Put the Preservation of Confidentiality standard, III(E), into practice
The idea
Members must keep information about current, former and prospective clients confidential unless the information concerns illegal activities, disclosure is required by law, or the client permits it. The duty survives the end of the relationship, which is why a former client's information may not be used at a new employer. A CFA Institute Professional Conduct Program investigation is an exception: cooperating with it is not a breach of confidentiality. Where the member suspects illegal activity, the safe course is to consult counsel rather than to decide the legal question alone.
A practice question
Does the duty of confidentiality end when a client relationship ends?
- Yes, once the account is closedWhy not: Closing an account ends the mandate and not the confidence in which the information was given.
- No, it continues for former clients — correct
- Yes, after one yearWhy not: No period appears in the Standard, and nothing about the passage of time makes the information less confidential.
Standard III(E) Preservation of Confidentiality continues to apply after the relationship ends. The client disclosed the information in confidence, and closing the account does not release it.
A harder one
Which is a permitted exception to the duty of confidentiality?
- A request from a prospective employerWhy not: A prospective employer has no claim on a client's information, and sharing it to win a job is the misuse the Standard forbids.
- A request from another client of the same firmWhy not: Being a client of the same firm confers no right to another client's information.
- Cooperating with a Professional Conduct inquiry — correct
Standard III(E) makes cooperation with a CFA Institute Professional Conduct Program investigation an express exception, alongside disclosure required by law and illegal activities by the client.
The hardest tier
A member suspects a client's activity may be illegal but is not certain. What is the appropriate course?
- Consult counsel before deciding to disclose — correct
- Disclose immediately to the authoritiesWhy not: Disclosing on a suspicion that turns out to be mistaken breaches a duty that was owed all along.
- Say nothing, since certainty is requiredWhy not: Certainty is not the threshold, and silence leaves the member inside a situation the Standard has a route out of.
Standard III(E) permits disclosure of illegal activities, and whether the activity is illegal is a legal question. Consulting counsel is how the member answers it without deciding alone.
In the app: 9 practice questions on this outcome, a narrated walkthrough with diagrams, spaced review that brings it back before you forget it.
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