Ruling Disciplinary Committee | DSI 2003-01

DSI Disciplinary Committee ruling dated December 20, 2003.

The DSI Disciplinary Committee has ruled in a case against an investment adviser who, according to the former employer, was guilty of:

• Insufficient control of available balance when taking orders (with repetitive nature);
• Advice that led to unauthorized overdrafts on clients;
• Regular failure to monitor liquidity position in margin-increasing transactions;
• Excessive and speculative private transaction behavior, not in line with internal guidelines.

The committee noted that the defendant did not deny these violations, but explained them in part by working conditions, systemic problems and culture within the organization. The committee emphasized that, despite these circumstances, the responsibility for compliance lies with the adviser himself. Strict compliance is in the interest of both client and bank. The committee’s action took into account the consequences the conduct had already had for the defendant.

Disciplinary Committee ruling

The Disciplinary Committee deemed the complaint founded and imposed the measure of a reprimand on the defendant.

Articles DSI Code of Conduct applicable: 7.1.1, 7.1.2, 7.1.4, 7.3.2

Linkage to DSI Core Principles:

• Core principle 1: Take responsibility.
  The consultant remains personally responsible for complying with rules, even in the face of organizational or technical constraints.
• Core principle 3: Act carefully
  Carefulness in checking balance, margin and liquidity position is essential to protect customer and organization.
• Core principle 5: Comply with rules
  Structural non-compliance with internal rules poses risks and damages trust in the industry.