Ruling Disciplinary Committee | DSI 2006-02

DSI Disciplinary Committee ruling dated March 29, 2006.

The DSI Disciplinary Committee ruled in a case against an investment adviser who was involved in disseminating information about a new bond issue (“Perpetual”) to clients while this information was under embargo. The adviser did not attend the conference call where confidentiality was emphasized, but understood from internal discussions that a new issue was coming. He then approached two active clients and shared information while unsure of exactly what he was allowed to say. The committee ruled that when in doubt, the consultant should have sought explicit instruction from his supervisor. Although the employer’s provision of information was careless, the adviser remains responsible for his own actions.

Disciplinary Committee ruling

The Disciplinary Committee deemed the complaint partially founded and imposed a reprimand. The term of visibility of this measure in the DSI register was shortened to 1.5 years, partly because the adviser had actually already been suspended for six months.

Articles DSI Code of Conduct applicable: 7.1.1, 7.1.2, 7.2.1, 7.2.2, 7.3.1

Linkage to DSI Core Principles:

• Core principle 6: Ensure confidentiality.
  Sharing (potentially) confidential information with clients without clear instruction violates ensuring confidentiality.
• Core principle 1: Take responsibility.
  When in doubt about the admissibility of disclosures, the consultant should have explicitly consulted with his supervisor.
• Core principle 3: Act carefully
  Carefulness in communication and avoidance of disparate disclosure are essential for trust in the industry.