Ethics Case Study of the Week: Confidentiality of the CFA Exam

By Gary Sarkissian posted 01-25-2021 10:55 AM


CFA Institute’s Code of Ethics and Standards of Professional Conduct codify the ethical guidelines for the investment profession that are critical to maintaining the integrity of capital markets and investor trust.  Members, candidates, and even firms make a commitment to uphold these standards as they help elevate ethical decision-making universally around the globe.  

As investment professionals, we are certain to face important ethical decisions in our day-to-day activities.  Some scenarios we encounter will be straightforward, while others may be more complex.  No matter what circumstances we face, continuous learning remains imperative in an investment industry that continues to evolve with products undergoing innovation and a regulatory environment continuing to adapt. 

For that reason, each week we will feature a sample case from CFA Institute’s Ethics in Practice Casebook.  Each case is built upon a real-life example that may involve a regulatory matter or even a CFA Institute Professional Conduct investigation.  At the end of the case is a multiple-choice question that addresses the ethical nature of the actions taken in that case.  

This week’s case involves Standard VII(A) Conduct as Participants in CFA Institute Programs. 

Confidentiality of the CFA Exam
Strong is a well-known host of a popular financial news program. Two days after the CFA® Exams are held in June, Strong makes a joking comment on her program: “Congratulations to all those who sat for the CFA Exams! I understand the portfolio management questions were amazing this year! Now that the test is over, you can have your life back!” Strong’s actions are

A. inappropriate because she shared confidential information about the CFA exam.
B. appropriate because the exams are over, so the information is no longer confidential.
C. appropriate because she is free to express her opinion about the exam questions.
D. appropriate because the fact that the topic portfolio management is tested on the CFA exam is not confidential.
E. none of the above.

What do you think is the correct choice?  Click the “Analysis” button below to see the analysis, and feel free to discuss in the comments below.  The completion of this case qualifies for 0.25 hour of Standards, Ethics, and Regulation (SER) credit

This case relates to a CFA charterholder’s responsibility to refrain from any conduct that compromises the integrity or security of CFA Institute Programs under CFA Institute Standard VII(A): Conduct as Participants in CFA Institute Programs. Providing confidential exam information to candidates or the public is a violation of this standard. CFA Insitute considers information about past exams confidential until such time as the organization elects to release it publicly. This includes all aspects of the exam, including questions, broad topical areas, and formulas, either tested or not tested.

This confidentiality requirement allows CFA Institute to maintain the integrity and rigor of exams for future candidates. Expressing an opinion about the difficulty or quality of a particular topic area on an exam indirectly divulges the fact that that topic area was tested. In this case, Strong made comments about a broad topic area that was tested on the most recent exam. But CFA Institute publicly acknowledges that the general topic of portfolio management regularly makes up a certain percentage of the CFA Exam each year, so that information is not confidential. If Strong had mentioned that a particular topic in the area of portfolio management was on the test, her statement would have been problematic. Choice D is the best choice.

Image by mohamed Hassan from Pixabay

© 2019 CFA Institute. All rights reserved. You may copy and distribute this content, without modification and for non-commercial purposes, provided you attribute the content to CFA Institute and retain this copyright notice.  This case was written as a basis for discussion and is not prescriptive of how a business situation or professional conduct matter should or should not be handled or addressed. Certain characters mentioned are fictional to facilitate discussion, and any resemblance to actual persons is coincidental.