Ruling Disciplinary Committee | 2002 | Profit Allocation

DSI Disciplinary Committee ruling (TC 02-01) dated 2002.

The DSI Disciplinary Committee ruled in a case against a Senior Investment Adviser. The complaint concerned the incorrect handling of an erroneous share order: instead of a sale, a purchase was made, after which the position was partly allocated to two relations of the advisor. This conduct violated the employer’s internal rules, as the transaction should have been handled through a so-called error account. By this way of proceeding, the relations involved received a benefit that was not due to them, whereas any result should have been credited or charged to the bank. The committee blamed the defendant for not following procedures and thus damaging confidence in the industry. There was no intent, but there was insufficient expertise.

Disciplinary Committee ruling

The Disciplinary Committee ruled that the conduct violated the elementary requirements of competence in the Code of Conduct. Although the financial interest was small and the defendant had already been severely harmed by loss of job and income, the committee deemed action appropriate. A reprimand was imposed.

Articles DSI Code of Conduct applicable: 7.1.1, 7.1.2 and 7.1.4

Linkage to DSI Core Principles.

• Core principle 9: Show expertise.
  Failure to handle errors carefully and according to established procedures undermines trust in the industry and can lead to unwanted favoritism of relationships.
• Core principle 5: Comply with rules.
  Failure to comply with internal rules and circumvent the prescribed error account violates the obligation to strictly observe laws, regulations and internal procedures.
• Core principle 1: Take responsibility.
  Even when mistakes occur, it is essential to take responsibility for one’s own actions and ensure proper resolution according to applicable standards.