SECTION 6.4. Standards of Conduct

(a) Compliance.

(1) These standards are intended to be in addition to, and not in lieu of, a financial advisor's or service provider's obligations under its contract or service agreement with the comptroller. In the event of a conflict between a financial advisor's obligations under these standards and under its contract or services agreement, the standard that imposes a stricter ethics or disclosure requirement controls.

(2) A financial advisor or service provider shall be knowledgeable about these standards, keep current with revisions to these standards, and abide by the provisions set forth in these standards.

(3) In all professional activities a financial advisor or service provider shall perform services in accordance with applicable laws, rules and regulations of governmental agencies and other applicable authorities, including the comptroller, and in accordance with any established policies of the comptroller.

(b) Qualification Standards.

(1) A financial advisor or service provider shall render opinions or advice, or perform professional services only in those areas in which the financial advisor has competence based on education, training or experience. In areas where a financial advisor is not qualified, the financial advisor shall seek the counsel of qualified individuals and/or refer the comptroller to such persons.

(2) A financial advisor or service provider shall keep informed of developments in the field of financial planning and investments and participate in continuing education throughout the financial advisor's relationship with the comptroller in order to improve professional competence in all areas in which the financial advisor is engaged.

(c) Integrity.

(1) A financial advisor or service provider has an obligation to observe standards of professional conduct in the course of providing advice, recommendations and other services performed for the comptroller. A financial advisor shall perform professional services with honesty, integrity, skill, and care. In the course of professional activities, a financial advisor shall not engage in conduct involving dishonesty, fraud, deceit or misrepresentation, or knowingly make a false or misleading statement to a client, employer, employee, professional colleague, governmental, or other regulatory body or official, or any other person or entity.

(2) A financial advisor or service provider's relationship with a third party shall not be used to obtain illegal or improper treatment from such third party on behalf of the comptroller.

(d) Objectivity. A financial advisor or service provider will maintain objectivity and be free of conflicts of interest in discharging its responsibilities. A financial advisor will remain independent in fact and appearance when providing financial planning and investment advisory services to the comptroller.

(e) Prudence. A financial advisor or service provider shall exercise reasonable and prudent professional judgment in providing professional services to the comptroller.

(f) Competence. A financial advisor or service provider shall strive to continually improve its competence and the quality of services, and discharge its responsibilities to the best of its ability.

(g) Conflicts of Interest.

(1) If a financial advisor or service provider is aware of any significant conflict between the interests of the comptroller and the interests of another person, the financial advisor shall advise the comptroller of the conflict and shall also include appropriate qualifications or disclosures in any related communication.

(2) A financial advisor or service provider shall not perform professional services involving an actual or potential conflict of interest with the comptroller unless the financial advisor's ability to act fairly is unimpaired, there has been full disclosure of the conflict to the comptroller, and the comptroller has expressly agreed in writing to the performance of the services by the financial advisor.

(h) Confidentiality.

(1) A financial advisor or service provider shall not disclose to another person any confidential information obtained from the comptroller or regarding the comptroller's investments unless authorized to do so by the comptroller in writing or required to do so by law.

(2) For the purposes of this section, "confidential information" refers to information not in the public domain of which the financial advisor or service provider becomes aware during the course of rendering professional services to the comptroller. It may include information of a proprietary nature, information that is excepted from disclosure under the Public Information Act, Government Code, Chapter 552, or information restricted from disclosure under any contract or service agreement with the comptroller.

Source Note: The provisions of this §6.4 adopted to be effective February 3, 2004, 29 TexReg 1014