Duties to Clients - III(E) Preservation of Confidentiality

LOS

What is the primary directive of Standard III(E) Preservation of Confidentiality? Members and Candidates must keep information about current, former, and prospective clients confidential unless one of the three exceptions are met.

What are the three confidentiality exceptions to Standard III(E) Preservation of Confidentiality? 1. The information concerns illegal activities on the part of the client or prospective client. 2. Disclosure is required by law. 3. The client or prospective client permits disclosure of the information.

a. demonstrate the application of the Code of Ethics and Standards of Professional Conduct to situations of issues involving issues of personal integrity

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b. distinguish between conduct that conforms to the Code and Standards and conduct that violates the Code and Standards

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Under what circumstances is it OK to discuss client information? 1. If the person is a fellow employee who works with the same client 2. If the disclosure is necessary and beneficial to the client in the cases where you have to disclose information 3. If the CFA Institute’s Professional Conduct Program (PCP) requests it, even if you have a settlement agreement with confidentiality clauses

What is the appropriate course of action if you think the client’s activities are illegal? You should consult with your supervisor and legal counsel to determine whether to report the activities to the appropriate governmental organization.

c. recommend practices and procedures designed to prevent violations of the Code of Ethics and Standards of Professional Conduct

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What two criteria, when met, require preservation of confidentiality? 1. The analyst must be in a relationship of trust with the client who has engaged him or her. 2. The information received must result from or be relevant to the portion of the client’s business that is the subject of the confidential relationship.

What happens if the CFA Institute’s Professional Conduct Program (PCP) requests confidential client information and you decline to provide it? You may be subject to suspension of membership under the CFA Institue’s bylaws.

What three questions should you ask yourself when you want to disclose client information that is outside the scope of the confidential relationship and does not involve illegal activities? 1. In what context was the information disclosed? 2. If disclosed in a discussion of work being performed for the client, is the information relevant to the work? 3. Is the information background material that, if disclosed, will enable the member to improve service to the client?