Appeals Committee ruling | DSI-2005-01

DSI Appeals Committee ruling dated September 28, 2005.

The DSI Appeals Committee ruled on a senior investment adviser’s appeal against her expulsion and removal from registration. The complaint concerned systematic borrowing and acceptance of gifts from clients over a long period of time, violating the norm of strictly separating business and private interests. The committee ruled that this norm also applied before the formal codification in the Code of Conduct and Further Regulations on the Supervision of Securities Transactions. The fact that the business relationship with a client was terminated before accepting a gift does not detract from the opinion that no integrity was shown. In view of the systematic nature and personal benefit, the committee considered expulsion to be an appropriate measure.

Appeals Board ruling

The Appeals Committee upheld the expulsion and cancellation of registration, and dismissed the appeal.

Articles DSI Code of Conduct applicable: 7.1.1 to 7.1.5, 7.3.1, 7.3.5

Linkage to DSI Core Principles.

• Core principle 7: Be clear about interests
  Accepting loans and gifts from clients creates a serious appearance of a conflict of interest and damages trust in the industry.
• Core principle 1: Take responsibility.
  The investment adviser should have taken responsibility for strictly separating private and business interests.
• Core principle 3: Act carefully
  Carefulness and integrity are essential, especially in long-term client relationships.
• Core principle 10: Act honestly
  Honesty and avoiding personal gain from client relationships are fundamental to financial services with integrity.