What principle of the CFA Institute Code of Ethics is violated when a firm ignores compliance due to lack of complaints?

The principle of promoting integrity within the CFA Institute Code of Ethics emphasizes the importance of upholding ethical standards and ensuring compliance with applicable laws and regulations, regardless of whether complaints have been raised. When a firm chooses to ignore compliance measures simply because there have been no complaints, it undermines the core value of integrity. This approach suggests a reactive rather than proactive stance towards ethical behavior, which can lead to significant risks and potential harm to clients and the broader financial market.

Promoting integrity requires that firms not only adhere to the letter of the law but also to the spirit of ethical behavior. This includes implementing robust compliance frameworks and fostering a culture of ethics that goes beyond just responding to direct issues as they arise. By neglecting compliance, the firm risks breaching trust and may foster an environment where unethical practices can flourish, ultimately resulting in negative consequences for both the firm and its clients.