Professional Conduct, Ethics & Standards
As a representative of the National Association of Independent Public Finance Advisors (NAIPFA), and as a representative of clients, Certified Independent Public Finance Advisors and other employees of member firms (both hereafter referred to as Advisor) shall have a responsibility to conduct themselves with dedication, integrity and honor of the profession. An Advisor shall not engage in underwriting activity and shall accept compensation only from the client for providing independent advice.
An Advisor shall provide a client with independent advice on implementing available financing alternatives. Advice given shall adhere to all federal, state and local laws, regulations and rules applicable to the securities industry. As a negotiator, the advisor shall seek the result most advantageous to the client and maintain honor and integrity in dealing with others.
An Advisor shall be competent, prompt and diligent in professional functions. An Advisor shall keep an open line of communication with a client concerning the representation. The Advisor shall keep all client information in confidence except as required by law or this code of ethics.
An Advisor shall be guided by personal conscience and approval of professional peers and thus strive to attain the greatest level of skill to improve the quality of advice. In the ever changing environment of laws, securities regulations and rules, it is imperative for the Advisor and NAIPFA to continue our education to provide the highest quality advice. This commitment to continuing education in matters related to advising our clients provides for better Advisors and enhances the credibility of NAIPFA.
Standards of Conduct and Ethics
A. Competence - The Advisor shall:
- provide competent representation to a client.
- make thorough preparations applying his/her knowledge and skill.
- not represent a client beyond his/her competence unless the advisor is associating with an advisor who is competent.
- seek to maintain the highest professional standards and seek to improve the effectiveness of the position of Certified Independent Public Finance Advisor through continuing professional education.
B. Scope - The Advisor shall:
- seek the client's objectives through reasonably available means permitted by law, securities regulations, rules and this code.
- not knowingly engage or assist a client in conduct that is illegal or violates current securities regulations.
C. Diligence - The Advisor shall:
- act with diligence and promptness in representing a client.
- act with commitment and dedication to the interest of the client.
- carry through to conclusion all matters undertaken for a client unless the relationship is terminated.
D. Communication - The Advisor shall:
- not knowingly sign, subscribe to, or permit the issuance of any Official Statement which contains any misstatement or which omits any material fact.
- explain a matter to the extent necessary to permit the client to make an informed decision.
- maintain ongoing communication with the client.
- comply with all reasonable requests for information.
E. Confidentiality - The Advisor shall:
- exhibit loyalty and trust in the affairs and interests of the client.
- not reveal information relating to representations of a client unless the client consents after consultation.
F. Conflict of Interest - The Advisor shall:
- not represent a client if such representation is adverse to another client.
- not seek or accept personal gain which would influence or appear to influence the conduct of the representation.
G. Competition - The Advisor shall:
- not solicit a party in connection with a specific financing for which the party has entered into an agreement with another financial advisor. However, an advisor may provide service to such a party if the party has initiated the request to provide advice.
Classes of Members. The Association shall have three classes of members: Firm Members, Professional Members, and Associate Members.
Firm Members. Any natural person or entity including a partnership, association or for profit corporation, may be a Firm Member if: its principal activity is to provide financial advisory services as an independent financial advisor to state and local governments; and in the case of a natural person, he or she is not directly or indirectly employed by, and in the case of an entity, it is not directly or indirectly owned, governed or directed by, any natural person or entity whose business is that of a broker dealer of securities or in any part relates to the underwriting or selling of federal, state, or local obligations; and its activities as a financial advisor to state or local governments are not incidental to its primary business; and it derives substantially all of its income, exclusive of personal investments, from fees and charges for financial advisory services directly billed to state and local governments and any other income is incidental; and continued membership may be subject to annual certification.
Professional Members. Any natural person who is not qualified to be a Firm Member and who is a Professional may be a Professional Member. The term "Professional" shall mean an individual who (a) currently is and has been employed by a Firm Member for not less than two years, and works not less than seventy-five percent of the Firm Member's basic schedule for full-time professional employees, (b) has continuously performed financial advisory services for state and local governments for a period of not less than two years, (c) either has a Bachelor's degree from an accredited institution of higher education or has been engaged in the field of public finance for a period totaling not less than six years and (d) has met other membership eligibility standards as may be established by the Association.
Associate Members. Any natural person or organization who is not qualified to be a Firm Member or a Professional Member may be an Associate Member if he or she or it meets the standards for such membership as established by the board of directors from time to time.
Member firms must be completely independent, ethically and actually, from bond underwriters, securities dealers, brokerage firms, and banks that buy tax-exempt bonds for resale and from legal, engineering, and accounting firms.
Member firms do not include:
Firms that do not derive substantially all of their income from direct billings to state and local governments for independent financial advisor services.
Firms having personnel afflliated with any firms in the Redbook's MUNICIPAL BOND DEALERS section. Firms that also provide legal, accounting, credit enhancement, and engineering advisory services and for which financing is incidental.
Qualified employees of member firms may become professional members of the Association. A Professional Member must be a current employee. The individual must have worked for the firm for two years, not less than 75 percent full time, and have continuously performed financial advisory services for a period of two years. A Bachelors degree or six years experience in public finance, successful completion of the Certification Test or 20 years experience in the field of public finance, plus other eligibility standards are required.
The Association will provide local, state and federal governments with a list of firms having technical and professional competence to advise public agencies on the structuring, marketing and disclosure requirements of bond issues and to take professional responsibility for meeting those requirements on behalf of the issuers they represent. The Association will provide a Board of Review to help investigate the standards of conduct of any of its members.
The Association will promote legislation and local government employment requirements that prohibit a bank or securities firm from underwriting a bond issue on which they or any of their subsidiaries have acted as a financial advisor. The members of the Association will provide public agencies with professionals whose primary role will be to advise them on public financing and to protect the public interest.