Ruling Disciplinary Committee | DSI 2013-01

Expulsion for serious abuse of trust customer

DSI Disciplinary Committee ruling dated March 25, 2013

The DSI Disciplinary Committee ruled in a case against an investment adviser who put a client, residing in the United States, in contact with an asset manager without an AFM license. The investment adviser did not investigate this manager, received payments from the manager, and acted as a de facto intermediary, with money flows also going through his own account. For several years, the adviser remained involved with the client and provided portfolio statements on behalf of the manager.

Disciplinary Committee ruling

The Disciplinary Committee ruled that the investment adviser seriously failed in expertise, care and integrity. He failed to put the client’s interests first, failed to warn of signals of irregularities, and violated internal and statutory rules by acting as an intermediary and receiving payments without a license. The committee deemed the complaint founded and imposed expulsion.

Articles DSI Code of Conduct applicable: 7.1.1, 7.1.2, 7.1.4, 7.2.1, 7.2.2, 7.2.3, 7.2.4

Linkage to DSI Core Principles:

• Core principle 2: Focus on customer interests:
  The adviser should have focused on the client’s interest, including by checking whether the manager was licensed and by issuing timely warnings of risks.
• Core Principle 10: Act honestly:
  Acting as an unlicensed intermediary, receiving payments and not being transparent toward clients and employers are contrary to honesty and integrity.