Note: this cheat sheet is updated for the latest 2025’s curriculum.
If mastered, Ethics can be the ace up your sleeve throughout your CFA exam journey, given its relative high topic-weight yet similar content across all 3 levels.
That said, Ethics can be really dry to read through at times… we know, as we have gone through them ourselves.
That’s why we’ve created this CFA Level 1 Ethics Cheat Sheet to help speed up your revision of this section. ☕
Our Cheat Sheet series focuses on one specific topic area for each CFA Level.
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By referring to the CFA Learning Outcome Statements (LOS), we prioritize and highlight the absolute key concepts and formula you need to know for each topic. Plus some topic-specific tips at the end too!
Let’s dive in!
Ethics is present in all 3 levels of the CFA exams and something candidates need to master for various reasons:
2025 CFA Level 1 Ethics’ topic weighting is 15%-20%, which means 27-36 questions of the 180 questions of CFA Level 1 exam is centered around this topic.
It is covered in Topic 10 which contains 5 Learning Modules (LMs).
| Learning Module | Sub-topic | Description |
|---|---|---|
| 1 | Ethics and Trust in the Investment Profession | An introduction to Ethics and why a high level of ethical standard is needed in investment management. This LM is not covered in our summary notes below given its introductory nature. |
| 2 | Code of Ethics and Standards of Professional Conduct | The key to know here is the 6 components of Code of Ethics and 7 Standards of Professional Conduct. |
| 3 | Guidance for Standards I–VII | The main section you need to master of all the Ethics readings, as it goes through the details of each Standard. |
| 4 | Introduction to the Global Investment Performance Standards (GIPS) | An introduction to GIPS: why it was created, to whom in applies to, how to verify GIPS compliance. |
| 5 | Ethics Application | A new chapter that goes through lots of examples of ethics in practice. This LM is not covered in our summary notes below as it is filled with examples, but do use it for your practice to learn how to answer CFA ethics questions! |
CFA Level 1 Ethics is focused on educating candidates on the CFA Institute’s Code of Ethics & Standards of Professional Conduct, an ethical benchmark for investment professionals worldwide.
Equally important is also the Global Investment Performance Standards (GIPS), which is the standard on how firms are supposed to record, compare and present investment performance.
CFA Ethics, in a nutshell, is there to teach you:
– how investment managers should conduct themselves.
– how firms should represent their investment performance.
Yes, you need to know all of these 22 Standards and sub-sections in details, plus their applications (see next LM).
| Standard’s name | Description |
|---|---|
| 1(A): Knowledge of the Law | Understand and comply with all applicable laws, rules, and regulations (including the CFA Institute Code of Ethics and Standards) of any government, regulatory organization, licensing agency, or professional association governing their professional activities. Note that: – In the event of conflict, comply with the strictest, applicable law to the situation. – Basically do not associate yourself with law-breakers. – You must be aware of the all laws where you conduct business. Stating that you’re not aware of the law, hence a violation, is not an acceptable excuse. |
| 1(B): Independence and Objectivity | Use reasonable care and judgment to achieve and maintain independence and objectivity in their professional activities. Must not offer, solicit, or accept any gift, benefit, compensation, or consideration that reasonably could be expected to compromise their own or another’s independence and objectivity. |
| 1(C): Misrepresentation | Must not knowingly make any misrepresentations relating to investment analysis, recommendations, actions, or other professional activities. For example, if an external source is used in a report, please cite it. |
| 1(D): Misconduct | Must not engage in any professional conduct involving dishonesty, fraud, or deceit or commit any act that reflects adversely on their professional reputation, integrity, or competence. Note that if a member/candidate declares personal bankruptcy, it is NOT a misconduct per se. However if the reason of bankruptcy was due to deceit or fraud, that would be a violation and deemed as a misconduct. Personal issues that reflect poorly on professional reputation/competence is deemed a misconduct. |
| Standard’s name | Description |
|---|---|
| 2(A): Material Nonpublic Information | 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. Material information is information that can have an impact on the price of a security, or something an investor wants to know before making an investment decision. Nonpublic information is simply information that has not been made public. Analysts are free to act on public and non-material, nonpublic information without risking violation (mosaic theory). |
| 2(B): Market Manipulation | Must not engage in practices that distort prices or artificially inflate trading volume with the intent to mislead market participants. Misleading investors by distorting prices (transaction based manipulation) or with false information (information-based manipulation) are not allowed. |
| Standard’s name | Description |
|---|---|
| 3(A): Loyalty, Prudence, and Care | Members/candidates have a duty of loyalty to their clients and must act with reasonable care and exercise prudent judgment. Must act for the benefit of their clients and place their clients’ interests before their employer’s or their own interests. Clients come first! |
| 3(B): Fair Dealing | 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. Communicate investment recommendations and changes simultaneously. |
| 3(C): Suitability | 1) When members and candidates are in an advisory relationship with a client, they must: – 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. – 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. – 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 only make investment recommendations or take investment actions that are consistent with the stated objectives and constraints of that portfolio. Remember it is not the responsibility of the sell-side analyst (who make recommendations) to determine suitability of investments for your client. Use regularly updated IPS (updated at least once a year) when making investment decisions. |
| 3(D): Performance Presentation | When communicating investment performance information, members or candidates must make reasonable efforts to ensure that it is fair, accurate, and complete. The key here is not to misrepresent past performance, nor promise any future performances. |
| 3(E): Preservation of Confidentiality | Members and candidates must keep information about current, former, and prospective clients confidential unless: – The information concerns illegal activities on the part of the client or prospective client, – Disclosure is required by law, or – The client or prospective client permits disclosure of the information. |
| Standard’s name | Description |
|---|---|
| 4(A): Loyalty | In matters related to their employment, members and candidates must act for the benefit of their employer and not deprive their employer of the advantage of their skills and abilities, divulge confidential information, or otherwise cause harm to their employer. Understand what you can or cannot do once leaving (or after leaving) an employer. For example, knowing the names of former clients is not confidential, but one must not use any records or work stored in paper/electronic format from previous firm. |
| 4(B): Additional Compensation Arrangements | Must not accept gifts, benefits, compensation, or consideration that competes with, or might reasonably be expected to create a conflict of interest with, their employer’s interests unless they obtain written consent from all parties involved. Best to obtain employer’s permission before accepting cash or significant perks. Token gifts (of not significant value) such as a pen does not need permission. |
| 4(C): Responsibilities of Supervisors | Must make reasonable efforts to detect and prevent violations of applicable laws, rules, regulations, and the Code and Standards by anyone subject to their supervision or authority. That said, supervisors’ are not responsible for their subordinates’ behavior. |
| Standard’s name | Description |
|---|---|
| 5(A): Diligence and Reasonable Basis | Members and candidates must: – Exercise diligence, independence, and thoroughness in analyzing investments, making investment recommendations, and taking investment actions. – Have a reasonable and adequate basis, supported by appropriate research and investigation, for any investment analysis, recommendation, or action. |
| 5(B): Communication with Clients and Prospective Clients | Members and candidates must: – Disclose to clients and prospective clients the basic format and general principles of the investment processes used to analyze investments, select securities, and construct portfolios, and must promptly disclose any changes that might materially affect those processes. – Use reasonable judgment in identifying which factors are important to their investment analyses, recommendations, or actions and include those factors in communications with clients and prospective clients. – Distinguish between fact and opinion in the presentation of investment analysis and recommendations. |
| 5(C): Record Retention | Must develop and maintain appropriate records to support their investment analysis, recommendations, actions, and other investment-related communications with clients and prospective clients. |
| Standard’s name | Description |
|---|---|
| 6(A): Disclosure of Conflicts | Must make full and fair disclosure of all matters that could reasonably be expected to impair their independence and objectivity or interfere with respective duties to their clients, prospective clients, and employer. Must ensure that such disclosures are prominent, are delivered in plain language, and communicate the relevant information effectively. |
| 6(B): Priority of Transactions | Investment transactions for clients and employers must have priority over investment transactions in which a member or candidate is the beneficial owner. |
| 6(C): Referral Fees | Must disclose to their employer, clients, and prospective clients, as appropriate, any compensation, consideration, or benefit received from or paid to others for the recommendation of products or services. |
| Standard’s name | Description |
|---|---|
| 7(A): Conduct as Members and Candidates in the CFA Program | Members and candidates must not engage in any conduct that compromises the reputation or integrity of CFA Institute or the CFA designation or the integrity, validity, or security of the CFA examinations. Basically do not discuss/share confidential questions tested in the actual exams. |
| 7(B): Reference to CFA Institute, the CFA Designation, and the CFA Program | When referring to CFA Institute, CFA Institute membership, the CFA designation, or candidacy in the CFA Program, members and candidates must not misrepresent or exaggerate the meaning or implications of membership in CFA Institute, holding the CFA designation, or candidacy in the CFA program. |
Talking about Ethics tips warrants a separate article in itself, because there is so much to cover.
Check out our top 10 tips for CFA Ethics for all levels to learn tried-and-tested strategies to ace this topic!
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it's so helpful, could be better if you add cases to each standard:)
Hi thank you so much for the cheat sheets! May I know when will you guys update the Economics & Alternative Investment cheat sheets?
Hi Irza, glad you found these cheat sheets useful! Econs and Alternative Investments will be ready next week :)
Thank you very much, it's very useful for me