Lesson 3 of 8 · 15 min

Standard III(A)–(B): Loyalty, Prudence, Care and Fair Dealing

Clients come first, ahead of the employer and yourself, and every client gets a fair (not identical) chance at your recommendations and trades.

In short

III(A) Loyalty, Prudence, and Care: act for the client's benefit, put client interests before your employer's and your own, and use the care and judgment of a prudent professional.
Identify the real client: for a pension plan or trust it is the beneficiaries, not the sponsor or its management; for a fund it is the stated mandate.
Client brokerage belongs to the client. Soft dollars may buy only research that benefits the client; client-directed brokerage is allowed, but still seek best execution.
Proxies have economic value: vote them in an informed way, with a cost-benefit view, and disclose the voting policy.
III(B) Fair Dealing: treat all clients fairly when disseminating recommendations and taking investment action. Fairly means no one is disadvantaged, not that everyone is treated identically.

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