Compliance, Ethics & Behavioral Finance·Ethics & Professional Conduct
Fiduciary Duty
The client's interest comes first
A fiduciary is legally and ethically bound to act in the client's best interest, ahead of the fiduciary's own. For investment professionals, this duty governs trade allocation, conflict-of-interest disclosure, suitability of recommendations, and the handling of any client information. The CFA Institute Code and Standards encode this duty in six standards every charterholder must follow.
Material non-public information
Trading on material non-public information (MNPI) — and tipping others to do so — is a federal crime in the US and a serious offense under EU Market Abuse Regulation. The standard is high: even credible-but-uncertain MNPI heard from a board member's spouse is enough to taint trades. When in doubt, don't trade and disclose to compliance.