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.
Members should be careful not to discriminate against any client when taking investment actions. This does not prohibit having different levels of service for different fees, but recommendations or changes to recommendations should be communicated to clients in an equitable manner.
When investment actions are taken, members must treat all clients fairly. Offerings should be made available to all clients for whom they are suitable, and allocated in proportion to orders received. Procedures for doing so should be documented and made available to clients.
- Limit the number of people who know of recommendation changes before they are distributed to clients
- Shorten the time frame between decision and dissemination
- Publish guidelines for pre-dissemination behavior
- Distribute recommendations to all clients simultaneously
- Maintain a list of clients and their holdings
- Develop and document trade allocation procedures
- Review accounts periodically to ensure none are being given unfair treatment
- Disclose levels of service
The CFA Institute Standards of Practice Handbook provides several examples of potential violations of fair dealing.
- Telling some clients of a change in recommendation before widely disseminating the report (though it is acceptable to contact selected clients after the report has been widely shared)
- Always placing orders for one account ahead of orders for other accounts
- Favoring some accounts on allocations of oversubscribed offerings
- Participating personally in oversubscribed offerings
- Allocating trades to clients based on post-trade performance
- Selective disclosure (such as having a “whisper” estimate that is given only to larger clients
- Excessive trading in some accounts to receive favorable treatment to all accounts
- Distributing recommendations via one selective methods (such as social media) before sharing it with all accounts