inquiries are handled by an office of the state (may or may not be the state bar association, depending on whether it’s an integrated bar). In any event, these organizations take ethics charges VERY SERIOUSLY, but they only investigate issues that are brought to their attention. So although there are lots of crooked lawyers out there, it is not the result of inattention by their bar associations (or equivalent). It’s the result of people not reporting problems (frequently because the clients who know about the transgressions aren’t squeaky clean either).[/quote]

I would say that’s a good description of how the CFA Institute operates as well. The problem being that they only have any authority whatsoever (which is minimal) over actual charterholders. And the percentage of folks who hold a charter is a tiny percentage (2%?) of the total number of financial services professionals. So, despite their best efforts, the CFA Institute’s ability to enforce ethics in the financial services industry at large is… practically nil.

[njtosd]

As a starting point, there will always be people who are bad at their jobs. That’s not illegal, and a bit of inquiry will usually allow you to avoid those people (and hopefully the marketplace will eventually put the bad ones out of business). If it’s more than just lack of talent, people can always file suit for fraud, negligence, misrepresentation, and perhaps file an ethics complaint if that’s available.
IMHO, it’s not the government’s job to be looking over the shoulder of every professional. If the average joe would take appropriate steps when he/she has been the victim of something more than simply making a poor choice, a lot of the bad actors would be weeded out.

[njtosd]

As a starting point, there will always be people who are bad at their jobs. That’s not illegal, and a bit of inquiry will usually allow you to avoid those people (and hopefully the marketplace will eventually put the bad ones out of business). If it’s more than just lack of talent, people can always file suit for fraud, negligence, misrepresentation, and perhaps file an ethics complaint if that’s available.
IMHO, it’s not the government’s job to be looking over the shoulder of every professional. If the average joe would take appropriate steps when he/she has been the victim of something more than simply making a poor choice, a lot of the bad actors would be weeded out.

[njtosd]

As a starting point, there will always be people who are bad at their jobs. That’s not illegal, and a bit of inquiry will usually allow you to avoid those people (and hopefully the marketplace will eventually put the bad ones out of business). If it’s more than just lack of talent, people can always file suit for fraud, negligence, misrepresentation, and perhaps file an ethics complaint if that’s available.
IMHO, it’s not the government’s job to be looking over the shoulder of every professional. If the average joe would take appropriate steps when he/she has been the victim of something more than simply making a poor choice, a lot of the bad actors would be weeded out.

[njtosd]

As a starting point, there will always be people who are bad at their jobs. That’s not illegal, and a bit of inquiry will usually allow you to avoid those people (and hopefully the marketplace will eventually put the bad ones out of business). If it’s more than just lack of talent, people can always file suit for fraud, negligence, misrepresentation, and perhaps file an ethics complaint if that’s available.
IMHO, it’s not the government’s job to be looking over the shoulder of every professional. If the average joe would take appropriate steps when he/she has been the victim of something more than simply making a poor choice, a lot of the bad actors would be weeded out.

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