Level III Core · Code of Ethics and Standards of Professional Conduct

CFA Standard VI and VII: Conflicts and Member Responsibilities

Updated 8 October 2026 · Fact-checked

Standard VI covers conflicts of interest: disclose conflicts to employers, clients and prospects; put clients and employers ahead of personal trades; and disclose referral fees. Standard VII covers conduct in CFA programs and how you may refer to the CFA Institute, the designation and the program. Solve by identifying the duty, then the required action.

Understand Conflicts of Interest and Responsibilities as a Member (VI and VII)

Standard VI protects the independence of your advice. A conflict of interest exists when your own interests, or your firm's, could affect your judgment or loyalty to a client or employer. The Standard does not ban every conflict. Its guidance is to avoid conflicts where possible and to disclose those that remain, so others can judge your objectivity.

VI(A) Avoid or Disclose Conflicts requires you to make full and fair disclosure of all matters that could reasonably impair your independence and objectivity or interfere with your duties to your clients, prospective clients and employer. Disclosure must be prominent, plain and specific enough to be understood. Typical conflicts are stock ownership in a company you cover, board service, a firm's investment banking relationship with a subject company, and compensation tied to the product you recommend.

VI(B) Priority of Transactions says investment transactions for clients and employers must have priority over transactions for your own benefit or that of your family. Clients trade first. You must not trade ahead of clients or take advantage of knowledge of pending client trades, and personal trades must not disadvantage clients. Personal trading is allowed if it does not harm clients, and firms often use pre-clearance, blackout periods and reporting to manage this.

VI(C) Referral Fees requires you to disclose to your employer, clients and prospective clients any compensation or benefit you pay or receive for recommending products or services. The disclosure lets the client judge the true cost of the recommendation and any bias in it. It must be made before entering into a formal agreement to provide services, and it must describe the nature of the consideration or benefit.

Standard VII is about you as a member or candidate. VII(A) says you must not do anything that compromises the reputation or integrity of the CFA Institute or the CFA designation, or the integrity, validity or security of CFA Institute programs. This includes cheating on an exam and disclosing confidential exam content, such as specific questions or topics tested or not tested. VII(B) says you must not misrepresent or exaggerate the meaning or implications of membership in the CFA Institute, holding the designation, or candidacy in the CFA Program.

Key rules to remember

VI(A) Avoid or Disclose Conflicts: Disclose all matters that could reasonably impair independence and objectivity or interfere with duties to clients, prospects and employer; Disclosure must be full, fair, prominent and in plain language. Avoid the conflict where possible and disclose the conflicts that remain.
VI(B) Priority of Transactions: Client and employer transactions come before personal or family transactions; Personal trades are allowed only if they do not disadvantage clients. Do not trade ahead of pending client trades. Use pre-clearance and reporting.
VI(C) Referral Fees: Disclose any compensation or benefit paid or received for referrals to employer, clients and prospects; Disclose before entering into a formal agreement for services, and describe the nature of the consideration or benefit. Covers both paying and receiving a fee.
VII(A) Conduct in CFA Programs: Do not compromise the integrity, validity or security of CFA Institute programs; Includes cheating and sharing confidential exam information, such as topics tested or not tested.
VII(B) Reference to CFA Institute, Designation and Program: Do not misrepresent or exaggerate the meaning of membership, the designation or candidacy; A candidate is not a charterholder. Passing a level does not give a designation or partial designation. Candidates may state that they are candidates in the CFA Program.

How to solve Conflicts of Interest and Responsibilities as a Member (VI and VII) questions

Use this sequence on any Standard VI or VII item set or essay. It keeps you from guessing between similar Standards.

1Read the facts and list who benefits: the analyst, the firm, the client, or the employer.
2Decide whether the issue is a conflict, a personal trade, a payment for referral, an exam matter, or a reference to credentials.
3Match it to one Standard: VI(A), VI(B), VI(C), VII(A) or VII(B).
4Check whether the action is a violation, or whether the person did enough, such as disclosing in time.
5Name the required action, such as disclose to clients, get pre-clearance, or correct the wording.
6Answer the command word precisely. If asked to determine, state yes or no. If asked to justify, give one reason tied to the Standard.
7Reread the options for qualifiers like all, before and in writing, then check that one answer fits.

Quickest way: Three-question triage

When to use it: Use when time is short and the vignette has several actors and several actions.

Ask: is money or a personal interest involved? If it is a payment for a recommendation, think VI(C). If it is a stake or relationship, think VI(A).
Ask: who traded first? If personal trades came before or at the expense of clients, think VI(B).
Ask: is it about the exam or the credential? Exam secrecy and cheating is VII(A). Wording about the designation or candidacy is VII(B).
Pick the answer that discloses clearly or puts clients first, and reject answers that rely on the client not noticing.

Common mistakes in Conflicts of Interest and Responsibilities as a Member (VI and VII)

Thinking every conflict of interest is prohibited.
The word conflict sounds like a ban.
Fix: Standard VI(A) guidance is to avoid conflicts where possible and to disclose those that remain. A conflict you disclose properly is not automatically a violation.
Treating personal trading as always forbidden under VI(B).
Students remember that clients come first and overstate it.
Fix: Personal trades are allowed if clients are not disadvantaged. The rule is priority, not prohibition.
Confusing VI(A) disclosure to employers with VI(C) referral fees.
Both involve disclosure and compensation.
Fix: VI(C) applies when you pay or receive something for a referral and covers clients and prospects too. VI(A) covers any impairing matter.
Thinking disclosure of a referral fee can come after the agreement for services.
Students focus on whether the fee was disclosed, not when.
Fix: Disclose to the employer, clients and prospects before entering into a formal agreement for services, and describe the nature of the consideration or benefit, so the client can evaluate the recommendation.
Calling yourself a charterholder, or implying a partial designation or superior performance, after passing a level.
Candidates want to show progress.
Fix: Passing a level does not give a designation or partial designation. A candidate may state that they are a candidate in the CFA Program. Do not claim the designation, imply a partial designation, or imply that passing levels or holding the designation guarantees superior investment performance.
Disclosing which topics were or were not tested on the exam.
It feels like general advice to peers.
Fix: This breaches VII(A). Share only non-confidential study information, never specific content, questions or topics tested.

Worked examples

Example 1

An analyst at an asset manager owns shares in a small company she covers. She plans to issue a buy rating next week. She has not told her employer or clients about the holding. She believes the rating is fair. What should she do under the Standards, and does she violate any?

Show the solution

The shareholding could reasonably impair her independence and objectivity, so Standard VI(A) applies.
Her belief that the rating is fair does not remove the conflict. The Standard asks whether the matter could reasonably impair objectivity.
She has not disclosed to her employer or to clients, so she has violated VI(A) if she publishes or acts without disclosure.
The required action is to disclose the holding to her employer and in the report to clients. Selling the shares or not covering the company would avoid the conflict, which the Standard's guidance also favours where possible. Any conflict that remains must be disclosed.

Answer: Yes, she violates Standard VI(A) unless she discloses. She must disclose the holding to her employer and clients prominently and clearly. Where possible, she should also avoid the conflict.

Example 2

A portfolio manager recommends a tax advisor to a client and receives a fee from the advisor for each client referred. He tells the client about the fee after the advisor has started work. Which Standard is relevant, and has he complied?

Show the solution

Compensation is received for recommending a service, so Standard VI(C) Referral Fees applies.
VI(C) requires disclosure to the employer, clients and prospective clients of any compensation or benefit received for referrals, including its nature.
Disclosure must come before entering into a formal agreement for the service, so the client can evaluate the recommendation and any bias.
He told the client only after the advisor started work, so he did not comply on timing. The facts also do not show disclosure to his employer, which is required too.

Answer: Standard VI(C) applies. He has not complied because disclosure came after the service began. He should disclose the fee and its nature to the client and his employer before the client enters into an agreement with the advisor.

Exam tips

Match the verb to the Standard: disclose for VI(A) and VI(C), give priority for VI(B), do not compromise or misrepresent for VII.
For a violation question, name the Standard and the specific failure, such as no disclosure or wrong timing, in one line.
For recommendation questions, tie the action to the client first. Clients and employers come before personal gain.
On VII(B) wording, look for claims that overstate status, such as implying a designation held or guaranteed results.
With no penalty for wrong answers, always select an option, but eliminate ones that suggest hiding a conflict.

Conflicts of Interest and Responsibilities as a Member (VI and VII) in other exams

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

Conflicts of Interest and Responsibilities as a Member (VI and VII): frequently asked questions

What is the difference between disclosure of conflicts and referral fees in the CFA Standards?

VI(A) is the general duty to disclose any matter that could impair your independence or duties. VI(C) is specific to compensation or benefits paid or received for referring clients or services. A referral fee is also a conflict, so VI(C) gives the precise rule.

What does priority of transactions mean at CFA Level III?

It means client and employer trades come before your own and your family's. You may still trade personally if it does not disadvantage clients. Firms commonly use pre-clearance and reporting to support this.

How should I refer to the CFA Program correctly?

State plainly that you are a candidate in the CFA Program if that is true. Passing a level gives no designation or partial designation, so do not claim either. Do not suggest passing levels guarantees better performance or exaggerate what membership or candidacy means.

Does Standard VII(A) stop me discussing the exam with other candidates?

You can discuss general study methods and public curriculum material. You must not share or seek confidential exam content, such as specific questions or which topics were or were not tested. Cheating also breaches VII(A).