Appeals Committee ruling | DSI-2008-03

Blending of private and business interests in establishing own company

DSI Appeals Committee ruling dated April 3, 2008.

The DSI Appeals Committee ruled on a DSI complaint against an investment adviser who, in addition to his employment with a bank, was involved in a company owned by his wife. DSI reproached the adviser for the fact that some of the bank’s clients were also clients of this company, which, according to DSI, constituted a mixing of private and business interests. The consultant was also accused of actively approaching clients after he left the bank to switch to his own company.

The Disciplinary Committee ruled that the overlap between clients was minor and that there was no systematic violation of integrity or active recruitment. The Appeals Committee confirmed that these were mainly internal agreements between employer and employee and that no sufficiently serious violation of the DSI Code of Conduct had been established. However, it did point out that the adviser could have done more to avoid the appearance of a conflict of interest.

Appeals Board ruling

The Appeals Committee upheld the Disciplinary Committee’s ruling and declared DSI’s complaints unfounded.

Articles DSI Code of Conduct applicable: 7.1.1, 7.1.2, 7.3.5

Linkage to DSI Core Principles:

• Core principle 7: Be clear about interests – Although no disciplinary violation was found, the consultant should have done more to avoid the appearance of a conflict of interest and be transparent about his outside activities.
• Core principle 1: Take responsibility. – The consultant should have been more aware of the impact of his actions on the trust of his employer and the industry.
• Core principle 3: Act carefully – Carefulness and transparency in ancillary activities are essential to avoid conflicts and the appearance of conflicts of interest.