Members and Candidates must keep information about current, former, and prospective clients confidential unless:
1 The information concerns illegal activities on the part of the client or
2 Disclosure is required by law, or
3 The client or prospective client permits disclosure of the information.
Data must typically be cleanly formatted to be useful for quantitative analysis. Depending on the number of variables, it can be arranged into one-dimensional arrays or two-dimensional rectangular arrays.
Data can be any collection of information, whether in the form of numbers, text, images, audio, etc. It can be classified across three dimensions: numerical vs. categorical; cross-sectional vs. time-series vs. panel; and structured vs. unstructured.
When communicating investment performance information, Members and Candidates must make reasonable efforts to ensure that it is fair, accurate, and complete.
1 When Members and Candidates are in an advisory relationship with a client, they must:
a Make a reasonable inquiry into a client’s or prospective client’s investment experience, risk and return objectives, and financial constraints prior to making any investment recommendation or taking investment action and must reassess and update this information regularly.
b Determine that an investment is suitable to the client’s financial situation and consistent with the client’s written objectives, mandates, and constraints before making an investment recommendation or taking investment action.
c Judge the suitability of investments in the context of the client’s total portfolio.
2 When Members and Candidates are responsible for managing a portfolio to a specific mandate, strategy, or style, they must make only investment recommendations or take only investment actions that are consistent with the stated objectives and constraints of the portfolio.
Members and Candidates have a duty of loyalty to their clients and must act with reasonable care and exercise prudent judgment. Members and Candidates must act for the benefit of their clients and place their clients’ interests before their employer’s or their own interests.
Members and Candidates must deal fairly and objectively with all clients
when providing investment analysis, making investment recommendations, taking investment action, or engaging in other professional activities.
Investors seek to avoid actions that will cause regret and seek actions that will cause pride. According to behavioral finance theory, this action manifests itself through the disposition effect – a greater likelihood that investors will sell winners and keep losers.
Members and Candidates must not engage in practices that distort prices or artificially inflate trading volume with the intent to mislead market participants.
Members and Candidates who possess material nonpublic information that could affect the value of an investment must not act or cause others to act on the information.