Ruling Disciplinary Committee | DSI 2007-03

Blending of private and business interests in establishing own company

DSI Disciplinary Committee ruling dated April 11, 2007.

The DSI Disciplinary Committee ruled in a case against an investment adviser. The complaint concerned on the one hand the mixing of private and business interests by setting up a BV together with his wife, whereby some clients of the ex-employer also became clients of this BV, despite an explicit condition from the ex-employer to prevent this. On the other hand, the consultant was accused of actively approaching clients of his ex-employer to switch to his own company and forwarding client data to his private company.

The committee found that there was an (indirect) financial interest in the BV and that about four clients of the ex-employer were also clients of this BV, but that the overlap was small and that it mainly concerned administrative services. There was no evidence that the consultant actively recruited clients. The committee ruled that there was no serious or systematic violation of the integrity standards in the DSI Code of Conduct, but did note that the adviser could have done more to avoid the appearance of a conflict of interest.

Disciplinary Committee ruling

The Disciplinary Committee 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
  The advisor should have been more transparent about his side activities and more actively avoided the appearance of a conflict of interest.
• Core principle 1: Take responsibility.
  It is the professional’s responsibility to act with integrity and to identify and report potential conflicts in a timely manner.
• Core principle 3: Act carefully
  Carefulness in separating private and business interests is essential for trust in the industry.