Ruling Disciplinary Committee | DSI 2009-02

Conflict with fair market conduct principle

Ruling Disciplinary Committee DSI (TC 09-02) dated June 16, 2009

The DSI Disciplinary Committee ruled in a case against a managing director and major shareholder of a financial institution. The complaint concerned participating in, or directing, various securities transactions in violation of the principle of fair market conduct. This occurred by taking positions in small funds prior to broadcasts of a television program that were then recommended in the program. These transactions were carried out both for clients and privately. The committee charged the defendant heavily for failing to take measures as a manager to prevent abuses and for being responsible for at least the appearance of a conflict of interest due to the commercial interest in participating in the program.

Disciplinary Committee ruling

The Disciplinary Committee ruled that these behaviors constituted serious violations of the standards of competence, integrity and honesty in the Code of Conduct. Efforts to improve compliance were taken into account, but the seriousness of the violations outweighed them. The commission imposed a two-year suspension (deducting the period already suspended) and a fine of €2,000. Publication of the ruling will take place anonymously.

Articles DSI Code of Conduct applicable: 7.1.1, 7.1.2, 7.1.3, 7.1.4, 7.1.5, 7.2.5, 7.3.1, 7.3.2 and 7.3.3

Linkage to DSI Core Principles:

• Core principle 10: Act honestly.
  Knowingly influencing market indicators and trading on insider information violates honesty and damages trust in the industry.
• Core principle 1: Take responsibility.
  As chief executive officer, the defendant had an exemplary role and responsibility to act with integrity and prevent wrongdoing.
• Core principle 7: Be clear about interests
  The appearance of a conflict of interest through commercial involvement in the television program should have been actively avoided.