Appeals Committee ruling | DSI-2004

DSI Appeals Committee ruling dated February 27, 2004.

The DSI Appeals Committee ruled in a case against a senior asset manager and director/fund manager of an investment fund. The complaint concerned trading in shares of two companies (Company A and Company B) at times when the person involved had non-public, price-sensitive information. The committee ruled that in purchasing Company A shares, after a conversation with the CEO about an impending issuance, the person involved created at least the appearance of unfair market conduct. Similarly, when selling Company B shares, the person involved had information that was not generally known. The committee emphasized that an executive in this position can be expected to refrain from acting when in doubt and to consult the compliance officer.

Appeals Board ruling

The Appeals Committee upheld the complaint and imposed the measure of a reprimand. The committee ruled that the person concerned violated Article 7.2.2 of the Code of Conduct, but saw no reason for a more severe measure because there was no evidence that the person concerned sought personal gain.

Articles DSI Code of Conduct applicable: 7.2.2

Linkage to DSI Core Principles:

• Core principle 10: Act honestly
  Trust in fair and transparent markets is essential; creating the appearance of insider trading damages this trust.
• Core principle 3: Act carefully
  Careful handling of price-sensitive information and timely consultation with compliance is crucial.
• Core principle 1: Take responsibility.
  As a manager, the individual had additional responsibility to act with integrity and lead by example.