Disciplinary Committee ruling | 2003 | Misuse of insider information

DSI Disciplinary Committee ruling dated June 4, 2003.

The DSI Disciplinary Committee ruled in a case against a senior asset manager/fund manager. The complaint concerned trading in shares of Company A and Company B at times when the defendant had non-public, price-sensitive information. In the case of Company A, shortly before purchasing shares, the defendant had a conversation with the CEO about an impending issuance. In the case of Company B, the defendant received a letter with additional, non-public information about the company’s financial situation and securities, after which he sold shares.

The committee ruled that by acting under these circumstances, the defendant at least gave the appearance of insider trading and was insufficiently careful. A senior asset manager can be expected to refrain from acting when in doubt and contact the compliance officer. The committee imposed a six-month suspension.

Disciplinary Committee ruling

The Disciplinary Committee deemed the complaint founded and imposed on the defendant the measure of a six-month suspension.

Articles DSI Code of Conduct applicable: 7.1.1, 7.1.5, 7.2.2, 7.2.3

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, Respondent had additional responsibility to act with integrity and lead by example.