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The Investigation and Disciplinary Process of the Professional Conduct Program

Well-run capital markets pair capital investors with those seeking to invest assets in profitable ventures. Highly efficient capital markets, in turn, give numerous benefits to those providing the investment capital, opening the floodgates for a variety of ethical decisions. The choice between right and wrong is not always crystal clear. Financial complexities can stump even the most well-intentioned investment professionals.


Non-disclosure of fees, commissions, and mismanagement of clients’ funds are serious – and complex – financial matters. Thankfully, the rigorous standards of the CFA Institute Code of Ethics and Standards of Professional Conduct provide guidance and regulation.


As such, the CFA Institute has dubbed the code the “ethical benchmark for investment professionals around the globe,” according to its website. Its designations include CFA®, Chartered Financial Analyst®, CIPM®, Claritas® and GIPS® among CFA-owned trademarks.

types of misconduct

“New challenges will continually arise for members and candidates in applying the Code and Standards because many decisions are not unambiguously right or wrong,” the CFA Standards of Practice Handbook states.


When searching for legal advice or representation, it’s important to consult with a qualified defense attorney overseeing the CFA Institute’s rigorous standards as they apply to your financial decision-making.


This trusted attorney capable of both understanding the financial dilemma and helping you resolve it can be of tremendous value to your long-term success as a Chartered Financial Analyst.


Conflicts of interest, investment analysis, professionalism, the integrity of capital markets, and duties to clients and employers – these are all standards financial professionals are required to abide by, according to the CFA Institute’s Code of Ethics and Standards of Professional Conduct.


According to the CFA Institute’s Disciplinary Sanction Guidelines, here are some of the most common types of misconduct:


  1. Conversion or improper use of funds or securities
  2. Fiduciary duty
  3. Forgery
  4. Inadequate supervision
  5. Insider trading
  6. Manipulation
  7. Plagiarism
  8. Suitability/excessive trading
  9. Duty to employer (independent practice)
  10. Duty to Employer (leaving an employer)


Consulting with an attorney well-versed in the exact intricacies of these standards presents a tangible benefit to financial practitioners. Code breaches have serious consequences – violations are taken very seriously and can result in the suspension of an individual’s charter. Not all firms maintain a commitment to ethics, and not all accusations against financial practitioners or firms are valid, either.


Trusting an attorney with questions aimed to thwart financial disputes from occurring in the first place is an important resource to obtain. Using an attorney well-versed in the CFA Institute Professional Conduct Program (“PCP”) investigation & disciplinary process is a critical first step in ensuring you are protecting yourself against as much risk as possible. Trust drives markets, to an extent; establishing yourself as a trusted financial professional is paramount.


The CFA Institute’s Professional Conduct Program monitors member and candidate compliance with ethical standards through three means: self-disclosures, written complaints, and internal initiatives.


Complaints from the PCP necessitate timely resolution and quick action.  “Notice of Investigation” letters received from the PCP should be taken seriously. That means a special investigator is inquiring further, and you don’t have much time to do things like perform research, develop a plan to mitigate claims, and prepare a comprehensive response.


It’s helpful to consult with an attorney specializing in CFA PCP matters before speaking with an investigator.


Now to resolving PCP matters with favorable outcomes early on. Skilled attorneys with demonstrated expertise in the CFA Institute investigations are better equipped to advocate on your behalf. We know the process inside and out and employ proven strategies to assist our clients in reaching the most favorable outcomes.


The CFA certification holds extremely high standards of excellence in the finance industry and enforcement is taken seriously.

With practicing CFA professionals on the rise in 2021, there is more reason than ever to talk to an attorney today and establish rapport early on in your career. An attorney-CFA relationship could end up saving you costly fees and headaches in the future, so it’s best to start thinking about it early on in the CFA career path.


How It Works

The Professional Conduct Program disciplinary process is a multilevel peer-review process. The CFA Institute Bylaws and Rules of Procedure govern the program. Its bylaws and rules of procedure guide the program and its investigations.

Here’s a synopsis of some of the key questions answered, in the context of the CFA Institute:

disciplinary process

What is peer review?

Peer review in disciplinary matters is used to determine whether certain conduct meets the CFA Institute Code of Ethics and Standards of Professional Conduct. Industry professionals review a colleague’s performance based on professional standards. All peers are charter holders.


What’s a multilevel process?

A multilevel process likely involves review from a Designated Officer initially, as well as the CFA Institute Disciplinary Review Committee (DRC) in a checks-and-balances arrangement similar to the CFA Institute grading process. For example, during that process CFA charter holders – as well as a second set of peers – review exams.


How does the CFA Institute Disciplinary Review Committee (DRC) factor in?

Its members serve in interdisciplinary panels that could range from professional conduct matters to disciplinary actions.


Talk to an Expert

In the world of CFAs, the development and maintenance of clear, frequent, and thorough communication practices is critical to providing high-quality financial services to clients, and the same holds true with attorney representation. Contact Lowthorp Richards today for a free consultation and to speak one-on-one with a CFA Institute legal expert who can take you through the steps of the interdisciplinary process.


CFA Institute Expertise

Diana P. Lytel is a defense attorney representing Lowthorp Richards McMillan Miller & Templeman and overseeing the CFA Institute Professional Conduct practice group. She has worked with the National Association of Securities Dealers (now FINRA), with experience in the Enforcement Division at The Department of Financial Protection and Innovation (DFPI) and tenure with Morgan Stanley’s litigation department.

Contact her today for counseling throughout the CFA Institute Professional Conduct Program (PCP) investigations.


Cristian R. Arrieta Lowthorp Richards McMillan Miller & Templeman

A Professional Corporation 300 E. Esplanade Drive Suite 850, Oxnard, CA 93036 NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.”

NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.

Cristian R. Arrieta, Lowthorp Richards McMillan Miller & Templeman, A Professional Corporation, 300 E. Esplanade Drive Suite 850, Oxnard, CA 93036