Disciplinary Committee ruling | 2004 | Excessive and speculative investment transactions

DSI Disciplinary Committee ruling dated December 20, 2004.

The DSI Disciplinary Committee ruled in a case against an investment adviser who was accused of having carried out 63 private transactions over a period of two months, partly with borrowed money, in violation of the ex-employer’s internal guidelines. DSI stated that this behavior was excessive and speculative and in violation of the Code of Conduct. However, the committee found that insufficient information was available about the defendant’s financial strength, the size of the transactions and the proportion of borrowed money. It also found that the number of transactions actually amounted to the opening and closing of 31 positions. Because there was no convincing evidence of excessive or speculative trading, the complaint was dismissed as unfounded.

Disciplinary Committee ruling

The Disciplinary Committee dismissed DSI’s complaint.

Articles DSI Code of Conduct applicable: 7.1.1 to 7.1.5

Linkage to DSI Core Principles:

• Core principle 3: Act carefully
  Care in reviewing private investment transactions is essential, but without clear standards and substantiation, a disciplinary violation cannot be said to have occurred.
• Core principle 1: Take responsibility.
  Professionals should be transparent about their actions, but should not be condemned without sufficient evidence.