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CFA Level II Exam · Guidance for Standard I: Professionalism

Standard I(D): Misconduct for CFA Level II

Updated 7 October 2026 · Fact-checked

Standard I(D) Misconduct says members and candidates 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. To solve a question, identify the act, test it for dishonesty or damage to reputation, then name the Standard.

Understand Standard I(D): Misconduct

Standard I(D) is short but broad. It states that members and candidates 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.

The idea is that the CFA designation signals trust. If a charterholder lies, cheats or steals, that trust is damaged, even if the act was not directly about a client. So the Standard looks at the person's character as shown by their conduct.

The Standard covers two kinds of behaviour. The first is professional conduct involving dishonesty, fraud or deceit, such as falsifying records or misusing client funds. The second is any act, which can include personal conduct, that reflects adversely on integrity, reputation or competence. Not every private failing is a violation. The act must bear on professional reputation, integrity or competence. Examples include fraud, theft or embezzlement committed in private life.

I(D) differs from I(C) Misrepresentation. I(C) is about false or misleading statements made to others, such as in marketing or research, and about plagiarism. I(D) is wider: it covers dishonest or damaging conduct even when no specific statement to a client is involved. One act can breach both.

The Standard does not say that members must police the private lives of colleagues. It does not cover every act of poor judgement. It targets conduct that undermines trust in the member or the profession. To support the Standard, firms should have a code of ethics, compliance procedures, and a policy that makes clear that misconduct is prohibited and that employees should report it. Members should also know that the Standard is about their own conduct, while supervision of others sits in IV(C).

Key formulas to remember

Text of Standard I(D)
No professional conduct involving dishonesty, fraud or deceit; no act that reflects adversely on professional reputation, integrity or competence
Both parts are separate tests. Meeting either one can create a violation.
Two-part test
Violation if (dishonesty, fraud or deceit in professional conduct) OR (any act that harms reputation, integrity or competence)
Personal acts count only when they bear on integrity, reputation or competence.
I(C) versus I(D)
I(C) = false or misleading statements and plagiarism; I(D) = dishonest or damaging conduct generally
Pick I(C) when a misleading statement is the core issue. Pick I(D) when the act is broader.
Compliance procedures
Code of ethics + clear misconduct policy + reporting channel
Firms encourage these. Checking the backgrounds of new hires is optional good practice, not a listed requirement. The Standard itself binds the individual member or candidate.

How to solve Standard I(D): Misconduct questions

Use this method on any vignette question that asks whether a person violated Standard I(D) or which Standard applies.

  1. 1Read the question first so you know whether it asks for a violation, the correct Standard, or the correct action.
  2. 2Find the act in the vignette. Note who did it and whether it was in a professional or personal setting.
  3. 3Ask whether the act involves dishonesty, fraud or deceit, such as lying, falsifying, stealing or misusing funds.
  4. 4If not, ask whether the act reflects adversely on professional reputation, integrity or competence.
  5. 5Check for a closer Standard. A misleading statement points to I(C). Misuse of client assets may also involve III(A) Loyalty, Prudence, and Care.
  6. 6Pick the answer that names the right Standard and the right conclusion. Reject answers that overstate, such as saying every personal mistake is misconduct.
  7. 7Check the action options. The correct action is usually to stop the conduct, correct the harm and put controls in place.

Quickest way: Dishonest or damaging? Two-question screen

When to use it: Use when time is short and the vignette describes someone's conduct and you must decide if I(D) applies.

  1. Ask: was there lying, fraud or deceit? If yes, I(D) is breached.
  2. If no, ask: does the act damage trust in this person's integrity, reputation or competence? If yes, I(D) is likely breached.
  3. If it is only a private matter with no link to integrity or competence, there is no violation.
  4. If a false statement to others is central, also consider I(C) and choose the best-fitting answer.

Common mistakes in Standard I(D): Misconduct

  • Treating every personal misstep as I(D) misconduct

    The words 'any act' look unlimited.

    Fix: Require a link to dishonesty or to professional reputation, integrity or competence. A purely private matter with no such link is not a violation.

  • Confusing I(C) with I(D)

    Both involve honesty.

    Fix: Use I(C) when a misleading statement or plagiarism is the issue. Use I(D) for the wider dishonest or damaging conduct.

  • Thinking I(D) applies only at work

    The text mentions 'professional conduct' first.

    Fix: The second part covers any act that reflects adversely on the member. Fraud or theft in private life can breach it.

  • Believing a conviction is needed for a violation

    Candidates link misconduct to legal findings.

    Fix: The Standard is about conduct, not court outcomes. Dishonest conduct can breach it even without charges.

  • Choosing I(D) when a more specific Standard fits better

    I(D) feels like a catch-all.

    Fix: Scan for specific issues such as client funds, conflicts or exam conduct. Choose the Standard that best matches the core facts.

Worked examples

Example 1

Vignette: An analyst at an asset manager is behind on expense reports. To hit a deadline, she changes the dates and amounts on several client-entertainment receipts before submitting them. No client is affected. Q1: Has she violated Standard I(D)? Q2: What should she do?

Show the solution
  1. Identify the act: she altered receipts, which is falsification.
  2. Falsification is dishonesty and deceit in professional conduct.
  3. The lack of client harm does not remove the breach, because the Standard bans dishonest conduct itself.
  4. For the action: stop, correct the reports and disclose to the employer, and follow firm policy.

Answer: Q1: Yes. Falsifying receipts is dishonesty or deceit and violates Standard I(D). Q2: Correct the records and inform the employer or compliance.

Example 2

Vignette: A portfolio manager is a CFA charterholder. In a personal dispute, he sends an angry private message to a neighbour, which has no link to his work, clients or honesty. Q1: Does this breach Standard I(D)? Q2: Which test decides it?

Show the solution
  1. Identify the act: a private, angry message with no dishonesty or fraud.
  2. Apply the first test: no dishonesty, fraud or deceit is involved.
  3. Apply the second test: does it reflect adversely on professional reputation, integrity or competence? There is no link to his work or honesty.
  4. Conclude that a private matter with no such link is not a violation.

Answer: Q1: No. Q2: The test is whether the act involves dishonesty, fraud or deceit, or reflects adversely on professional reputation, integrity or competence. Neither applies here.

Exam tips

  • Expect I(D) to appear in item sets as one of several Standards, so name the best-fitting one.
  • Look for clue words such as falsified, concealed, stole, misused or deceived. They point to I(D).
  • Reject options that say any personal mistake is misconduct. The Standard needs a link to integrity or reputation.
  • When I(C) and I(D) both seem to fit, choose the one that matches the central fact: a false statement or broader dishonest conduct.
  • There is no penalty for wrong answers, so always pick an option after eliminating the clearly wrong ones.

Standard I(D): Misconduct in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Standard I(D): Misconduct: frequently asked questions

What is the difference between Standard I(C) and I(D)?

I(C) Misrepresentation covers false or misleading statements and plagiarism. I(D) Misconduct covers dishonesty, fraud or deceit and any act that harms professional reputation, integrity or competence. One act can breach both.

Does Standard I(D) cover personal conduct?

Yes, when the act reflects adversely on professional reputation, integrity or competence. Fraud or theft in private life can breach it. A private matter with no such link does not.

What compliance procedures support Standard I(D)?

Firms are encouraged to adopt a code of ethics, a clear policy that prohibits misconduct, and a way for staff to report concerns. Checking the backgrounds of new hires can be good practice, but it is optional. The Standard itself binds the individual member or candidate.

Is a criminal conviction required for a I(D) violation?

No. The Standard is about conduct. Dishonest or damaging acts can breach it whether or not there is a legal finding.