Recommended Procedures for Compliance
Members and Candidates
Suggested methods by which members and candidates can acquire and maintain understanding of applicable laws, rules, and regulations include the following:
Stay informed: Members and candidates should establish or encourage their employers to establish a procedure by which employees are regularly informed about changes in applicable laws, rules, regulations, and case law. In many
instances, the employer’s compliance department or legal counsel can provide such information in the form of memorandums distributed to employees in the organization. Also, participation in an internal or external continuing education program is a practical method of staying current.
Review procedures: Members and candidates should review, or encourage their employers to review, the firm’s written compliance procedures on a regular basis to ensure that the procedures reflect current law and provide adequate guidance to employees about what is permissible conduct under the law and/ or the Code and Standards. Recommended compliance procedures for specific items of the Code and Standards are discussed in this Handbook in the “Guidance” sections associated with each standard.
Maintain current files: Members and candidates should maintain or encourage their employers to maintain readily accessible current reference copies of applicable statutes, rules, regulations, and important cases.
Distribution Area Laws Members and candidates should make reasonable efforts to understand the applicable
laws—both country and regional—for the countries and regions where their investment products are developed and are most likely to be distributed to clients. Legal Counsel When in doubt about the appropriate action to undertake, it is recommended that a member or candidate seek the advice of compliance personnel or legal counsel
concerning legal requirements. If a potential violation is being committed by a fellow employee, it may also be prudent for the member or candidate to seek the advice of the firm’s compliance department or legal counsel.
Dissociation
When dissociating from an activity that violates the Code and Standards, members and candidates should document the violation and urge their firms to attempt to persuade the perpetrator(s) to cease such conduct. To dissociate from the conduct, a member or candidate may have to resign his or her employment.
Firms
The formality and complexity of compliance procedures for firms depend on the nature and size of the organization and the nature of its investment operations. Members and candidates should encourage their firms to consider the following policies and procedures to support the principles of Standard I(A):
Develop and/or adopt a code of ethics: The ethical culture of an organization starts at the top. Members and candidates should encourage their supervisors or managers to adopt a code of ethics. Adhering to a code of ethics
facilitates solutions when people face ethical dilemmas and can prevent the need for employees to resort to a “whistleblowing” solution publicly alleging concealed misconduct. CFA Institute has published the Asset Manager Code of Professional Conduct, which firms may adopt or use as the basis for their codes
Provide information on applicable laws: Pertinent information that highlights applicable laws and regulations might be distributed to employees or made available in a central location. Information sources might include primary information developed by the relevant government, governmental agencies, regulatory organizations, licensing agencies, and professional associations (e.g., from their websites); law firm memorandums or newsletters; and association memorandums or publications (e.g., CFA Institute Magazine).
Establish procedures for reporting violations: Firms might provide written protocols for reporting suspected violations of laws, regulations, or company policies.
