Industry-Related Violations Historical sanctions imposed

The following are disciplinary sanctions imposed on members and candidates since 1 January 2000 for industry-related violations of the CFA Institute Code and Standards of Professional Conduct. Select a sanction from the drop-down box to view brief descriptions of the behaviors/activities that led to the sanction.

Industry Sanctions

Revocation

Effective 22 June 2017, CFA Institute imposed a Revocation of membership and of the right to use the CFA designation on a charterholder member. This sanction was based on a hearing panel’s determination that, at various times from 1992 until 2011, the charterholder member violated the CFA Institute Code of Ethics and Standards of Professional Conduct prohibiting misrepresentation, misconduct, violation of fiduciary duty, and failure to know and comply with the law.                                                                                                                           
During the relevant period, the charterholder member operated a one-person advisory firm in Alexandria, Virginia. From 1992 to 2010, he and his firm acted as both trustee and investment advisor to two irrevocable trusts established for a wealthy family. In 2010, the family became concerned about the charterholder member's conduct and, after consulting an attorney, he was asked to resign.               

The charterholder member then sued the successor trustees for allegedly unpaid deferred trustee and investment advisor fees of more than $1.4 million. The successor trustees then countersued the charterholder member for $17 million, alleging breach of contract, breach of fiduciary duty, and fraud. After the successor trustees’ counterclaims against him had been pending for four months, the charterholder member filed a Professional Conduct Statement with CFA Institute in which he did not disclose and misrepresented that he was not the subject of any litigation concerning his professional conduct.

After a six-day trial, a jury concluded that the charterholder member had no valid claim for unpaid deferred fees and agreed with the successor trustees that he had violated his contract, breached his fiduciary duties, and defrauded the trusts. As a result, the jury awarded them $3 million in compensatory damages and $10 million in punitive damages. The judge later disallowed the award of punitive damages and reduced the amount of the compensatory damages to $1.5 million. The Virginia Supreme Court subsequently considered and denied the charterholder member’s appeal.   

The CFA Institute hearing panel found that the charterholder member: failed to register himself and the firm as investment advisors as required by Virginia law, thus avoiding any regulatory review or supervision of his actions as an investment advisor; intentionally chose not to file State trust tax returns as required by law because doing so would cause the trusts to pay taxes; intentionally caused the filing of false federal income tax returns by deducting from trust income investment advisor and trustee fees that were never paid, thus avoiding the payment of taxes; billed the grantors and trusts for outside legal and accounting expenses in amounts that greatly exceeded the actual charges incurred; and filed a Professional Conduct Statement that failed to disclose and misrepresented that he was not the subject of litigation concerning his professional conduct.

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 Effective 3 August 2017, CFA Institute imposed a Revocation of membership and of the right to use the CFA designation on a lapsed charterholder member. This sanction was based on the determination that the lapsed charterholder member violated the CFA Institute Code of Ethics and Standards of Professional Conduct: I(C) – Misrepresentation; I(D) – Misconduct; II(A) – Material Nonpublic Information; and IV(A) – Loyalty (2005).

In January 2012, the U.S. Attorney’s Office for the Southern District of New York announced the unsealing of a guilty plea by the lapsed charterholder member a research analyst at a hedge fund, to felony criminal charges that he conspired with others to engage in insider trading. According to the government, the lapsed charterholder member participated in a scheme with fund managers and research analysts at five different investment firms to share material, nonpublic information about two publicly-traded technology companies. Based on his guilty plea, Professional Conduct imposed a Summary Suspension automatically suspending the lapsed charterholder member’s membership and right to use the CFA designation. The lapsed charterholder member did not request a review and the Summary Suspension automatically became a revocation in March 2012.

In January 2017, the lapsed charterholder member requested that the revocation be rescinded and provided documents showing that the criminal charges filed against him by the U.S. Attorney’s Office had been dismissed. The dismissal resulted from a decision issued by the U.S. Court of Appeals for the Second Circuit in a related case, that found that the transactions that were the basis for the entry of judgment against the lapsed charterholder member and others did not constitute illegal insider trading. The U.S. Supreme Court subsequently denied the government’s petition for review of that decision.

In accordance with Rule 10.6 of the Rules of Procedure, the lapsed charterholder member’s revocation was rescinded and a Notice of Rescission was published in CFA Institute Magazine and on the Institute’s public website. Professional Conduct then reopened its investigation into the underlying conduct and determined that the lapsed charterholder member had intentionally and repeatedly used material, non-public information to assist Global Level in the trading of securities, and made false statements to cover up his misconduct, in violation of the Code and Standards.

In May 2017, Professional Conduct issued a Statement of Charges to the lapsed charterholder member seeking a revocation of his membership and right to use the CFA designation. He failed to respond, so the matter was presented to a Review Panel, which accepted Professional Conduct’s conclusions as to violations and imposed the recommended sanction of a revocation.

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On 26 January 2017, CFA Institute imposed a Revocation of membership and of the right to use the CFA designation on a lapsed charterholder member. The sanction was based on Professional Conduct’s determination that the lapsed charterholder member violated the Code of Ethics and Standards of Professional Conduct:  I(A) – Knowledge of the Law; I(C) – Misrepresentation; I(D) – Misconduct; and IV(C) – Responsibilities of Supervisors (2005 and 2010).  

During 2007 and 2008, the lapsed charterholder member was a registered representative and Head of Structured Credit, Americas, of Mizuho Securities USA Inc.  In July 2012, the U.S. Securities and Exchange Commission issued an Order in which the lapsed charterholder member consented to the SEC’s entry of findings that in 2007 he violated Sections 17(a)(2) and (3) of the Securities Act of 1933 by causing false information to be presented to prospective investors in numerous tranches of a collateralized debt obligation.  As a result, the SEC suspended the lapsed charterholder member from the securities industry for one year and fined him $150,000.

From March 2008 until October 2011, the lapsed charterholder member was a Managing Director with Guggenheim Capital Markets, LLC. He supervised the firm’s CDO desk and was its lead trader. In October 2012, the Financial Industry Regulatory Authority accepted a Letter of Acceptance, Waiver, and Consent in which the lapsed charterholder member consented to FINRA’s entry of findings that in 2008 and 2009 he violated NASD Rule 2110, FINRA Rule 2010, and NASD Rule 3010(a) by making intentional misrepresentations in connection with the sale of a tranche of a collateralized loan obligation. As a result, FINRA suspended the lapsed charterholder member from association with any member firm for one year and fined him $50,000.

In May 2011, although he knew that both the SEC and FINRA were investigating his professional conduct and had recently taken his testimony, the lapsed charterholder member submitted a Professional Conduct Statement to CFA Institute in which he falsely denied that he had been the subject of any investigation regarding his professional conduct during the preceding two years.

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Effective 28 March 2016, CFA Institute imposed a Revocation of membership and of the right to use the CFA designation on a charterholder member. CFA Institute found that the charterholder member violated the Code of Ethics and Standards of Professional Conduct: I(A) – Knowledge of the Law; I(C) – Misrepresentation; I(D) – Misconduct; and VI(A) – Disclosure of Conflicts (2005 and 2010). 

During the period 2005 to 2011, the charterholder member was employed by China International Capital Corporation (Hong Kong) Limited (CICCHK) and Yuanta Securities (Hong Kong) Company Limited (Yuanta). From October 2005 to February 2008, the charterholder member was the Managing Director of CICC Securities’ Sales and Trading Department. In February 2008, the charterholder member joined CICC Asset Management and became Managing Director of the Asset Management Department. In August 2009, the charterholder member left CICCHK and became a Director and President of Yuanta.

In January 2014, the SFC banned the charterholder member from re-entering the securities industry in Hong Kong for 10 months. The SFC found that during the relevant five-year period, the charterholder member conducted extensive personal trading in several securities accounts belonging to two of their friends, while intentionally concealing such activities from his employers, CICCHK and Yuanta, in violation of General Principle 1 of the Code of Conduct for Persons Licensed by or Registered with the SFC.

Starting in June 2005, the charterholder member secretly bought a total of 30 million shares of an energy company for his own benefit, using their two friends’ securities accounts. In July 2007, the charterholder member sold the shares and received two checks totaling HK$25.6 million. The charterholder member used the remaining money in the accounts to trade 83 different securities (excluding the energy company), until the accounts were closed in April 2011. The charterholder member later admitted to the SFC that all of the shares in the friends’ accounts were bought and sold at the charterholder member’s direction, and secretly belonged to the charterholder member.  

 According to the SFC, the charterholder member knowingly and intentionally violated the written policies and procedures of CICCHK and Yuanta, which required that employees disclose their outside securities accounts and holdings both before joining the firm and annually. The firms also required that all personal trading by the charterholder member be pre-approved in writing by both their supervisors and the firms’ compliance departments. The SFC found that the charterholder member deliberately and dishonestly concealed from their employers their beneficial interests and trading activities in his friends’ accounts by preparing and submitting annual declarations and acknowledgement forms that they knew were false and misleading. 

This charterholder member’s misconduct, which was repeated numerous times and continued over a period of more than five years, prevented CICCHK and Yuanta from properly monitoring their personal trading to detect and prevent market manipulation and insider trading. Such monitoring is of crucial importance in protecting the integrity of the financial markets.

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Effective 20 November 2015, CFA Institute imposed a Revocation of membership and of the right to use the CFA designation on a Charterholder member. A Hearing Panel found that the member violated the Code of Ethics and Standards of Professional Conduct: I(D) - Misconduct; II(A) - Material Nonpublic Information; and VI(B) - Priority of Transactions (2005). This result was subsequently reviewed and affirmed by an Appeal Panel.

The Hearing Panel found that, over a five-year period, the member provided advance information to three accomplices as to when he was planning to buy or sell sizeable blocks of stocks on behalf of the funds he managed. This information was material and non-public, and could affect the value of the stocks. The member's accomplices then used the information he provided to establish corresponding long or short positions in the stocks ahead of the member's trades. The member would then enter his orders, which would often impact the market price by several percentage points and enable his accomplices to liquidate their positions and realize illicit profits, which they later shared with him as “kickbacks” or secret cash payments.

The member estimated that he and his accomplices engaged in such “front running” trades 500 to 1,000 times. An independent accounting firm later reviewed the trading and identified 1,359 corresponding profit-generating trades by the group, and determined the total amount of damages to be 5.3 million Swiss francs.

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Effective 24 July 2015, CFA Institute imposed a Revocation of membership and of the right to use the CFA designation on a Charterholder Member. This sanction was imposed by a Hearing Panel following its determination that the member had violated the CFA Institute Code of Ethics and Standards of Professional Conduct:  l(A) - Knowledge of the Law, l(B) - Independence and Objectivity, l(C) – Misrepresentation, I(D) – Misconduct, III(D) - Performance Presentation, and V(A) - Diligence and Reasonable Basis (2005 and 2010 Editions).

The member was the owner and president of a research firm, which also did business as another entity. On websites run by these entities and others, the member published research reports about highly speculative microcap securities. Issuers and other interested third parties paid the member to publish these reports. From at least 2013, the member also maintained a website which touted his claimed success as a stock picker.

 In his research reports, the member intentionally or recklessly made substantial, short-term price predictions for the speculative securities that he recommended, in violation of the anti-fraud provisions of federal securities laws, specifically, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Also in violation of the federal anti-fraud provisions, the member intentionally or recklessly omitted material negative information from many of the research reports that he published. In addition, the member's reports made many unsupported, overly optimistic assumptions about the covered companies’ future prospects. Although negative information subsequently surfaced about many of the stocks that he recommended, the member failed to update, correct, or withdraw his earlier research reports.

 On the website, the member claimed that he produced a 450% gain within 28 months, and that by following his advice, investors could “clobber” the market averages and quadruple their money in a short time. The member failed to make reasonable efforts to ensure that his presentations were fair, accurate, and complete. Finally, in a video presentation on the website, the member made a substantial return prediction for a speculative security and failed to make reasonable efforts to ensure that his statements regarding his investment performance were fair, accurate, and complete.

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Effective 23 July 2015, CFA Institute imposed a Revocation of membership and the right to use the CFA designation on a lapsed Charterholder Member. A Hearing Panel found that the lapsed member violated the Code of Ethics and Standards I(A) – Knowledge of the Law, I(B) – Independence and Objectivity, I(C) – Misrepresentation, I(D) – Misconduct, and VI(A) – Disclosure of Conflicts of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005 and 2010). This result was subsequently reviewed and affirmed by an Appeal Panel.

In 2009 and 2010, the lapsed member was employed as a research analyst at  a broker-dealer and investment banking firm in New York City. Her duties were to prepare objective research reports on companies in the metals and mining sector.

In June 2012, the lapsed member signed a Letter of Acceptance, Waiver, and Consent (AWC), which FINRA accepted in August 2012. The regulator found that she violated its rules requiring that members observe high standards of commercial honor and just and equitable principles of trade by “requesting the CEO of [a] covered company to pay her a concealed fee for her efforts, including research coverage.” As a result, the lapsed member was suspended for six months in all capacities and fined $10,000 by FINRA.

 In her July 2012 Professional Conduct Statement (PCS) submitted to CFA Institute, the lapsed member denied that she had been the subject of any investigations or regulatory actions--even though she was interviewed by FINRA in May 2012 and had signed the AWC in June 2012, just two weeks before submitting her PCS answers. CFA Institute later discovered FINRA’s disciplinary action against the lapsed member from media reports.

In March 2014, the Ontario Securities Commission (OSC) suspended the lapsed member and a research firm and website that she established after returning to Toronto from acting in various capacities for periods ranging from one to three years. In settling the OSC action, the lapsed member admitted to marketing and selling research reports on mining companies while she was not registered, and without disclosing to investors that companies had paid her for the reports and that she had purchased and continued to own stock in some of them.

 The CFA Institute Hearing Panel found that the lapsed member failed to act with integrity, did not place the integrity of the investment profession above her own personal interests, and solicited compensation that reasonably could be expected to compromise her independence and objectivity. The lapsed member also serviced and supported the work of investment bankers, despite industry rules that required separation of research and investment banking functions. Finally, the Hearing Panel found that the lapsed member made false statements when she testified under oath in the FINRA inquiry; she made false statements to CFA Institute in her July 2012 PCS and during the course of the Professional Conduct Program’s investigation of her conduct; and she published research reports that falsely stated that she had no financial interest in the companies that she covered.

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On 4 June 2013, a Hearing Panel imposed a Revocation of membership and the right to use the CFA designation on a Charterholder Member. The Panel found that the Member violated Standards I(A) – Knowledge of the Law, I(D) – Misconduct, IV(A) – Loyalty, VI(A) – Disclosure of Conflicts, and VI(B) – Priority of Transactions of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005). This result was subsequently reviewed and affirmed by an Appeal Panel on 9 October 2013.

The Chicago Mercantile Exchange (CME) found that from January through October 2009, the Member, then a trader at a financial adviser in Brazil, violated the CME’s rules prohibiting fraud, bad faith, conduct inconsistent with just and equitable principles of trade, and the prearrangement of noncompetitive purchases and sales of index options. As a result, the Member was suspended by the CME from trading for six months and fined US$110,000, including restitution.

The Hearing Panel similarly found that the Member had executed numerous trades in E-mini options on the S&P 500 index directly between his personal account and a firm trading account that he controlled. These trades typically were done within just minutes of each other, and the Member directly bought from and sold to the firm’s account. The Member admitted these trades were designed to move money, totaling about US$18,400, from his employer’s account to his personal account, for his own benefit.

The Hearing Panel also found that through a series of 39 noncompetitive trades involving his employer’s account, the Member attempted to capture more favorable spreads in the open market for his own options trades. These trades resulted in a total gain of approximately US$73,379 for the Member and a corresponding loss of about US$47,514 for his employer.

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On 11 October 2012, a Review Panel imposed a Revocation of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the Member violated Standards I – Fundamental Responsibilities and V(A) – Prohibition against Use of Material Nonpublic Information of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

In August 2009, the Hong Kong Market Misconduct Tribunal found that the Member engaged in insider dealing based on material nonpublic information he received from an equity salesman at another firm. The tribunal found that the Member was told in confidence by the salesman that his firm's investment bankers were negotiating a below-market price private placement for a company listed on the Hong Kong Stock Exchange. Based on this inside information, the Member sold over 4 million shares of the company held by the funds he managed to avoid a substantial loss from what he anticipated would be a fall in the market price following public disclosure of the private placement. The tribunal concluded that the Member knowingly traded on the basis of material nonpublic information. As a result, it barred the Member for eight months from managing investment funds or dealing in securities. The Member appealed, and in April 2012, the Court of Appeal affirmed the decision of the tribunal.

The CFA Institute Review Panel similarly determined that the Member had violated Standard V(A) because he traded the company on the basis of material nonpublic information that was disclosed to him in confidence, and that he knew or should have known was misappropriated by the salesman at the other firm. In addition, by violating the laws in Hong Kong relating to insider dealing, the Member violated Standard I which requires that members know and comply with all applicable laws and rules.

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On 8 August 2011, CFA Institute imposed a Revocation of membership and the right to use the CFA designation on a Charterholder Member. CFA Institute found that the Member violated Standards I(A) – Knowledge of the Law, I(D) – Misconduct, III(A) – Loyalty, Prudence, and Care, IV(C) – Responsibilities of Supervisors, and VII(A) – Conduct as Members and Candidates in the CFA Program of the CFA Code of Ethics and Standards of Professional Conduct (2005).

In 2007 and 2008, the Member was the chief compliance officer and portfolio manager for the registered investment adviser firm for a hedge fund. The firm and the fund were created and controlled by a former dentist turned money manager. The fund had about 250 investors and C$30 million in assets under management.

In May 2011, the Ontario Securities Commission (OSC) determined that the firm and the money manager had perpetrated a major fraud on investors by: (1) selling investment fund units with falsely inflated values, (2) taking almost C$7 million in performance and management fees based on the inflated values; and (3) misappropriating more than C$4 million in the form of advances from investment funds. The fraud was tied to a small company that held indirect rights to a glacier, which it intended to use as its source for selling bottled water. The OSC found that from July 2007 to December 2008, the money manager arbitrarily increased the value assigned to the fund’s position in the company by 1,340 percent despite the fact that the company’s business was not operational and had never generated any revenue. At times, the fund was more than 90 percent invested in the company even though the private placement memorandum provided to investors had stipulated that no single position would ever exceed 20 percent.

The Member was one of three respondents who had worked with the money manager at the firm named in the OSC’s complaint. Prior to an administrative hearing before the OSC, the Member entered into a settlement and agreed to testify against the money manager. As part of the agreement with the OSC, the Member admitted that he breached his management duties under the Ontario Securities Act to the detriment of investors. Specifically, he (1) failed to report working capital deficiencies to the OSC and failed to take steps necessary to ensure that the noncompliance was remedied; (2) failed to ensure the firm complied with requirements relating to the concentration of investments within the fund; (3) failed to prevent the firm and the money manager from making prohibited investments; and (4) failed to supervise the trades made and advice provided by the firm. The Member also agreed to the termination of his registration under the Ontario securities laws, a 10-year prohibition from becoming registered again, and a C$15,000 administrative penalty.

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On 28 June 2011, a Hearing Panel imposed a Revocation of membership and the right to use the CFA designation on a Charterholder Member. The Hearing Panel found that the Member violated Standards I – Fundamental Responsibilities, II(B) – Professional Misconduct, II(C) – Prohibition against Plagiarism, and III(E) – Responsibilities of Supervisors (1999), and Standards I(A) – Knowledge of the Law, I(D) – Misconduct, IV(C) – Responsibilities of Supervisors, and VII(A) – Conduct as Members and Candidates in the CFA Program of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

From 2004 to 2007, the Member organized and participated with others in a scheme to misappropriate confidential, proprietary, and copyrighted materials pertaining to the CFA examination. He then used (and allowed others to use) the stolen materials to promote and conduct a business that provided examination preparation courses for CFA candidates. In doing so, the Member knowingly and deliberately acted (and conspired with others whom he supervised) to use dishonest and deceptive means to record and photograph CFA examination questions and undermine the security and integrity of the CFA Program.

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On 22 November 2010, a Hearing Panel imposed a Revocation of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the Member violated Standards I(B) – Independence and Objectivity, I(D) – Misconduct, V(A) – Diligence and Reasonable Basis, V(B) – Communication with Clients and Prospective Clients, and V(C) – Record Retention of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

These findings were predicated on the Member’s authorship of at least 59 issuer-paid “research reports” for Beacon Equity Research from December 2006 through August 2009. These reports were for small-cap and microcap companies that were traded in the over the counter (OTC) markets. The Member rated all 59 companies as “speculative buys.” Her research reports were widely circulated and available to the investing public via the internet.

The panel found that the Member did not conduct adequate, independent research and analysis regarding many of the companies she covered. In several instances, these were public shell companies that had no audited financial information and had made no recent public filings. As a result, in many cases, the Member relied exclusively on information provided to her by the issuers, which she accepted without question and failed to verify against publicly available information. As a result, the Member’s reports, formatted to resemble equity research reports with price targets and “speculative buy” recommendations, lacked independence, objectivity, and reasonable basis and were essentially extensions of the issuing companies’ promotional efforts rather than independent research.

According to the Standards of Practice Handbook (2005), analysts conducting issuer-paid research “must engage in thorough, independent, and unbiased analysis…otherwise, analysts risk misleading investors by becoming an extension of an issuer’s public relations department while appearing to produce ‘independent’ analysis…. At a minimum, research should include a thorough analysis of the company’s financial statements based on publicly disclosed information, benchmarking within a peer group, and industry analysis.” The Member’s research reports gave the appearance of independence but failed to include analysis of the companies’ financial statements based on publicly disclosed information, in violation of Standard I(B) – Independence and Objectivity. Failure to reach the minimum standard of research also reflected adversely on the Member’s competence as a CFA charterholder in violation of Standard I(D) – Misconduct.

The panel found that the Member, in conducting her research, failed to verify the accuracy and reasonableness of issuers’ statements, claims, and projections before using and publishing the information in her reports. She consequently published inaccurate and/or misleading information which was then distributed to public investors via the internet. Under the circumstances, the Member failed to exercise diligence, independence, and thoroughness in making investment recommendations and to have a reasonable and adequate basis, supported by appropriate research and investigation, for those recommendations. These actions violated Standard V(A) – Diligence and Reasonable Basis.

The Member also violated Standard V(B) – Communication with Clients and Prospective Clients, by failing to outline the limits of her analysis and/or include the risk of business failure in some reports. Finally, she violated Standard V(C) – Record Retention, which requires that members develop and maintain appropriate records to support their investment analyses and recommendations. The Member’s research records included promotional materials provided by issuing companies, but did not include public filings or audited financial statements for each company.

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On 19 October 2010, a Hearing Panel imposed the sanction of Revocation of and the right to use the CFA Designation on a Charterholder Member. The panel found that the Member violated Standards I – Fundamental Responsibilities, II(B) – Professional Misconduct, III(E) – Responsibilities of Supervisors, and V(A) – Prohibition Against Use of Material Nonpublic Information of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999). The violations were based on the Member’s receipt of nonpublic material and price-sensitive information; disclosure of such information to two subordinates; and subsequent trading based on the information received. The panel’s decision and sanction determination were affirmed by a Review Panel on 2 February 2011.

In 2003, through the course and scope of his employment, the Member came to possess material nonpublic information concerning a proposed offering by a company of preferred shares. Immediately after receiving such information, the Member disclosed it to two of his direct subordinates. The Member and the subordinates then immediately sold shares of the company in the respective client accounts that they managed. The Member’s actions violated Sections 219(2)(a), 219(2)(b) and 219(3) of the Securities and Futures Act of Singapore. The Member disclosed the matter to CFA Institute and fully cooperated with the investigation and review of the incident.

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On 20 July 2010, CFA Institute imposed Revocations of membership and the right to use the CFA designation on two Charterholder Members pursuant to a Stipulation and Consent to Disciplinary Action. CFA Institute found that the Members violated Standards I – Fundamental Responsibilities, II(B) – Professional Misconduct, and V(A) – Prohibition against Use of Material Nonpublic Information of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999). 

Through the course and scope of their employment, the Members received material nonpublic information concerning a proposed offering of preferred shares by a company. Immediately after receiving this information, the Members sold shares of the company in the client accounts they managed so as to avoid anticipated losses.

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On 22 September 2009, a Hearing Panel imposed a Revocation of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the Member violated Standard VII(A) – Conduct as Members and Candidates in the CFA Program of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

Based on the Member’s self-disclosure of a matter, the CFA Institute Professional Conduct Program (PCP) sent the Member a Notice of Inquiry in December 2006. The Member submitted a response that contained content considered to be highly unprofessional and disrespectful, and included graphic, inappropriate images. On the Member’s website, where he provided a link to CFA Institute web pages and used the CFA designation, the PCP also found pornographic images. Additionally, the PCP found unprofessional commentary on internet pornographic chat sites, apparently posted by the Member, where his name included the CFA designation. The Member also failed to fully cooperate with the PCP inquiry, testify, and otherwise cooperate in the disciplinary proceedings.

CFA Institute convened a Hearing Panel. After consideration of the evidence, the panel found that the Member’s conduct was unprofessional, disrespectful, and contrary to the integrity required of CFA Institute charterholders, and compromised the reputation and integrity of CFA Institute and the CFA designation.

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On 4 March 2008, CFA Institute imposed the sanction of Revocation of membership and the right to use the CFA designation on a Charterholder Member, pursuant to a Stipulation and Consent to Disciplinary Action. CFA Institute found that the Member violated Standards I – Fundamental Responsibilities, II(B) – Professional Misconduct, III(C) – Disclosure of Conflicts to Employer, IV(A.1) – Reasonable Basis and Representations, IV(A.3) – Independence and Objectivity, IV(B.3) – Fair Dealing, IV(B.4) – Priority of Transactions, and IV(B.7) – Disclosure of Conflicts to Clients and Prospects of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member, while employed as a managing director and senior research analyst, made private investments in two companies that were later involved in separate mergers with two publicly traded companies for which the Member provided research report coverage. The Member praised the mergers in his research reports and in other public comments; however, the research reports did not specifically disclose the Member’s personal interests in the private companies. Similarly, in two media appearances, the Member also did not disclose his personal interests.

In a separate matter, in November 1999, the Member, personally and as part of his firm’s investment group, made personal investments in a third company. The company went public in July 2000 and the Member began issuing research reports on the company in August 2000, rating it a “buy.” The research reports did not disclose the Member’s personal interests in the company. In January 2001, the Member – according to a member of his firm’s investment committee – told the committee that the stock was a good buy at approximately half the price of the then market value. The following day, the Member sold approximately 75 percent of his personal holdings in the stock. The Member’s subsequent research report on the company did not specifically disclose his personal interests in the company or his sale of stock in the company. Three days after the research report was issued, the Member sold additional personal shares of the stock.

In one of the instances above, the Member did not disclose his personal ownership to his employer, in contravention of his employer’s compliance policies and Standard III(C) – Disclosure of Conflicts to Employer. Pursuant to Standard III(C), the Member was required to disclose to his employer all matters, including beneficial ownership of securities or other investments that reasonably could be expected to interfere with his ability to make unbiased and objective recommendations.

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On 9 January 2008, CFA Institute imposed the sanction of Revocation of membership and the right to use the CFA designation on a Charterholder Member, pursuant to a Stipulation and Consent for Disciplinary Action. CFA Institute found that the Member violated Standards II(B) – Professional Misconduct, III(C) – Disclosure of Conflicts to Employer, IV(A.1) – Reasonable Basis and Representations, IV(A.3) – Independence and Objectivity, IV(B.3) – Fair Dealing, and V(A)- Prohibition against Use of Material Nonpublic Information of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member violated the Code of Ethics and Standards of Professional Conduct by (a) sharing unpublished research reports and ratings with certain institutional investors and an issuer; (b) disseminating material nonpublic information to selected institutional investors; (c) issuing and publishing research that did not provide a sound basis for evaluating facts, contained unwarranted, unbalanced, or misleading statements about the company, and opinions about target prices for which there was no reasonable basis, was not based on principles of fair dealing and good faith, and failed to disclose material risks; (d) giving and receiving improper gifts; and (e) failing to abide by his employer’s compliance policies.

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On 13 July 2006, a Hearing Panel imposed a Revocation of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the Member violated Standards I – Fundamental Responsibilities, II(B) – Professional Misconduct, III(E) – Responsibilities of Supervisors, IV(A.3) – Independence and Objectivity, and IV(B.7) – Disclosure of Conflicts to Clients and Prospects of the CFA Institute Code of Ethics and Standards of Professional Conduct (1996).

The Member failed to exercise reasonable judgment to achieve and maintain independence and objectivity and failed to adequately disclose conflicts of interest in the preparation and issuance of press releases, a financial analysis report, and public statements about a company. Specifically, the Member formed a second company to generate purchase orders for the first company; issued a financial analysis report on the company through another owned company; and issued press releases for the company through another owned company, while failing to disclose the material conflicts of interest including his ownership of the company’s stock, his client’s ownership of the company’s stock, and his ownership of the three companies. The Member also failed to exercise adequate supervision of company employees, thereby perpetuating the disclosure failures.

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On 27 September 2000, a Hearing Panel imposed a Revocation of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the Member violated Standard II(B) – Professional Misconduct of the AIMR Code of Ethics and Standards of Professional Conduct (1999). The panel’s decision and sanction determination were affirmed by a Review Panel on 30 November 2000.

The Member and a second AIMR member were co-workers until the second AIMR member accepted a position elsewhere. Shortly after the second AIMR member accepted this new position, the Member copied AIMR stationery and utilized it to prepare a fictitious document titled “Money Manager Alert!” purportedly from AIMR regarding the second AIMR member. The “Money Manager Alert!” claimed to be authored by a fictitious Senior Vice President of AIMR and claimed to be a new service provided by AIMR. The fictitious document provided false information about the second AIMR member’s professional experiences and made accusations about his professional conduct. The fictitious document was sent to the second AIMR member’s new employer, three existing clients of the new employer, and two public funds, one of which was a prospective client of the new employer.

Summary Suspension Felony/Bar

On 28 September 2017, CFA Institute imposed a Summary Suspension on a charterholder member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 26 October 2017.

From 1997 until 2012, the charterholder member was employed by a Canadian company. In August 2011, the Ontario Securities Commission (OSC) suspended trading of the shares of the company, stating that the company had engaged in practices they “knew or should have known perpetuated a fraud.” That same month, the OSC filed a lawsuit in Toronto against the company and its five senior executives, including the charterholder member. In March 2012, the company filed for bankruptcy protection.

The OSC trial started in 2015, and in July 2017, the Hearing Panel rendered their Decision, finding that: 1) As an officer of the company, the charterholder member permitted the company to make materially misleading or untrue statements with respect to ownership of assets, revenue recognition, and internal controls, contrary to subsection 122(1)(b) of the Securities Act; 2) the charterholder member engaged in deceitful or dishonest conduct related to the company’s standing timber assets and revenue that he knew constituted fraud, contrary to subsection 126.1(b) of the Securities Act; and 3) the charterholder member misled OSC staff during its investigation, contrary to subsection 122(1)(a).

Subsections 122(1)(a) and (b) state that a person who makes a materially misleading or untrue statement in information submitted to the OSC or in any required document filed under the securities laws is guilty of an offence and on conviction is liable to a fine of not more than $5 million or to imprisonment for a term of not more than five years less a day, or to both. The charterholder member was summarily suspended because he was convicted of a crime punishable by more than one year in prison. His conviction is currently on appeal.

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On 3 August 2017, CFA Institute imposed a Summary Suspension on a lapsed charterholder member, automatically suspending his right to reactivate his membership and use the CFA designation. Because he did not request a review, the summary suspension became a Revocation on 1 September 2017.  

On 19 December 2016, the lapsed charterholder member, a former trader at Standard Bank, Barclays PLC, BNP Paribas and Australia & New Zealand Banking Group Ltd. pleaded guilty to felony criminal charges related to violations of Section One of the Sherman Antitrust Act in the United States Court for the Southern District of New York. The charges stemmed from the lapsed charterholder member's involvement in an alleged conspiracy to suppress and eliminate competition by fixing prices for Central and Eastern European, Middle Eastern, and African Emerging Market currencies from January 2007 until July 2013.

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On 2 August 2017, CFA Institute imposed a Summary Suspension on a charterholder member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the summary suspension became a Revocation on 31 August 2017.  

On 12 July 2017, the charterholder member, a former Managing Director and head of the Transition Management desk for Europe, the Middle East, and Africa for a firm, pleaded guilty to felony criminal charges in the United States Court for the District of Massachusetts. The charges were related to the charterholder member's involvement in allegedly fraudulent transition management fees that were levied on various institutional investors between February 2010 and September 2011. Prosecutors claimed that the charterholder member and two co-conspirators engaged in a scheme to defraud the bank’s transition management clients by applying hidden commissions to securities trades made on behalf of the clients. 

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On 23 January 2017, CFA Institute imposed a Summary Suspension on a charterholder member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the summary suspension became a Revocation on 21 February 2017.  

On 2 November 2016, the charterholder member was permanently barred by the Financial Industry Regulatory Authority as a result of purchasing securities while in possession of material nonpublic information. FINRA determined that between October and November 2015, the charterholder member purchased 2,087 shares of a Company (not identified by FINRA) in six accounts under his trading authority, including individual accounts and those of his family, at prices between $94.95 and $97.45 per share. The charterholder member purchased these shares while in possession of material nonpublic information that he had improperly obtained from an employee of the Company regarding its impending acquisition by another company. When the acquisition was publicly announced, the Company’s share price increased approximately 29% over the previous day’s closing price.  

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On 20 January 2017, CFA Institute imposed a Summary Suspension on a charterholder member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the suspension became a Revocation on 18 February 2017.  

On 15 December 2016, the charterholder member pleaded guilty in the Circuit Court for the County of Benton, Arkansas, to 10 felony counts of distributing, possessing, or viewing images depicting sexually-explicit conduct involving a child. The charterholder was sentenced to twenty years in prison and he must abide by a suspended sentence agreement for 7 years following his release.

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On 21 November 2016, CFA Institute imposed a Summary Suspension on a lapsed charterholder member, automatically suspending his right to membership in CFA Institute and use of the CFA designation. Because he did not request a review, the summary suspension automatically became a Revocation.  

On 26 May 2016 in Manhattan federal court, the lapsed charterholder member admitted that between 2006 and 2008, while employed as a trader with Deutsche Bank U.S. Financial Markets, he participated in a scheme to manipulate the London Interbank Offered Rate (LIBOR). He pleaded guilty to felony charges of conspiring to commit wire fraud and bank fraud.  

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On 13 May 2016, CFA Institute imposed a Summary Suspension on a regular member, automatically suspending his membership. This suspension was later affirmed by a Summary Suspension Hearing Panel and became a Revocation on 10 October 2016.

The regular member was the owner and principal of an investment adviser. On 16 May 2014, the U.S. Securities and Exchange Commission found that from September through December 2009, the regular member violated the antifraud provisions of the federal securities laws by “marking the close” by submitting orders at the end of the trading day with the intent to manipulate the prices of three small, thinly traded, bank stocks. As a result, the SEC permanently barred the regular member from associating with, among others, any broker, dealer, or investment adviser, and imposed a $75,000 fine. On 28 March 2016, the United States Supreme Court denied the regular member’s request to review the decision of the United States Court of Appeals for the District of Columbia, which had reviewed and upheld the SEC’s bar.

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On 30 August 2016, CFA Institute imposed a Summary Suspension on  a lapsed charterholder member, automatically suspending his right to reactivate his membership and use the CFA designation. Because he did not request a review, the summary suspension became a Revocation on 28 September 2016.  

On 16 August 2016, the U.S. Securities and Exchange Commission announced that it had barred the lapsed charterholder member from the securities industry for misleading customers and causing them to pay higher prices for residential mortgage-backed securities (RMBS) from 2010 to 2012. The SEC stated that it found that the lapsed charterholder member generated extra revenue for his firm by concealing the prices at which the firm had purchased RMBS and then reselling the RMBS at higher prices and keeping the difference. The SEC also stated that on some occasions the lapsed charterholder member mislead buyers by suggesting to them that he was negotiating a transaction when he was actually just selling from his firm’s inventory.

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On 10 August 2016, CFA Institute imposed a Summary Suspension on a charterholder member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the summary suspension became a Revocation on 8 September 2016.  

On 1 August 2016, The High Court of Singapore accepted the charterholder member's guilty plea to charges of culpable homicide not amounting to murder. In October 2015, he suffocated his five-year-old son during a child custody battle. On 22 August 2016, the charterholder member was sentenced to five years in prison after psychiatric findings showed he had “diminished responsibility.”

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On 29 January 2016, CFA Institute imposed a Summary Suspension on a lapsed charterholder member, automatically suspending her membership and right to use the CFA designation. A hearing panel affirmed the summary suspension, which then automatically became a Revocation on 14 July 2016.

On 22 December 2015, the U.S. Securities and Exchange Commission barred the lapsed charterholder member from the securities business, with the right to reapply after five years. The SEC determined that in late 2011 and early 2012, the lapsed charterholder member, then a Managing Director, trader, and portfolio manager at Morgan Stanley Investment Management Inc., entered into an agreement with a counterparty at another firm to engage in a series of six unlawful prearranged sales and “buybacks” of fixed-income securities at predetermined prices, which secretly favored certain advisory clients over others, in violation of the firm’s fiduciary duties to those clients. By cross-trading between advisory accounts and “parking” securities in this manner, the SEC found that the lapsed charterholder member evaded her firm’s internal cross trade requirements and procedures, and willfully violated the anti-fraud provisions of the federal securities laws. In addition to the bar, the lapsed charterholder member was ordered to pay a fine of USD$125,000.

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On 29 June 2016, CFA Institute imposed a Summary Suspension on a lapsed charterholder member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the summary suspension automatically became a Revocation on 28 July 2016.  

On 10 November 2015, the U.S. Attorney’s Office for the Northern District of California announced that the lapsed charterholder member had pled guilty and admitted that from 2009 until 2012 he and a friend had led an insider trading scheme in which they secretly traded on confidential merger and earnings information obtained from the lapsed charterholder member’s employers. Conspiring with his friend, the lapsed charterholder member arranged to use a brokerage account held in the name of a third participant in the scheme in order to keep his employers unaware of the illegal trading.

More specifically, beginning in 2009, the lapsed charterholder member, who was a financial analyst at Applied Materials, Inc. (“Applied Materials”), used confidential information with which his employer had entrusted him to trade options in advance of Applied Materials’ acquisitions of Semitool, Inc. in 2009 and Varian Semiconductor Equipment Associates, Inc. in 2011. In 2012, after the lapsed charterholder member became the vice president for investor relations and finance at Rovi Corporation (“Rovi”), he and his friend used material, nonpublic information that the lapsed charterholder member learned as a company insider to trade Rovi securities ahead of its public announcements of its first and second quarter 2012 financial results. To avoid detection, the lapsed charterholder member and his friend used disposable prepaid mobile phones to discuss the trades, and the lapsed charterholder member’s friend made structured cash withdrawals to kick back profits to the lapsed charterholder member. In total, the scheme reaped illegal profits totaling approximately $743,000.

The lapsed charterholder member pled guilty to two felonies, including securities fraud, which carries a maximum sentence of 20 years in prison and up to $5 million in fines. In July 2016, the lapsed charterholder member received a six-month prison sentence, followed by 3 years of supervised release. 

Separately, in February 2015, the lapsed charterholder member entered into a settlement agreement with the U.S. Securities and Exchange Commission in which he agreed to be permanently enjoined from violating Sections 10(b) and 14(e) of the Exchange Act and barred from serving as an officer or director of a public company for 10 years. The lapsed charterholder member also agreed to pay disgorgement of $52,000, prejudgment interest of $4,002 and a fine of $417,468.

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On 22 June 2016, CFA Institute imposed a Summary Suspension on a charterholder member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the summary suspension became a Revocation on 22 July 2016.    

On 13 June 2016, the U.S. Securities and Exchange Commission affirmed the findings of an Administrative Law Judge that the charterholder member, a portfolio manager at Fiduciary Asset Management LLC, made fraudulent misstatements and omitted material facts in reports to shareholders of his firm’s closed-end mutual fund, the Fiduciary/Claymore Dynamic Equity Fund. According to the SEC, the charterholder member failed to disclose the fund’s use of new, complex, and risky derivative trading instruments and strategies, and their effect on the fund’s performance and risk exposure. The fund lost more than USD$45 million in September and October 2008, and was liquidated the following year. The SEC ordered that the charterholder member pay a fine of USD$130,000, and barred him from the securities business, with a right to reapply after two years.  

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On 23 June 2016, CFA Institute imposed a Summary Suspension on a lapsed charterholder member, automatically suspending his membership and right to use the CFA designation. Because the lapsed charterholder member did not request a review, the summary suspension became a Revocation on 23 July 2016.

On 15 June 2016, the U.S. Attorney’s Office for the Southern District of New York announced that the lapsed charterholder member, a former portfolio manager at Visium Asset Management LP, had pled guilty and admitted his participation in an illegal scheme to trade on highly confidential and material non-public information received from a paid consultant who obtained advance tips from an unnamed senior official at the U.S. Food and Drug Administration regarding the agency’s approvals of pending generic drug applications. 

The lapsed charterholder member also pled guilty to charges that he participated in a scheme to defraud investors by obtaining fraudulent price quotes from “friendly” brokers, and then using these “sham” quotes to deceptively mismark each month the value of certain illiquid securities held in the fixed-income hedge fund that he managed. By doing so, he artificially inflated the net asset value (“NAV”) of the fund, often by tens of millions of dollars, and overstated the securities’ liquidity. In other instances, the lapsed charterholder member purchased additional quantities of certain securities (in which his fund already had a position) at deceptively inflated prices in a practice known as “painting the tape.” He then reported the artificially inflated prices to his firm’s accounting department for use in determining and reporting the fund’s NAV.

The lapsed charterholder member pleaded guilty to seven felony counts, including conspiracy and securities fraud charges, several of which carry maximum sentences of 20 years in prison and up to $5 million in fines. The lapsed charterholder member has not been sentenced yet and, reportedly, has been cooperating in the government’s investigation.

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On 3 June 2016, CFA Institute imposed a Summary Suspension a lapsed charterholder member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the summary suspension became a Revocation on 1 July 2016.

In January 2015, the lapsed charterholder member was arrested and charged with second-degree kidnapping, after ordering a person to get into his car at gunpoint. According to police, the lapsed charterholder member then demanded that the victim help him find cocaine. On 14 May 2015, the lapsed charterholder member pleaded guilty to two lesser charges of solicitation to commit a felony (a Class “D” felony under Iowa law) and carrying a firearm while intoxicated.

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On 7 June 2016, CFA Institute imposed a Summary Suspension on a Candidate, automatically suspending his right to participate in the CFA and/or CIPM exam programs. Because the candidate did not request a review, the summary suspension became a Prohibition on 19 July 2016. 

In March 2015, the candidate pleaded guilty to one count of conspiracy to defraud numerous financial institutions of many millions of dollars by creating and submitting falsified documents in support of home loan applications.

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On 4 February 2016, CFA Institute imposed a Summary Suspension on a charterholder member, suspending her membership and right to use the CFA designation. A Hearing Panel affirmed the Summary Suspension, which then automatically became a Revocation on 16 June 2016.  

The charterholder member was employed by the Bank of East Asia (BEA) in Hong Kong from 2012 to 2014. On 26 January 2016, the Securities and Futures Commission (SFC) announced that it had banned the charterholder member for eight months because she failed to disclose an earlier criminal conviction in Taiwan. 

Specifically, in 2010, the charterholder member pleaded guilty to a charge of contravention of Article 16 of Taiwan’s Securities Investment Trust and Consulting Act and was sentenced by the District Court in Taipei to four months’ imprisonment for illegally promoting and selling offshore funds to Taiwanese investors without regulatory approval. The charterholder member never disclosed this conviction to the SFC, to her future employer, or to CFA Institute in her annual Professional Conduct Statements. Professional Conduct learned of the charterholder member’s conviction from the SFC’s disciplinary action, and imposed a summary suspension because the charterholder member had pleaded guilty in Taiwan to a crime punishable by more than one year in prison

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On 27 August 2014, CFA Institute imposed a Summary Suspension on a charterholder member, automatically suspending his membership and right to use the CFA designation. This action was taken because the charterholder member was barred from registration for an indefinite period by the Ontario Securities Commission (OSC). Professional Conduct granted the charterholder member additional time to respond while he appealed to the Ontario Superior Court. The OSC’s decision was affirmed on 17 May 2016. Because the charterholder member failed to renew his request for a review, the Summary Suspension automatically became a Revocation on 16 June 2016.

During the relevant period, the charterholder member served as President, CEO, and a director of Crown Hill Capital Corporation (CHCC), the investment fund manager for a trust and several funds, including the Crown Hill Fund (CHF). He was also director and sole officer of Crown Hill Asset Management Inc., the portfolio manager of CHF.

Following a fourteen-day adversarial hearing, the OSC found that, among other things, the charterholder member breached his duties to investors in CHF by causing CHCC and CHF to enter into a series of transactions to have CHCC acquire the management services agreements for other investment funds and bring about mergers of those funds with CHF, primarily for the charterholder member’s own interests rather than those of CHF. The OSC found that the charterholder member also violated his duties to CHF’s investors by causing CHCC to use CHF’s assets to finance two other separate acquisitions of the rights to the management services agreements for other investment funds in order to increase CHCC’s assets under management and management fees, primarily for the benefit of CHCC and charterholder member rather than CHF. The OSC also found that charterholder member caused CHCC to send CHF unitholders a materially misleading notice of meeting and management proxy circular in connection with a special meeting of CHF unitholders.

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On 12 November 2015, CFA Institute imposed a Summary Suspension on  a lapsed charterholder member, automatically suspending his membership and right to use the CFA designation. Because the lapsed member did not request a review, the Summary Suspension became a Revocation on 12 December 2015.

On 21 October 2015, the lapsed member was found guilty of three counts of criminal breach of trust, stemming from his participation as a member of the management board of City Harvest Church (CHC) in a scheme to divert funds allocated to the church’s building fund to support the singing career of the wife of CHC’s founder. The lapsed member and others funneled donor funds explicitly earmarked for building projects and investments into purchases of bonds issued by an entertainment management company created and controlled by CHC’s founder. The proceeds from the bond offering were then spent to advance the singing career of the founder’s wife. When church auditors raised questions about the bond investment, the lapsed member and his co-conspirators engaged in round trip transactions in an attempt to conceal the illicit nature of the investments.

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On 19 October 2015, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. The suspension was affirmed by a Summary Suspension Hearing Panel and became a Revocation on 16 February 2016.

On 27 May 2015, the charterholder member pleaded guilty to several charges in the Middlesex Superior Court in Woburn, Massachusetts. The most serious of these crimes related to his attempt to hire a “hit man” or contract killer – who turned out to be an undercover state trooper – to murder or maim his estranged wife so that she could not attend an upcoming hearing in family court. As a result, the charterholder member was sentenced to 3 to 5 years in prison, followed by 3 years of probation, and barred permanently by a regulator. 

The charterholder member is also the subject of federal criminal charges relating to his attempt, while being held without bail, to hire a gang member to kill the state trooper who had earlier posed as the “hit man”, and the friend who had revealed the charterholder member's intentions to the police. In addition, on 23 July 2015, the charterholder member was permanently barred by the Financial Industry Regulatory Authority (FINRA) as a result of his failure to produce requested information.

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On 8 October 2015, CFA Institute imposed a Summary Suspension on a Lapsed Charterholder, automatically suspending his right to reactivate his membership and use the CFA designation. Because the lapsed member did not request a review, the summary suspension became a Revocation on 8 November 2015.

In 2006, the lapsed member, then a CFA charterholder, failed to cooperate and appear for an on-the-record investigative interview requested by FINRA concerning his actions as the Chief Compliance Officer of a member firm. As a result, in 2007, the lapsed member was permanently barred by FINRA. He did not, however, disclose this investigation and disciplinary action to CFA Institute in his annual Professional Conduct Statements as required. In 2010, the lapsed member allowed his membership in CFA Institute to lapse. 

In October 2015, the Professional Conduct Program learned that FINRA had barred the lapsed member back in 2007, when the U.S. Securities and Exchange Commission announced that he had been charged with participating in a $6 million fraudulent scheme to create and sell undisclosed “blank check” companies (having no operations or value) to be used in reverse mergers with publicly-traded shell companies and sold to public investors as penny stocks in “pump and dump” scams. The SEC’s complaint is pending in federal district court in Florida.
 

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On 9 February 2015, CFA Institute imposed a Summary Suspension on a lapsed charterholder member, automatically suspending her membership and right to use the CFA designation.  Because she did not request a review, the summary suspension became a Revocation on 20 March 2015.  On 27 October 2014, the Financial Industry Regulatory Authority (FINRA) barred the lapsed member from association with any FINRA member in any capacity.  FINRA determined that between 2011 and 2013, the lapsed member entered into an agreement with counterparties at other financial institutions to engage in pre-arranged trading. These pre-arranged transactions artificially influenced the natural forces of supply and demand in the market for the relevant securities.


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On 2 September 2014, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the summary suspension became a Revocation on 2 October 2014.

In June 2014, the Swiss Financial Market Supervisory Authority (FINMA) barred the Member from, among other things, carrying out any activity that is legally related to the financial markets and requires a permit and from engaging in professional activity as a securities broker. FINMA’s bar was issued in connection with proceedings against three Swiss firms of which the Member served as a director. FINMA found that the firms were improperly engaged in accepting investor subscriptions on behalf of clients without the proper licenses.

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On 2 June 2014, CFA Institute imposed a Summary Suspension on a lapsed Affiliate Member, automatically suspending his membership. Because he did not request a review, the Summary Suspension became a Revocation on 3 July 2014.

The Member admitted to engaging in illegal insider trading between June 2010 and December 2011. In May 2013, the Ontario Securities Commission (OSC) approved a settlement agreement under which the Member was: permanently prohibited from trading securities; permanently prohibited from becoming or acting as a director or officer of an investment fund manager; and permanently prohibited from becoming or acting as a registrant, investment fund manager or promoter. In addition to the permanent prohibitions, he was ordered to pay OSC a C$750,000 administrative penalty, disgorge C$416,719 in profits, and pay C$30,000 in costs.

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On 5 December 2013, CFA Institute imposed a Summary Suspension on an Affiliate Member, automatically suspending his membership. Because he did not request a review, the Summary Suspension became a Revocation on 6 January 2014. 

In July 2013, the Securities and Futures Commission of Hong Kong revoked the Member’s securities license after finding that he masterminded “window dressing” activities at the firm where he served as a responsible officer and managing director. Specifically, firm funds were transferred to a company wholly-owned by the Member, leading to a drop in his firm’s liquid capital to a level below the amount it was required to maintain under the SFC’s Financial Resources Rules. At the end of the month, before the Member’s firm submitted its financial filings to the SFC, a similar amount of funds would be returned to the firm either by the Member’s wholly-owned company or his relatives and friends. The SFC found that the purpose of these repeated intentional and fraudulent transfers was to inflate artificially the firm’s liquid assets in violation of the SFC’s Financial Resources Rules.

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On 7 November 2013, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. The sanction was reviewed and affirmed by a Summary Suspension Hearing Panel and became a Revocation on 15 April 2014.

On 19 September 2013, the SEC entered an Order barring the Member from, among other things, associating with any broker, dealer, or investment advisor, with the right to reapply after five years, subject to meeting certain conditions. The SEC found that the Member participated and assisted in a multi-million dollar fraud orchestrated by another individual. According to the SEC, the Member worked closely with the individual in raising over US$5 million from investors for several bogus Silicon-Valley hedge funds.

Specifically, the SEC found that the Member held himself out to potential investors as the “fund manager” of the funds; met and communicated with potential investors about the bogus funds’ purported investment strategies; showed potential investors documents and made presentations touting the funds’ outstanding investment performance; and, in doing these things, the Member substantially assisted the other individual’s fraudulent scheme by lending an air of legitimacy and security to these non-existent investment funds. In fact, the Member did not manage any portfolios of investments for the funds because there were no such portfolios; the Member simply relied on documents prepared by the other individual without conducting any diligence of his own. Despite having no investments to manage, the Member accepted more than US$850,000 for playing his part in the fraudulent scheme, which represented nearly 20% of all the funds raised from investors in the funds.

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On 27 September 2013, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. The Summary Suspension was affirmed by a Summary Suspension Hearing Panel and became a Revocation on 19 February 2014.

The Member served as the President, sole owner, and principal of a firm and controlled a Fund, an unregistered investment pool. In September 2012, the SEC entered an Order barring the Member from, among other things, associating with any broker, dealer, or investment adviser, with a right to reapply after two years subject to the conditions specified in the Order. The SEC found that the Member: (i) solicited his clients to invest in an unregistered stock offering without disclosing that the firm would earn a 10% success fee for the capital it raised, (ii) solicited his clients to invest in the Fund without disclosing that the Fund would initially invest primarily in the offering (for which the firm would receive a success fee), (iii) misused Fund assets by causing the Fund to purchase a firm client’s shares of the offering  in settlement of a dispute, and (iv) repeatedly misrepresented the Fund’s liquidity to investors. In addition to the industry bar, the Member and the firm agreed to pay disgorgement of US$482,745, prejudgment interest of US$169,195, and a civil penalty of US$130,000.

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On 1 October 2013, CFA Institute imposed a Summary Suspension on an Affiliate Member, automatically suspending his membership. Because he did not request a review, the Summary Suspension became a Revocation on 31 October 2013.

In May 2013, FINRA permanently barred the Member from association with any FINRA member in any capacity. FINRA found that the Member violated FINRA Rules 3270 and 2010 by participating in an unapproved private securities transaction in violation of his former firm’s policy. FINRA also found that the Member violated FINRA Rules 8020 and 2010 by providing a false and misleading response to an inquiry from FINRA regarding the Form U5 his former firm filed reporting the matter.

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On 9 May 2013, CFA Institute imposed a Summary Suspension on a
Charterholder Member, automatically suspending his membership and right to use the CFA designation. The sanction was reviewed and affirmed by a Summary Suspension Hearing Panel on 17 September 2013. Thus, the Summary Suspension became a Revocation on 19 September 2013.

In October 2011, the Member pleaded guilty to the felony offense of Enticing a Minor in violation of Iowa Code Section 710.10(2).

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On 14 August 2013,
CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 13 September 2013.

In April 2013, FINRA permanently barred the Member from association with any FINRA member in any capacity. FINRA found that the Member violated FINRA Rules 8210 and 2010 by refusing to appear for an on-the-record interview with FINRA in connection with its investigation of his management of a limited partnership fund.

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On 30 April 2013, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. The sanction was reviewed and affirmed by a Summary Suspension Hearing Panel on 7 August 2013. Thus, the Summary Suspension became a Revocation on 28 August 2013.

On 26 March 2013, the U.S. Attorney in Manhattan announced that the Member had pleaded guilty to one count of conspiracy to commit securities fraud and one substantive count of securities fraud, both of which are felonies. The Member was alleged to have traded on material nonpublic information that he received from an acquaintance who worked as an analyst for an investment advisory firm to a family of hedge funds. The inside information concerned the impending acquisition of a technology company by another technology company in 2008. According to the prosecutors, the Member traded illegally on the basis of this advance information and made a profit of more than US$136,000.

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On 18 April 2013, a Summary Suspension Hearing Panel imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. The Summary Suspension became a Revocation on 2 May 2013.

On 6 September 2010, the Member entered a guilty plea in Singapore District Court to four criminal charges relating to a trading scheme involving the execution of married trades with a counterpart while working as a Senior Fund Manager. The trading scheme was deemed to act as a fraud upon the Member’s client, a charitable organization. The trading scheme provided non-financial benefits to the Member and his counterpart made S$842,000 in intra-day, contra-profits. The Member was sentenced to eight months in prison in October 2010. The Member appealed his sentence to the High Court of the Republic of Singapore but withdrew his appeal.

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On 17 April 2013, CFA Institute imposed a Summary Suspension on a Candidate, automatically suspending his participation in the CFA Program. Because he did not request a review, the Summary Suspension became a Prohibition from Participation in the CFA Program on 17 May 2013.

The Candidate was suspended after he pleaded guilty to two felony counts of insider trading.

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On 15 April 2013, CFA Institute imposed a Summary Suspension on a lapsed Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 13 June 2013.

On 6 September 2012, the Member pleaded guilty to first-degree indecent exposure, a felony. On 7 December 2012, the Member was sentenced to eight years in prison, with six years suspended, and ten years of probation. Under Rule 10.1 of the CFA Institute Rules of Procedure for Professional Conduct [2010], conviction of a crime defined as a felony or punishable by imprisonment of one year or more is grounds for Summary Suspension.

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On 11 April 2013, a Summary Suspension Hearing Panel imposed a Summary Suspension on a Candidate, automatically suspending his participation in the CFA Program. The Summary Suspension became a Prohibition of Participation in the CFA Program on 11 April 2013.

In May 2011, while he was a candidate in the CFA Program, the individual entered the women’s bathroom at a local university and photographed a woman without her consent. After his arrest, the Candidate admitted to legal authorities that he had secretly taken hundreds of indecent photographs and videos of multiple women in a pattern of conduct over several months preceding his arrest. The Candidate pleaded guilty to the offense of loitering under circumstances that caused a person reasonably to be concerned for her safety or well-being. The offense carried a maximum sentence of two years’ imprisonment.

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On 13 March 2012, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. The Member requested a review but did not proceed with the Summary Suspension Hearing Panel once scheduled. Because there was no completed request for review within the time provided under the Rules of Procedure, the Summary Suspension became a Revocation on 13 April 2012.

On 30 December 2011, the Member pleaded guilty in federal court to charges that he engaged in separate conspiracies to rig bids for investment agreements and to defraud municipal issuers. According to the U.S. Department of Justice, from approximately 1998 through 2006, the Member was the owner of a financial services firm based in California. State and local governments and agencies hired the firm to act as their broker and conduct a competitive bidding process for contracts to invest the proceeds of municipal bonds issued to pay for public projects. The Member and others, however, decided in advance which providers would be the winning bidders for certain investment agreements, in return for kickbacks to the firm in the form of unearned or inflated fees. As part of their fraudulent scheme, the Member and others also gave certain co-conspirator providers “last look” information about the prices and conditions in their competitors’ bids, which enabled the providers to win contracts at artificially determined price levels. In exchange, the firm received kickbacks and relied on the co-conspirator providers to submit intentionally losing bids when requested on other contracts.

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On 7 March 2013, a Summary Suspension Hearing Panel imposed a Summary Suspension on a Charterholder Member, automatically suspending her membership and right to use the CFA designation. The Summary Suspension became a Revocation on 14 March 2013.

On 7 May 2012, the Member entered a guilty plea to five counts of theft, each carrying a maximum penalty of ten years in prison, in the Bermuda Supreme Court. She was charged with stealing BD$76,500 from an elderly couple for whom she was acting as a personal financial consultant. The Member was sentenced to six months in prison for this offense on 6 July 2012.

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On 5 December 2012, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 4 January 2013.

On 17 July 2012, the U.S. SEC barred the Member from association with any broker, dealer, investment advisor, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization. He was also barred from participating in any offering of a penny stock, including acting as a promoter, finder, consultant, agent, or other person who engages in activities with a broker, dealer, or issuer for purposes of the issuance or trading in any penny stock or inducing or attempting to induce the purchase or sale of any penny stock. The Member has the right to apply for reentry after three years.

According to the SEC, the Member misled or failed to adequately inform investors about the risks of investing in the Schwab YieldPlus Fund. The SEC determined that the Member misled investors by representing the YieldPlus Fund as being only slightly riskier than a money market fund and falsely claiming that the YieldPlus Fund primarily held very short-maturity bonds.

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 On 10 October 2012, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 9 November 2012.

On 28 September 2012, the U.S. Attorney for the Southern District of New York announced that the Member, a former technology industry research analyst, had entered a guilty plea in federal district court in Manhattan to criminal charges that he conspired with others to engage in insider trading. The alleged scheme involved several research analysts and portfolio managers at different hedge funds who, from 2007 to 2009, exchanged material nonpublic information about publicly traded technology companies.

According to the charges, the Member was part of a circle of research analysts who obtained inside information, both directly and indirectly, from employees who worked at public companies. The analysts then shared the inside information with each other and with the portfolio managers for whom they worked. For example, the Member admitted receiving inside information concerning certain tech stocks from other members of this circle of analysts, knowing that it came from employees in breach of their duties of loyalty to their companies. He then provided the inside information to the portfolio manager for whom he worked and caused trades in those stocks to be executed based on the inside information he received from the circle of analysts. In exchange, the Member provided the circle of analysts with inside information concerning other technology stocks that he obtained directly from public company employees. The Member faces a potential statutory maximum sentence of 45 years in prison, but he has been cooperating in the government’s ongoing investigation.

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On 30 March 2012, a Summary Suspension Hearing Panel imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. The Member requested the review, but did not submit a pre-hearing brief or exhibits, and he did not call in to participate in the hearing. The Summary Suspension became a Revocation on 3 December 2011.

Specifically, the panel found that on 12 March 2010, the U.S. SEC concluded that the Member, while president and chief investment officer of a wealth management firm, improperly accepted US$1.24 million in undisclosed kickbacks from certain investments made by four of the six unregistered funds the investment advisor managed, while continuing to cause clients to invest in those funds even though he knew the investments were clearly unsuitable. The SEC also found that the Member breached his fiduciary duty and made fraudulent representations to clients regarding the safety and stability of the two largest funds managed by the firm. As a result, the SEC entered an order indefinitely barring the Member from association with any investment advisor, with an opportunity to reapply after three years. In a related civil action, the U.S. District Court permanently enjoined the Member from committing further violations and ordered him to disgorge his ill-gotten gains.

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On 27 March 2012, CFA Institute imposed a Summary Suspension on a Candidate, automatically suspending his participation in the CFA Program. Because he did not request a review, the Summary Suspension became a Prohibition of Participation in the CFA Program on 25 May 2012.

On 18 January 2012, the U.S. Attorney’s Office for the Southern District of New York announced the unsealing of a guilty plea entered by the Candidate, an investment analyst at a New York City-based mutual fund firm, to criminal charges that he conspired with others to engage in insider trading. According to the government, the Candidate knowingly participated in a scheme with several research analysts and portfolio managers at three different hedge funds to share material nonpublic information about a company where he had worked previously.

According to authorities, the Candidate received advance information about the company’s disappointing first- and second-quarter 2008 earnings from a source inside the company’s investor relations department. The Candidate then shared that inside information with a research analyst friend with whom he had worked earlier in his career. That analyst then tipped off several others, who passed the misappropriated confidential information to the portfolio managers for whom they worked. Based largely on this inside information, confirmed again by the Candidate, the three hedge funds shorted the company in advance of the company’s earnings announcements, and together they netted illegal profits totaling approximately US$62 million. For his role in the fraudulent scheme, the Candidate was paid US$175,000 in soft dollars via a sham research consulting arrangement. The Candidate faces a statutory maximum sentence of 25 years in prison, but he has cooperated in the government’s ongoing investigation.

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On 15 March 2012, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 15 April 2012.

On 18 January 2012, the U.S. Attorney’s Office for the Southern District of New York announced the unsealing of a guilty plea entered in April 2011 by the Member, a research analyst at a hedge fund, to criminal charges that he conspired with others to engage in insider trading. According to the government, the Member participated in a scheme with fund managers and research analysts at five different investment firms to share material nonpublic information about two publicly-traded technology companies, Dell and NVIDIA.

Prior to a Dell earnings announcement in August 2008, the Member knowingly received inside information from a co-conspirator analyst indicating that the company’s gross margins would be materially lower than the market expected. The Member provided this inside information to the portfolio manager for whom he worked who then sold short approximately 9 million shares of Dell and purchased 10,900 put option contracts. Shortly after Dell’s disappointing earnings announcement, the price of its stock fell about 13%. The portfolio manager then covered the fund’s short position, sold its option contracts, and realized an illegal profit of US$53 million. The member faces a statutory maximum sentence of 25 years in prison, but he has been cooperating in the government’s ongoing investigation.

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On 13 March 2012, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 13 April 2012.

On 24 February 2010 in federal district court in New York City, the Member pleaded guilty to charges that he engaged in separate conspiracies to rig bids for investment agreements and to defraud municipal issuers. According to the U.S. Department of Justice, from approximately 1998 through 2006, the Member was an employee of a financial services firm based in Beverly Hills, California. State and local governments and agencies hired the firm to act as their broker and conduct a competitive bidding process for contracts to invest the proceeds of municipal bonds issued to pay for public projects. The Member and others, however, decided in advance which providers would be the winning bidders for certain investment agreements, in return for kickbacks to the financial services firm in the form of unearned or inflated fees. As part of their fraudulent scheme, the Member and others also gave certain co-conspirator providers “last look” information about the prices and conditions in their competitors’ bids, which enabled the providers to win contracts at artificially determined price levels. In exchange, the financial services firm received kickbacks and relied on the co-conspirator providers to submit intentionally losing bids when requested on other contracts.

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On 24 February 2012, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 11 May 2012.

On 21 February 2002, the U.S. Comptroller of the Currency found that the Member, in violation of his firm’s agreements with its discretionary-account customers, placed customers in highly risky and unsuitable collateralized mortgage obligations and, in order to hide the losses incurred, made overvalued cross trades and misrepresented the pricing and average life of the securities. As a result, the comptroller entered an order indefinitely barring the Member from associating with all federally insured national banks, savings institutions, and credit unions in the United States.

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On 18 January 2012, CFA Institute imposed a Summary Suspension on a Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 18 February 2012.

According to the Alberta Securities Commission (ASC), between April 2007 and November 2008, 30 investors placed a total of C$7 million with a firm to be invested in limited partnership interests in a fund, which was directed by the Member. The fund represented that it was actively engaged in foreign currency trading carried out by the Member as portfolio manager. The firm received payments, presumably from the fund, until June 2009, when all payments ceased. The ASC found that no financial statements, quarterly summaries, or other reports were ever provided to the firm, and there was no evidence that the Member or the fund had ever engaged in any foreign currency trading. The ASC added that the location of the Member and the investors’ money was unknown, and there was no realistic hope of recovering any of the money they had invested.

In May 2011, the ASC permanently barred the Member after finding him guilty of illegally trading in and distributing securities without registration and a prospectus. He was also ordered to disgorge more than C$3.5 million and pay an administrative penalty of C$1 million.

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On 13 January 2012, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 13 February 2012.

The Member was suspended after he pled guilty to felony charges of securities fraud and conspiracy to commit securities fraud. Under the terms of his plea agreement, the Member admitted to tipping his nephew with material nonpublic information regarding the possible acquisition of Safeco Corporation, which the Member had learned of during the course of his employment. While in possession of that information, the Member and his nephew purchased Safeco securities, which they sold immediately following the announcement of Safeco’s acquisition - realizing more than US$615,000 in ill-gotten gains. In a separate civil proceeding brought by the U.S. SEC, the Member was ordered to disgorge all the ill-gotten gains of his fraud and assessed a civil penalty of more than US$1.8 million.

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On 16 November 2011, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending her membership and right to use the CFA designation. Because she did not request a review, the Summary Suspension became a Revocation on 16 December 2011.

In April 2011, the Financial Industry Regulatory Authority (FINRA) permanently barred the Member from association with any member firm in any capacity. According to FINRA, the Member forged a letter of authorization and then used the letter to transfer securities from one client account to another without permission.

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On 3 November 2011, CFA Institute imposed a Summary Suspension on a Candidate, automatically suspending his participation in the CFA Program. Because he did not request a review, the Summary Suspension became a Prohibition from Participation in the CFA Program on 4 December 2011.

According to the official government news release, from 2006 to 2010, the Candidate tipped three of his university classmates with inside information regarding stock purchases by funds operated by his former employer. The group then used the information to trade in advance of the company’s purchases. The group traded in a total of 68 stocks with a combined investment of more than CNY95 million. The Candidate reportedly made more than CNY2.01 million in profits from the illegal trading. As a result, he was sentenced to three years’ imprisonment and fined CNY2.1 million for illegal insider trading.

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On 3 August 2011, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 3 September 2011.

The SEC found that the Member misappropriated approximately US$8.7 million from advisory clients, friends, and family through material misrepresentations and omissions. According to the SEC, the Member offered and sold securities promising investors that their funds would be invested in “socially responsible” companies, but he then diverted a portion of the investors’ funds to pay previous investors, the expenses of his affiliated companies, and his own salary. In addition to the permanent bar, the Member was ordered to disgorge more than US$10 million in ill-gotten gains and to pay a civil penalty of US$150,000.

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On 18 July 2011, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and his right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 18 August 2011.

According to the SEC, the Member, the senior portfolio manager of five funds, instructed Morgan Keegan’s accounting department to make arbitrary price adjustments to the fair value of certain portfolio securities. The SEC found that these price adjustments ignored lower values for those same securities provided by outside broker/dealers as part of the pricing process and often lacked a reasonable basis. The SEC also found that the Member screened and influenced the price confirmations obtained from at least one broker/dealer. Specifically, the Member induced the broker/dealer to provide interim price confirmations that were lower than the values at which the funds were valuing certain bonds but higher than the initial confirmations that the broker/dealer had intended to provide. The interim price confirmations enabled the funds to avoid marking down the value of securities to reflect current fair value. On other occasions, the Member induced the broker/dealer to withhold price confirmations when those price confirmations would have been significantly lower than the funds’ current valuations of the relevant bonds.

According to the SEC’s order, the Member’s actions fraudulently prevented a reduction in the net asset values of the funds that would otherwise have occurred as a result of the deterioration in the subprime securities market in 2007. Accordingly, the SEC found that the Member caused and willfully aided and abetted the Morgan Keegan entities’ violations of the Investment Advisers Act of 1940 and directly violated several provisions of the Investment Company Act of 1940. In addition to agreeing to be barred from the securities industry, the Member agreed to pay US$500,000 in penalties.

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On 15 June 2011, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 15 July 2011.

On 13 June 2011, the Member was convicted of two counts of securities fraud and one count of conspiracy to commit securities fraud in connection with the Galleon Group insider-trading case. The charges alleged that the Member received material nonpublic information related to the acquisition of 3Com through a network of paid informants, including attorneys at a prominent New York law firm. The Member then earned profits trading on that inside information. The Member faces a maximum sentence of 45 years imprisonment on the three counts.

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On 11 May 2011, a Summary Suspension Hearing Panel imposed a Summary Suspension on a Candidate and Regular Member, automatically suspending his participation in the CFA Program and membership in the organization. The Summary Suspension became a Prohibition from Participation in the CFA Program and Revocation of membership on 7 January 2012.

The Hearing Panel confirmed that on 1 October 2010, the securities division of the Office of the Secretary for the State of Nevada permanently barred the Candidate from any and all associations or employment with any broker/dealer, investment adviser, or issuer. The securities division found that starting in 2004, the Candidate, a sales representative and investment adviser representative at Citigroup Global Markets, and later at UBS Financial Services, facilitated unlawful withdrawals by Southwest Exchange (SWEX) from escrow accounts for which he was the account manager.

SWEX operated as an “exchange intermediary” pursuant to Section 1031 of the U.S. Internal Revenue Code, which allows buyers, under carefully regulated circumstances, to sell real estate and then buy a new property without paying capital gains tax on the sale. The Candidate assisted SWEX in unlawfully placing millions of dollars of exchanger funds with third parties without their consent. According to the division’s consent order, “[The Candidate] even went so far as creating his own account statements for SWEX on Citigroup letterhead in violation of firm policy.” As payment for his assistance, the Candidate and his wife were flown to the Bahamas in a private jet, and he received a US$150,000 check made payable to his wife to disguise its true purpose. As a result of the unauthorized withdrawals by SWEX facilitated by the Candidate, the intermediary was later left without sufficient funds to complete Section 1031 exchanges, and many of its clients lost funds that were supposed to have been held for them in escrow.

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On 28 April 2011, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 28 May 2011.

On 17 December 2010, the Member agreed to enter a guilty plea in the U.S. District Court for the Southern District of New York to felony charges of securities fraud and conspiracy to commit securities fraud relating to insider trading. He cooperated with federal prosecutors, testified against others at trial, and is awaiting sentencing by the court. The combined statutory maximum sentence on these two charges is 25 years.

Beginning in 2008, the Member, a technology analyst at a New York-based hedge fund, obtained inside information from the expert networking firm Primary Global Research (PGR). PGR, like other expert networking firms, linked investors with industry experts, including current employees of publicly traded companies, for a fee. Through PGR experts, the Member received material nonpublic information regarding earnings, revenues, gross margins, and other confidential and material business developments for a number of publicly traded technology companies. Based on this information, the Member executed trades on behalf of his employer in the securities of these companies for which he had received inside information, earning substantial sums in unlawful profits.

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On 31 March 2011, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 30 April 2011.

In February 2011, the Member pleaded guilty in the U.S. District Court for the District of Colorado to four counts of making false statements to banks and to one count each of wire fraud, bank fraud, and money laundering. On 12 May 2011, the Member was sentenced to 78 months in federal prison followed by 60 months of supervised release. He was also ordered to pay nearly US$11 million in restitution to defrauded customers.

Beginning in 2005, the Member began misrepresenting the total assets held in a hedge fund he ran. By 2009, the Member reported total assets of more than US$28 million when in fact the total amount under management was just more than US$1 million. The Member sent investors statements with false information that led them to believe their investments were growing. During this period, the Member also diverted nearly US$1.8 million from the investment fund for his own use. The Member also used his position as chairman of a bank to forge signatures of individuals without their knowledge on promissory notes, loan agreements, and bank forms to obtain lines of credit from the bank he chaired worth more than US$3.8 million. He also took out millions more in loans from other banks that were never repaid.

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On 25 March 2011, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 25 April 2011.

On 21 December 2010, the U.S. SEC barred the Member from association with any investment adviser and with the right to reapply after five years. The SEC determined that the Member, the former CEO of two registered investment advisers, engaged in improper self-dealing, misused client assets, and failed to disclose conflicts of interest.

Specifically, without notifying investors, the Member used more than US$18 million in loans and advances from his Auto Loan Fund to acquire the fund’s sole supplier of subprime auto loans. According to the SEC, this created a “pervasive conflict of interest” as the Member had a duty to maximize the fund’s performance while at the same time generating profits for the loan supplier he secretly owned. The SEC also determined that the Member borrowed millions of dollars from the Auto Loan Fund to support other funds he managed. At one point, 40 percent of the Auto Loan Fund’s assets consisted of loans to the Member-related businesses – with fund investors being charged fees based on these undisclosed related-party transactions.

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On 15 March 2011, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 15 April 2011.

On 7 March 2011, the Member was convicted by a jury in the Québec Superior Court on 115 counts involving fraud, conspiracy, and fabricating false documents. The Member co-founded and was the general manager of a Montreal-based asset management company until October 2005, when it ceased operations and filed for bankruptcy. Following a six-month trial, the Member was found guilty of manipulating the company’s financial statements to conceal that client funds were being diverted for personal use by certain employees. It is estimated that 9,200 investors lost a total of C$115 million after investing with the company between 2002 and 2005.

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On 25 February 2011, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 27 March 2011.

On 7 January 2011, the Member entered a guilty plea to one felony count of conspiracy to commit securities fraud and three felony counts of securities fraud in connection with an insider trading scheme. As part of the guilty plea, he admitted to receiving and trading on insider information related to six mergers and acquisitions being considered by certain clients.

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On 15 February 2011, CFA Institute imposed a Summary Suspension on a former Affiliate Member, automatically suspending his ability to renew his membership. He requested a review, and on 8 June 2011 a Summary Suspension Hearing Panel reviewed and affirmed the sanction. Thus, the Summary Suspension became a Prohibition of his ability to become a member of CFA Institute.

The Financial Industry Regulatory Authority (FINRA), revoked the former Member’s registration in 2009 for refusing to pay a US$25,000 disciplinary fine and permanently barred him in two separate disciplinary cases for failing to cooperate, both of which became final in 2010.

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On 31 August 2010, CFA Institute imposed a Summary Suspension on a Member, automatically suspending his membership. Because he did not request a review, the Summary Suspension became a Revocation on 1 October 2010.

In November 2009, the Member was arrested in connection with the Galleon Group insider-trading case. The charges alleged that in 2007, while employed as a proprietary trader, the Member executed trades in 3Com Corporation and Axcan Pharma. At the time of the trades, he possessed material nonpublic information related to potential acquisitions of 3Com Corporation and Axcan Pharma. On 16 July 2010 the Member pleaded guilty to one count of securities fraud and one count of conspiracy.

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On 21 July 2010, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 21 August 2010.

On 15 August 2008, the Financial Industry Regulatory Authority (FINRA) barred the Member from association with any FINRA member firm in any capacity. FINRA determined that the Member failed to disclose material information regarding an investment recommendation and that the recommendation was unsuitable. The Member appealed the decision and on 26 February 2010 the National Adjudicatory Council (NAC) affirmed the decision permanently barring the Member.

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On 8 July 2010, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 8 August 2010.

On 1 April 2010, the Securities and Futures Commission permanently banned the Member from re-entering the securities industry after a Market Misconduct Tribunal determined that he had engaged in insider trading in shares of China Overseas Land & Investment.

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On 24 June 2010, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 24 July 2010.

The Member was the owner and advising director of an investment management firm. The firm was registered under the provincial Securities Act of 1933 as a portfolio manager and, until 2003, managed several mutual funds. The British Columbia Securities Commission (BSCS) began a compliance review in 2002 after the firm withdrew the prospectus filings for its mutual funds. Following its investigation, the BCSC approved the firm’s merger with another firm, which took over the mutual funds. As part of the resolution, the firm and the Member voluntarily surrendered their securities registrations. In 2004, the BCSC reopened its investigation into whether the Member and his firm had met the required standards of care in managing the mutual funds in 2003. In 2006, the Member entered into a settlement agreement in which he agreed never to apply for registration under the Securities Act of 1933 as an advising or trading officer of a registrant.

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On 17 May 2010, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 17 June 2010.

The Member was co-founder and president of an investment adviser. On 13 October 2009, the Member pleaded guilty to securities fraud and conspiracy to commit securities fraud and wire fraud in the U.S. District Court for the Southern District of New York. The Member pleaded guilty to conspiring to obtain and trade on inside information regarding several technology companies. The trades at issue generated more than US$5 million in illicit profits (or avoided losses) in brokerage accounts associated with the adviser.

On 2 February 2010, the SEC obtained a final judgment permanently enjoining the Member from future violations of the federal antifraud provisions. The complaint alleged that in July 2007, the Member obtained material nonpublic information concerning Google, which he passed to a business partner. The two men then traded on the basis of that information and generated more than US$450,000 in illicit profits. The complaint also alleged that in December 2008 and February 2009, the Member traded on inside information obtained by his business partner about Atheros Communications. These trades generated more than US$870,000 in illegal profits (or avoided losses). On 12 May 2010, the SEC issued an administrative order permanently barring the Member from associating with an investment adviser.

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On 11 March 2010, CFA Institute imposed a Summary Suspension on a Candidate, automatically suspending his participation in the CFA Program. Because he did not request a review, the Summary Suspension became a Prohibition of Participation in the CFA Program on 11 April 2010.

The Candidate pleaded guilty in the Circuit Court of the Sixth Judicial Circuit, Champaign County, Illinois, to the offense of unlawful possession with the intent to deliver cannabis.

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On 5 January 2010, a Summary Suspension Hearing Panel imposed a Summary Suspension on a Candidate, automatically suspending his participation in the CFA Program. During the hearing, the Candidate did not dispute that he was guilty of the underlying criminal charges, but he argued that the Summary Suspension was unfair in that it would permanently prevent him from completing the CFA Program and becoming a CFA charterholder. The panel confirmed that the Candidate pleaded guilty to criminal offences that are punishable by more than one year in prison, and affirmed the Summary Suspension. Thus, the Summary Suspension became a Prohibition of Participation the CFA Program.

On 17 July 2009, the Candidate pleaded guilty in the Ontario Court of Justice in Kitchener, Ontario, Canada to criminal charges of possession of marijuana for the purpose of trafficking, and possession of the drug ecstasy. As a result, the Candidate received a conditional sentence of imprisonment of 18 months, to be served in the community, for the marijuana trafficking charge and a three-month conditional sentence for possession of ecstasy, to be served concurrently. These are “indictable offences” under Canada’s Controlled Drugs and Substances Act, punishable by more than one year in prison.

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On 1 December 2009, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 1 January 2010

The Member was convicted of sexual assault in the Southwark Crown Court and was sentenced to 30 months of imprisonment.

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On 16 April 2009, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 16 May 2009.

The Member pleaded guilty in Connecticut Superior Court to one count of attempted kidnapping and one count of trafficking in personal identification information, both of which are felonies.

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On 5 November 2008, a Summary Suspension Hearing Panel imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. The Summary Suspension became a Revocation on 5 November 2008.

On 27 March 2008, the China Securities Regulatory Commission imposed on the Member a bar for an indefinite period of time from registration under the securities laws or similar laws relating to the investment decision-making process.

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On 7 March 2008, CFA Institute imposed a Summary Suspension on a former Charterholder Member, automatically suspending his ability to renew his membership and his right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 7 April 2008.

The former Member pleaded guilty to three counts of theft by swindle, which are felonies, in the Hennepin County District Court in Minnesota.

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On 12 February 2008, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and the right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 14 March 2008.

The Member pleaded guilty in the United States District Court to one count of conspiracy to commit securities fraud and three counts of insider trading, which are felonies.

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On 12 February 2008, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and the right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 14 March 2008.

The Member pleaded guilty in the United States District Court to one count of conspiracy to commit securities fraud and three counts of insider trading, which are felonies.

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On 14 November 2006, a Summary Suspension Hearing Panel imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. The Summary Suspension became a Revocation on 17 August 2006.

On 26 April 2006, the SEC issued an Order Instituting Public Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions which imposed an indefinite bar on the Member.

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On 17 March 2005, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 17 April 2005.

The Member pleaded guilty in the United States District Court, Eastern District of Missouri, to a violation of Title 18, U.S.C. §875(d), which is a felony. The elements of a Section 875(d) crime include transmission of a communication in interstate or foreign commerce with the intent to extort money and containing a threat to injure the property or reputation of the addressee or another.

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On 11 May 2004, CFA Institute imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 17 April 2005.

The Member pleaded guilty in the United States District Court of Hawaii to a violation of Title 18, U.S.C. §2252(a)(4) – Certain activities relating to material involving the sexual exploitation of minors, which is a felony.

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On 24 October 2002, AIMR imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 24 November 2002.

The Member pleaded guilty in the United States District Court of Massachusetts to two counts of wire fraud and one count of mail fraud, which are felonies.

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On 9 February 2000, AIMR imposed a Summary Suspension on a Charterholder Member, automatically suspending his membership and right to use the CFA designation. Because he did not request a review, the Summary Suspension became a Revocation on 11 March 2000.

The Member pleaded guilty in the United States District Court of Connecticut to RICO in violation of Title 18, U.S.C. §1962(c) and Conspiracy to Money Launder, in violation of Title 18 U.S.C. §1956(h), which are felonies.

Summary Suspension Non-Cooperation
From 1 January 2000 to the present, CFA Institute has imposed the sanction of Summary Suspension for non-cooperation on 44 Members and/or Candidates. These individuals failed to cooperate with the CFA Institute Professional Conduct Program in its investigation of their conduct.

Article 11.3(c) of the CFA Institute Bylaws and Rule 10 of the CFA Institute Rules of Procedure for Professional Conduct allows for the imposition of a Summary Suspension on a covered person if the covered person fails to cooperate with a CFA Institute Professional Conduct Program investigation. Unless a timely request for review is received, a Summary Suspension automatically becomes a revocation of membership in CFA Institute and permanent prohibition from participation in the CFA Program.

If, after receiving a Summary Suspension for non-cooperation, a Covered Person agrees to cooperate with the Professional Conduct Program’s investigation, the Designated Officer may rescind the notice of summary suspension and reverse the revocation and/or prohibition on such conditions as the Professional Conduct Program may impose. To date, one Covered Person has successfully petitioned for Reinstatement following a sanction of Summary Suspension for non-cooperation. To date, four Covered Persons have had his/her sanction rescinded by CFA Institute due to extraordinary circumstances.

Prohibition from Participation in the CFA Program

 Effective 31 October 2017, CFA Institute imposed a Prohibition from Participation in CFA Institute Exam Programs on a Postponed Level I Candidate. CFA Institute found that the candidate violated the CFA Institute Code of Ethics and Standards of Professional Conduct: I(C) – Misrepresentation; and VII(B) – Reference to CFA Institute, the CFA designation, and the CFA Program (2014).

Professional Conduct found that from March 2013 to June 2017, the candidate misused the CFA designation and misrepresented to others that he was a CFA charterholder on his company’s website and on company newsletters. The candidate admitted that by misrepresenting himself as a CFA charterholder, he would gain an advantage over his competition for employment. Once he was hired for the position, the candidate continued the misrepresentation to his employer and clients. 

The candidate confessed to misusing of the CFA designation in his response to Professional Conduct. The candidate stated that he wanted to come clean about his misrepresentation to his employer years ago, but failed to do so out of fear of possible consequences.

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Effective 11 October 2016, CFA Institute imposed a Prohibition from participation in the CFA Program on a Level III Candidate. CFA Institute found that the Candidate violated the Code of Ethics and Standard of Professional Conduct I(C) – Misrepresentation (2014).

Specifically, the Candidate created a false employment verification letter and then submitted it to a bank as part of his mortgage loan application. The fraudulent letter was prepared on firm letterhead and contained inflated salary and bonus information. The Candidate also forged the signature of his Managing Director. The bank contacted the employer to confirm the letter’s accuracy, the falsification was then discovered, and the firm terminated the Candidate’s employment.  

When first questioned by Professional Conduct, the Candidate insisted that he did not prepare the falsified employment verification letter. Instead, he claimed that he was the innocent victim of an Internet “scammer” who had misappropriated his identity and then attempted to obtain a mortgage loan in his name. The Candidate also suggested that the real reason for his termination was that his employer had discovered that he was in the final round of interviews for a position with their main competitor. Later, the Candidate admitted to Professional Conduct that he had lied and that he did, in fact, prepare and submit the false letter to the bank.

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Effective 20 January 2016, a Review Panel affirmed CFA Institute’s imposition of a Prohibition from Participation in the CFA Program on a Candidate. CFA Institute found that the Candidate violated the Code of Ethics and Standard of Professional Conduct I(C) – Misrepresentation (2014).

Specifically, after the Candidate failed the December 2014 Level I CFA exam, he sent an email message to the Human Resources Manager at his place of employment and submitted an altered letter that falsely stated he passed the December 2014 exam. In addition, the Candidate told approximately five to seven other employees at his place of employment that he had passed Level I. The Candidate knew that he had failed the exam at the time he submitted the altered letter and told others that he had passed.

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Effective 6 October 2015, CFA Institute imposed a Prohibition from Participation in the CFA Program on a Candidate. CFA Institute found that the Candidate violated the Code of Ethics and Standards of Professional Conduct: I(C) – Misrepresentation and I(D) – Misconduct (2014).

In March 2015, a pre-employment screening company contacted CFA Institute to verify the Candidate’s status in the CFA program. To that end, the company provided CFA Institute a copy of a document that it had received from the Candidate representing that he had taken and passed the CFA Level I examination in December 2012. 

When CFA Institute contacted the Candidate regarding the document, the Candidate represented that it was in fact a scanned copy of an email that he had received from CFA Institute in January 2013. CFA Institute then requested a copy of the original email, which the Candidate claimed he was unable to provide. According to CFA Institute examination records, the Candidate had failed the December 2012 CFA Level I Exam, and the document he provided to the pre-employment screening company stating otherwise, was a deliberate forgery.

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On 16 September 2015, CFA Institute imposed a Summary Suspension on a Candidate (US), automatically suspending his right to participate in the CFA Program.  The candidate was suspended for his failure to cooperate with a Professional Conduct Program investigation of an industry-related matter.  Because he did not request a review, the Summary Suspension became a Prohibition from Participation in the CFA Program on 17 October 2015.  

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On 8 August 2011, CFA Institute imposed a Prohibition from Participation in the CFA Program on a CFA Level III Candidate. It was determined that the Candidate had violated Standards I(A) – Knowledge of the Law, II(A) – Material Nonpublic Information, and I(D) - Misconduct  of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The Candidate, a financial analyst, had access to material nonpublic information relating to the proposed takeover of two telecom companies through his employment by a financial institution that was participating in the preparation of the takeover bid. Based on this information, the Candidate purchased shares and options in the stock of the two target companies between the dates of 7–12 August 2009. On 24 August 2009, the takeover bid was publicly announced and shares in both of the target companies rose by more than 20 percent.

In November 2009, Estonian prosecutors charged the Candidate with insider trading. In December 2009, an Estonian court entered judgment against the Candidate, finding him guilty of misuse of material nonpublic information and fining him in an amount equal to 100 days of daily income.

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On 6 November 2003, AIMR imposed the sanction of Prohibition from Participation in the CFA Program on a Candidate, pursuant to a Stipulation and Offer of Consent for Disciplinary Action. AIMR found that the Candidate violated Standards II(B) – Professional Misconduct and IV(B.6) – Prohibition against Misrepresentation of the AIMR Code of Ethics and Standards of Professional Conduct (1999).

The Candidate enrolled to take the 2002 Level II CFA examination. Although he was enrolled for the 2002 exam, the Candidate failed to take the exam – he was a “no show.” Although he did not take the Level II exam, the Candidate created a document, purportedly from AIMR, that represented he passed the 2002 Level II CFA exam. The Candidate presented this document to his supervisor and also verbally represented to his supervisor that he passed the Level II CFA exam. The Candidate received a compensation increase for “passing” Level II of the exam. The Candidate’s employer subsequently investigated the matter and his employment was terminated.

Timed Suspension – Five Years

Effective 18 October 2016, CFA Institute imposed a Five-Year Suspension of membership and the right to use the CFA designation on a charterholder member. A hearing panel found that charterholder member violated the CFA Institute Code of Ethics, Standard of Professional Conduct I(C) – Misrepresentation (2005, 2010, and 2014), and Section 3.5(a)(i) of the Bylaws. This result was affirmed by an appeal panel.

The hearing panel found that over the course of nearly a decade, the charterholder member repeatedly provided false information in his annual Professional Conduct Statements. Namely, despite having been informed in 2006 by his former employer that he was the subject of a written customer complaint regarding his professional conduct, the charterholder member filed Professional Conduct Statements in 2007 and 2008 in which he falsely represented that he was not the subject of a written complaint. 

In 2011, the charterholder member was named as a defendant in an arbitration claim by his former firm to recover money that he had borrowed. Despite having an obligation to disclose the matter to CFA Institute, the charterholder member represented in the Professional Conduct Statements that he filed in 2011 and 2012 that he was not the subject of an arbitration or other action in which his professional conduct was at issue. In doing so, the charterholder member affirmatively stated that his responses were “truthful, accurate, and complete.” 

In July 2012, the Financial Industry Regulatory Association (FINRA) suspended the charterholder member’s association with any FINRA member firm for failing to pay the arbitration award to his former employer. As he had on four previous Professional Conduct Statements, the charterholder member failed to make accurate disclosures in the Professional Conduct Statements that he filed with CFA Institute in 2013 and 2014. Instead, the charterholder member misrepresented that he had not been suspended from working or participating in the securities industry, and he misled CFA Institute by stating that his responses and all information provided by him on his Professional Conduct Statements were “truthful, accurate, and complete.” 

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Effective 15 March 2016, CFA Institute imposed a Five-Year Suspension from Participation in the CFA Program on a Candidate who violated the Code of Ethics and Standard of Professional Conduct I(C) – Misrepresentation (2014).

In February 2015, the candidate submitted a stock presentation that he claimed to have created, as part of his application for a summer internship at a private investment firm. The prospective employer determined that the candidate had not authored the presentation and questioned him about it. In his subsequent communications with the prospective employer, authorities at the university where he is a student, and with Professional Conduct, the candidate admitted his plagiarism. Specifically, the candidate acknowledged that he had found the stock presentation online and replaced the names of its authors with his own in order to enhance his employment prospects.

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On 10 December 2014, CFA Institute imposed a Five-Year Suspension of membership and of the right to use the CFA designation on a Charterholder Member. A Hearing Panel found that the Member violated the CFA Institute Code of Ethics and Standards of Professional Conduct I(C) – Misrepresentation, I(D) – Misconduct, and III(D) – Performance Presentation (2010).

In 2011, the Member was an affiliate member of CFA Institute and candidate in the CFA Program. He was employed as a portfolio manager in a Bank in the US. The Member became a CFA charterholder in 2013.

At the Bank, it was well-known that changes to asset allocations for customer trust accounts could be made only with the advance review and approval of the Bank’s Trust Investment Committee (or TIC). In December 2011, the Member recommended to the TIC that the Bank increase its allocations to alternative investments by 3% (to 15%), but the TIC did not approve this request.

Shortly thereafter, Bank employees began to suspect that, without telling anyone, the Member had begun purchasing securities to increase the alternative-investment allocations before the TIC meeting. When the Member’s co-workers and supervisors at the Bank questioned him about this, he repeatedly denied that he had changed the allocations without permission. In fact, the Member made purchases changing the allocations both before and after the TIC meeting at which his recommendation was discussed, but not approved. The Bank terminated the Member’s employment in January 2012.

The Hearing Panel also found that, while he was employed at the Bank, the Member failed to make every reasonable effort to investigate, report, and remedy a suspected problem with the Bank’s reported performance results, despite repeated requests by his colleagues that he do so. As a result, the Member caused inaccurate, inflated performance figures for the accounts that he managed to be communicated to the Banks’s customers and Trust Committee.

Finally, after the Bank terminated him, the Member claimed that he was entitled to unemployment compensation by making false and misleading representations to his state’s Department of Labor and Regulation that he was not fired for intentional misconduct. During the Professional Conduct Program’s investigation, the Member continued to make false and misleading statements regarding his changes to the Bank’s trust account asset allocations.

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On 3 September 2014, CFA Institute imposed a Five-Year Suspension of membership and the right to use the CFA designation on a Charterholder Member. A Hearing Panel found that the Member violated Standards I(B) - Independence and Objectivity, I(C) – Misrepresentation, III(D) - Performance Presentation, and VI(A) - Disclosure of Conflicts of the CFA Institute Code of Ethics and Standards of Professional Conduct (2010).

The Member was the owner of a firm which prepared and published research reports on the Internet. Three small gold mining companies paid the Member and his firm to prepare and publish favorable research reports and YouTube videos about them on the Internet.

The Member secretly entered into written agreements with two of the companies that required that he compromise his independence and objectivity by promising to use his best efforts to serve and promote the companies’ interests whenever he wrote about them. One of the two companies explicitly required that the Member obtain its advance approval of anything he might want to publish about it. In exchange for his flattering research coverage, the companies each compensated the Member with $5,000 monthly payments and undisclosed stock options, which represented a direct stake in his ongoing ability to successfully promote them. The Member had a similar, oral agreement with the third company, which also paid him $5,000 per month (but no options) as compensation for his research reports and videos, which were always highly favorable.

The Hearing Panel found that the Member did not disclose to potential investors: that he had entered into these promotional agreements with the three companies; that his compensation was contingent on promoting their interests; or the amounts the companies paid him for his positive research coverage. The Member’s repeated failures to disclose these conflicts of interests were egregious. Only after receiving the Professional Conduct Program’s Statement of Allegations outlining his apparent violations of the CFA Institute Standards, did the Member finally begin to disclose his contractual obligations to favorably promote the three companies. But even then, he continued to fail to disclose the volumes, exercise prices, and expiration dates of the stock options he received as payment.

Finally, the Member failed to make reasonable efforts to ensure that a video presentation he placed on YouTube touting his investment performance on behalf of investors was fair, accurate, and complete; and he made misleading statements in two videos suggesting to investors that he had a staff of CFA charterholders who assisted him in preparing his reports. Although the Member had at times employed several different people to help him prepare his research reports and videos, he was the only person at the firm who was ever a CFA charterholder.

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On 15 December 2010, a Hearing Panel imposed a Five-Year Suspension of membership and the right to use the CFA designation on a Charterholder Member. The panel determined the Member violated Standards I – Fundamental Responsibilities and II(B) – Professional Misconduct of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member was employed as a portfolio manager for two high-yield municipal bond funds. During the relevant period, the funds managed by the Member had been performing poorly and simultaneously had been subject to greater than normal rates of redemption not offset by new subscriptions. Following the Member’s resignation from his employer, the funds’ net asset values were written down substantially, causing investors who redeemed to incur losses.

The SEC commenced an investigation into the matter and determined that the Member violated the antifraud provisions of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, Section 34(b) of the Investment Company Act of 1940, and the negligence provisions of Section 206(2) of the Investment Advisers Act of 1940. The Member was ordered to cease and desist from committing or causing any violations and any future violations of the previously mentioned statutes, was ordered to pay a civil monetary penalty, and entered into a settlement agreement with the SEC that agreed with the terms of the orders.

The panel found that the Member had violated CFA Institute Standards I(A) and I(B) by failing to comply with the applicable laws, rules, and regulations and by knowingly participating or assisting in such violations and had violated Standard II(B) by engaging in conduct that reflected adversely on and compromised the integrity of the CFA designation.

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On 2 December 2010, a Hearing Panel imposed a Five-Year Suspension of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the Member violated Standards V(A) – Prohibition against Use of Material Nonpublic Information; II(B) – Professional Misconduct; and I – Fundamental Responsibilities of the Code of Ethics and Standards of Professional Conduct (1999).

The panel found that in March 2005, the Member purchased 100 call options on the basis of material, nonpublic information he received from a longtime friend whose employer was soon to be the subject of an acquisition. Although couched at times as a “rumor,” the information the Member received included very specific information regarding the identity of the potential acquirer, the purchase price, and the timing of the acquisition. According to the Member’s friend, the acquisition was “pretty [expletive] certain.” About 15 minutes after speaking with his friend, the Member decided to purchase call options in the target company.

Three business days after the Member purchased the call options, news of the target company’s acquisition was announced to the public. The timing of the acquisition and the identity of the acquirer were consistent with the information that the Member learned from the target company employee, although the price per share was lower than predicted. The Member sold the options on the date of the acquisition’s announcement deriving nearly US$20,000.00 in profit.

In early April 2005, Canadian securities regulators contacted the Member’s firm. Aware that Canadian regulators were questioning his firm about his trades in the target company’s options, the Member provided his firm with a written explanation for his purchase that was neither accurate nor complete.

The Member’s trade and his subsequent conduct was the subject of investigations by the Financial Industry Regulatory Authority (FINRA) in the United States and the Investment Industry Regulatory Organization of Canada (IIROC). In June 2008, the Member reached a settlement with FINRA relating to his trading in ASCL (his employer). FINRA found that the Member violated NASD Conduct Rule 2100, fined him US$50,000, and suspended him from association with any member firm in any capacity for two months. In February 2010, the Member admitted his guilt and reached a similar settlement with the IIROC in which he acknowledged that he had violated the Investment Dealers Association of Canada (IDA) Bylaw 29.1. The IIROC fined the Member C$23,853, which represented the amount of his ill-gotten gains.

The information that the target company employee provided to the Member related to a tender offer and was clearly material and nonpublic. Further, the target company employee informed the Member that he could not purchase shares because he worked for the company. Knowing that his friend could not trade without breaching his duty of loyalty and confidentiality to his employer, the Member should have refrained from trading while in possession of material nonpublic information. His failure to do so violated Standard V(A). The Member’s insider trading and the misstatements and omissions he made to his firm violated Standard II(B).

Finally, under Standard I, the Member had a responsibility to know and comply with all applicable laws, rules, and regulations governing his professional conduct but also was prohibited from knowingly participating in any violation of the applicable laws, rules, and regulations governing his professional conduct (including the CFA Institute Code and Standards). The panel found that the Member violated Standards V(A) and II(B) and thus violated Standard I. Furthermore, his violations of NASD Conduct Rule 2100 and IDA Bylaw 29.1 were evidence of a failure to know and comply with applicable rules governing his professional conduct and thus constituted separate violations of Standard I.

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On 16 November 2010, a Hearing Panel imposed a Five-Year Suspension of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the Member violated Standards I – Fundamental Responsibilities, II(B) – Professional Misconduct, and IV(A.3) – Independence and Objectivity of the CFA Institute Standards of Professional Conduct (1999).

From January 2002 through October 2004, the Member was a trader for a group of mutual funds. The panel’s findings were based on the Member’s receipt of premium tickets to sporting events and concerts. The Member also went on 10 trips with brokers to such destinations as the Super Bowl, Las Vegas, and Aspen, Colorado (four of these 10 trips were by private jet and six by commercial jet). Brokers paid for some of his lodging and other travel and entertainment expenses for these trips. The estimated total value of the gifts that the Member received from brokerage firms that sought and obtained orders from him exceeded US$55,000.

In 2008, the SEC alleged that the Member’s receipt of the gifts from brokers violated the Investment Company Act of 1940. In December 2008, the SEC issued an order announcing that it had accepted the Member’s offer of settlement resulting in the following sanctions: (1) the Member was ordered to cease and desist from committing or causing any future violations of Section 17(e)(1) under the Securities Exchange Act of 1934, (2) the Member was censured, and (3) the Member was required to pay disgorgement of US$39,000 and a civil penalty of US$30,000.

The Member’s conduct violated CFA Institute Code and Standards because accepting these gifts may have impeded his independence and objectivity in selecting brokers to execute trades on behalf of the funds. As the comments to Standard IV(A.3) reads, “[e]very member should endeavor to avoid situations that might cause, or be perceived to cause, a loss of independence or objectivity in recommending investments or taking investment action.”

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On 3 August 2010, a Hearing Panel imposed a Five-Year Suspension of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the Member violated Standards I(A) – Fundamental Responsibilities, II(B.1) – Professional Misconduct, IV(B.1) – Fiduciary Duties, and IV(B.3) – Fair Dealing of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

During 2001 through 2003, the Member was president and chief investment officer of one of the largest mutual fund families in the United States. In July 2005, the SEC determined that he had authorized or permitted 10 illegal market-timing agreements within portfolios of the mutual funds the firm managed, in contravention of certain representations made in the funds’ prospectuses as to the maximum number of exchanges allowed each shareholder per calendar year.

According to the funds’ prospectuses, market-timing was considered detrimental to the overall performance of the funds.  The SEC concluded that the Member knew, or should have known, that market-timing agreements would increase advisory fees and result in trading that was harmful to the interests of the funds and their shareholders. This conflict of interest also was never disclosed to the funds’ boards of directors or shareholders. As a result, the firm breached its fiduciary duty to the funds and their shareholders, and the Member was a cause of that breach.

Likewise, the CFA Institute Hearing Panel found that the Member breached his fiduciary duty to the funds and their shareholders and that he was responsible for misrepresentations and omissions of material facts in the funds’ prospectuses over a period of almost three years.

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On 18 June 2010, a Hearing Panel imposed a Five-Year Suspension of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the Member violated Standards I – Fundamental Responsibilities, II(B) – Professional Misconduct, III(E) – Responsibilities of Supervisors, and IV(B.1) – Fiduciary Duties of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

In 2000, while employed as an investment adviser, the Member entered into an off-market purchase of shares in a Toronto Stock Exchange-listed public company. This transaction was contrary to the rules of both the TSX and his employer. In addition, the shares were purchased in a related account not properly designated as a “pro” account, which also was contrary to his employer’s policies. The subsequent disposition of the shares resulted in a substantial net profit. On behalf of a group of clients, the Member, and/or an assistant under his supervision, also made unsolicited trades in the stock that were considered manipulative and deceptive. Some of these transactions also contravened the trading authorization in place for one of the clients. Market Regulation Services, the regulating authority for the TSX, subsequently investigated the Member’s conduct. In 2003, the Member entered into a settlement agreement with MRS that included a fine and suspension.

The panel found that the Member violated Standard I by failing to maintain knowledge of and comply with TSX regulations and by failing to exercise diligence in monitoring and evaluating the trading activity of his clients. The panel further found that the Member violated Standard II(B) by failing to properly designate a related account, engaging in an off-market transaction contrary to applicable regulations, and failing to properly police the trading activity of his clients. The panel also found that the Member violated Standard III(E) by failing to exercise reasonable diligence in supervising his assistant, who was complicit in the manipulative and deceptive trading activity of the clients. Finally, the panel found that the Member violated Standard IV(B.1) by failing to determine and adhere to the restrictions on trading authority related to one of the client accounts.

Timed Suspension – Three Years

Effective 6 October 2015, a CFA Institute imposed a Three-Year Suspension from participation in the CFA Program upon a Candidate. A Hearing Panel found that he violated the CFA Institute Code of Ethics and Standards of Professional Conduct: I(A) – Knowledge of the Law and I(C) – Misrepresentation.  

Specifically, the Candidate entered into a settlement with a securities regulator in which he admitted that he had forged the signatures of four clients (two couples) on various account-related documents. The Candidate stated that he signed the clients’ names to the account documents for their convenience, after they had left his office without doing so. The Candidate did not benefit from his misconduct, and the clients were not harmed.

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Effective 4 February 2014, CFA Institute imposed a Three-Year Suspension of membership and the right to use the CFA designation upon a Charterholder Member. A Hearing Panel found that the Member violated Standards I(A) – Fundamental Responsibilities, II(B) – Misconduct, and V(A) – Prohibition against Use of Material Nonpublic Information of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999). This result was subsequently reviewed and affirmed by an Appeal Panel.

The Hearing Panel found that the Member, a portfolio manager, obtained and traded upon material nonpublic information from his brother about the failure of a critical bioequivalence study on a drug being developed. On 3 April 2002, the Member telephoned his brother, a physician and PhD who led the bioequivalence study, and learned that there were problems with the study. The Member understood that this development would delay the US Food and Drug Administration from approving the drug for sale to the public. The next morning, on 4 April 2002, after providing inaccurate information to his firm about his brother’s role in the study and receiving permission to trade, the Member caused the fund he managed to sell all of its 332,000 shares of the drug developer. The price of the developer's stock fell 42% that day, and the fund the Member managed avoided a loss of US$954,776.

After the SEC conducted an investigation into his conduct, the Member agreed to a permanent injunction against future violations of the anti-fraud provisions of the US securities laws, a twelve-month suspension from associating with any investment adviser and US$2,224,838.57 in penalties, interest, and disgorgement

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On 4 January 2011, a Hearing Panel imposed a Three-Year Suspension of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the Member violated Standard I – Fundamental Responsibilities of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member’s violations were based on his involvement in facilitating a large “pump and dump” scheme perpetrated by a notorious Canadian stock manipulator. The Member, a registered representative and investment adviser, opened a number of investment accounts for clients that were then used by stock manipulators to purchase and trade shares in a dormant public “shell” company. Over just a two-month period, the share price increased more than 3,700 percent, with the majority of the trading volume resulting from unsolicited purchases at increasing prices by the Member’s clients. The Member also allowed an individual not properly authorized to trade in the investment accounts to make trades, and he allowed third-party checks to be deposited in the accounts without determining the source of the funds, in violation of his employer’s compliance procedures. As a result of the Member’s involvement in the facilitation of the market manipulation, he was terminated and his employer incurred a loss of more than US$2.6 million.

After conducting a lengthy investigation, the Investment Dealers Association (IDA, now known as the Investment Industry Regulatory Organization of Canada, IIROC) found that, although the Member was not aware of the manipulation, he clearly should have known and his “gross negligence” provided necessary assistance to the perpetrators and facilitated their illegal scheme. According to the IDA, the Member committed a serious breach of the “know your client” rule that went beyond mere inadvertence or negligence. The IDA also concluded that the Member had abdicated his role as a gatekeeper to the markets and engaged in conduct unbecoming or detrimental to the public interest. As a result, the Member was suspended for one year, fined C$40,000, and assessed costs of C$25,000 by the IDA.

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On 3 February 2009, a Hearing Panel imposed a Three-Year Suspension of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the Member violated Standards I – Fundamental Responsibilities, II(B) – Professional Misconduct, IV(A.1) – Reasonable Basis and Representations, IV(A.2) – Research Reports, IV(A.3) – Independence and Objectivity, and IV(B.3) – Fair Dealing of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The panel found that between July 1999 and April 2002, the Member issued research reports on four companies that were affected by conflicts of interest, contained recommendations for which there was no reasonable basis, and were contrary to his personally expressed beliefs.

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On 28 May 2008, a Hearing Panel imposed a Three-Year Suspension of membership and the right to use the CFA designation on a Charterholder Member. The panel found that a Member violated Standards I – Fundamental Responsibilities, II(B) – Professional Misconduct, and V(A) – Prohibition against Use of Material Nonpublic Information of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Panel determined that in the course of his employment, the Member came to possess material nonpublic information regarding estimated losses per share of a stock. Prior to public dissemination of the information, the Member sold personal and client stock in the subject company to avoid anticipated losses.

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On 18 October 2006, a Hearing Panel imposed a Three-Year Delay of the CFA charter and CFA Institute membership on a Candidate. The panel found that the Candidate violated Standards I – Fundamental Responsibilities and V(A) – Prohibition against Use of Material Nonpublic Information of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999). A Review Panel was requested by the Candidate, which determined there were no exceptional or unusual circumstances that made the Hearing Panel’s determination inequitable; therefore the sanction was affirmed on 31 January 2007.

In the course of his employment, the Candidate came to possess material nonpublic information regarding a possible acquisition by his employer. Prior to public dissemination of the information, the Candidate divulged the information to his sister, and both the Candidate and his sister's husband purchased common stock of the company being acquired. After public announcement of the merger agreement, the Candidate and his sister’s husband sold their stock at a profit.

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On 19 January 2000, a Hearing Panel imposed a Three-Year Suspension from Participation in the CFA Program on a Postponed Candidate. The panel found that the Candidate violated Standard II(B) – Professional Misconduct of the AIMR Code of Ethics and Standards of Professional Conduct (1999). A Review Panel affirmed the sanction on 16 March 2000.

The panel found that the Candidate made material misrepresentations to AIMR in connection with his candidacy in the 1999 CFA Study and Examination Program.

Timed Suspension – Two Years

Effective 10 July 2017, CFA Institute imposed a Two-Year Suspension of membership and of the right to use the CFA designation on a charterholder member. A Hearing Panel found that the charterholder member violated the CFA Institute Code of Ethics and Standards of Professional Conduct: I(B) – Independence and Objectivity; I(C) – Misrepresentation; and I(D) – Misconduct (2010).  An Appeal Panel reviewed and affirmed that decision, but reduced the term of suspension from three years to two.

The Hearing Panel found that while serving as Secretary of the New York Society of Securities Analysts (NYSSA) Board of Directors, the charterholder member: participated in an internal investigation; received confidential information, documents, and investigative reports; and attended and participated in confidential meetings, discussions, deliberations, and voting regarding allegations against a fellow Board member and an officer of NYSSA, without ever disclosing that he was married to the complaining party. And when specifically asked at a Board meeting, the charterholder member denied having any relationship with the complaining party or other conflicts of interest regarding the matter under review. 

Both the Board’s internal investigation and a separate, independent investigation by an outside party commissioned by NYSSA concluded that the allegations against the Board member and officer were unfounded. 

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Effective 24 September 2016, CFA Institute imposed a Two-Year Suspension of membership and of the right to use the CFA designation on a charterholder member. A Hearing Panel found that the charterholder member violated the CFA Institute Code of Ethics and Standards of Professional Conduct:  I(A) – Knowledge of the Law; I(C) – Misrepresentation; I(D) – Misconduct; and III(D) – Performance Presentation (2005 and 2010).

The charterholder member was and is CEO, Portfolio Manager, and sole owner of Trust & Investment Advisors, Inc. (TIA), a registered investment adviser based in Indianapolis, Indiana. During the relevant period, the charterholder member managed and supervised TIA’s staff and had primary responsibility for meetings with clients and prospective clients. He also was responsible for, and personally appeared on, a local public-access television show for TIA called “Investing Today.”

In May 2015, the charterholder member entered into a settlement agreement with the U.S. Securities and Exchange Commission in which he agreed to remedial sanctions, monetary penalties, and a cease-and-desist order for misconduct that took place between 2005 and 2012. During that period, the SEC’s Office of Compliance Inspection and Examinations (OCIE) conducted three separate on-site examinations of TIA:  the first in 2005; a second in 2007; and a third in 2011. These exams revealed repeated, unaddressed deficiencies in the areas of performance advertising and compliance generally. The charterholder member was heavily involved in all three of the OCIE examinations.

During OCIE’s 2005 exam, the staff discovered that TIA had failed to develop a compliance program and Compliance Manual, as required by Rule 206(4)-7 of the Advisers Act. TIA promised to remedy the deficiency. During OCIE’s 2007 exam of TIA, the staff discovered that, notwithstanding the firm’s earlier promises to remedy its compliance deficiency, TIA still had not yet completed its Compliance Manual; TIA had not conducted an “Annual Compliance Review”; and TIA’s designated Chief Compliance Officer did not have appropriate knowledge of the Advisers Act, including being unaware of the requirement to conduct an annual review of TIA’s compliance program.

In response to the 2007 exam, TIA again assured OCIE that it would remedy its compliance deficiencies and engage a compliance consulting firm to complete the development of the firm’s Compliance Manual. However, when OCIE returned for its 2011 exam, the staff found that TIA still had made no progress in resolving its compliance deficiencies, despite having had three additional years in which to do so.

In its 2005 and 2007 exams, OCIE also found several instances in which TIA provided misleading performance information in marketing materials. Specifically, TIA’s performance presentations to clients included gross of fee performance returns over an extended period; yet, the same presentations did not explain the impact that advisory fees could have on the value of a client’s portfolio. Following the 2007 exam, TIA represented to OCIE that it had corrected the problem. But when the staff returned for its 2011 exam, they found that the firm was still using misleading marketing materials with cumulative returns that did not account for the impact of advisory fees and did not include appropriate disclosures.

In its 2011 exam, OCIE also discovered that TIA had distributed misleading performance information in weekly summary marketing emails from at least 2009 through 2012. In particular, TIA distributed a table on a weekly basis to some of its clients and to its solicitors -- individuals who are responsible for soliciting new investment advisory business -- that compared percentage increases in the S&P 500 Index to percentage increases in TIA’s portfolios, yet the table materially overstated the performance of the TIA portfolios compared with the S&P 500 Index because only the former included the reinvestment of dividends.

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Effective 25 August 2014, CFA Institute imposed a Two-Year Suspension of membership in CFA Institute and of the right to use the CFA designation on a Charterholder Member. A Hearing Panel found that the Member violated Standards I(A) - Knowledge of the Law; I(C) - Misrepresentation; and I(D) – Misconduct of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The Member is an executive and part-owner of a registered investment advisor in Connecticut. In August 2008, the Member learned that a portfolio manager at the firm was misrepresenting his investment performance results in the quarterly letters he sent to his clients. Upon further investigation, it was determined that these misrepresentations had occurred in hundreds of client letters, over a period of approximately three years.

When confronted, the portfolio manager vehemently denied the allegations, but on the following day, he admitted that he had lied and that he had, in fact, misrepresented his performance results to his clients. While under review, the portfolio manager also was caught deleting copies of his communications with clients from the firm’s computer system. The portfolio manager pleaded with the Member to keep his job because a termination would jeopardize his career and ability to support his family, but the decision was made to terminate his employment.

In connection with the termination, the Member signed a Memorandum of Understanding on behalf of the firm in which he agreed that, so long as the portfolio manager did not disparage the firm or its employees, they would not report his misconduct and resulting termination to the proper regulatory authorities. Several weeks later, with the Member’s knowledge and approval, the firm submitted a Form U5 (Uniform Termination Notice for Securities Industry Registration) report to FINRA, the U.S. Securities and Exchange Commission, and the Connecticut Department of Banking that he knew falsely and misleadingly stated that the portfolio manager had not been discharged for cause or while under suspicion of violating investment-related laws, rules, or standards of industry conduct.

Approximately six months later, an outside consultant working for one of the firm’s clients learned from the firm that the portfolio manager had been terminated because he was found to have engaged in misrepresentations to clients and that his misconduct had not been reported to the regulatory authorities. Only then, after strong encouragement from the client’s outside consultant, did the Member cause the firm to correct the false and misleading Form U5 they had filed previously, and notify the proper regulatory authorities of the portfolio manager’s termination for cause, misrepresentations of investment performance results to his clients, and deletions of firm records.

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On 12 August 2011, a Hearing Panel imposed a Two-Year Suspension of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the Member violated Standards I(A) – Knowledge of the Law, I(D) - Misconduct, IV(A) – Loyalty, V(A) – Diligence and Reasonable Basis, and V(B) – Communication with Clients and Prospective Clients of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The panel found that between November 2006 and April 2007, the Member provided research, recommendations, and sales materials to clients without the prior knowledge or approval of his employer firm. Several of the Member’s communications to clients contained unsupported price predictions, failed to distinguish fact from opinion, and failed to discuss the potential risks associated with the recommended investments. The Member also sent new account forms to clients and asked that they be signed and returned in blank so that he could complete them later, in violation of his firm’s internal policies and the rules of the Investment Dealers Association of Canada (the IDA, now known as the IIROC). As a result of the foregoing misconduct, the IDA found that the Member violated its bylaws (29.1 and 29.7) and imposed a C$10,000 fine, ordered him to pay C$10,000 in costs, and required that he pass an examination on the IDA’s Conduct and Practices Handbook.

The panel also determined that in April 2007 the Member deliberately misrepresented to his firm’s compliance department that he had not disseminated to his clients an unapproved research report he had prepared when, in fact, he had already distributed the report. The Hearing Panel concluded that the Member’s statement was dishonest, disloyal, and reflected adversely on his professional reputation and integrity, in violation of CFA Institute Standards I(D) and IV(A).

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On 10 February 2011, a Hearing Panel imposed a Two-Year Suspension of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the Member violated Standards I – Fundamental Responsibilities, III(E) – Responsibilities of Supervisors, and IV(B.7) – Disclosure of Conflicts  of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999). The suspension was reviewed and affirmed by an Appeal Panel on 14 June 2011.

In 2008, the Financial Industry Regulatory Authority (FINRA), a self-regulatory organization in the U.S., found that the Member violated several of its rules governing the conduct of research analysts. Specifically, FINRA determined that the Member traded inconsistently with his research recommendations 12 times; traded during restricted periods 24 times; failed to disclose his personal holdings in five securities he discussed in articles published in Forbes magazine; and failed to maintain records demonstrating that the articles complied with the applicable rules. In addition, FINRA found that employees of the Member’s firm, whom he supervised, violated rules prohibiting trading inconsistently with research reports and trading within restricted periods. FINRA also determined that the firm and an employee did not disclose compensation received from a covered company and that the firm, acting through the Member, had failed to adopt appropriate written supervisory procedures. As a result of these violations, FINRA suspended the Member for 20 business days and fined him US$31,459, of which US$16,459 was disgorgement of ill-gotten gains.

The Hearing Panel determined that the Member’s conduct violated Standard I, which required that he maintain knowledge of, comply with, and not knowingly participate in violations of laws or rules governing his professional conduct. The panel also concluded that the Member failed to reasonably supervise the firm’s employees to avoid violations of the applicable rules, thus violating Standard III(E). The panel also determined that the Member’s failure to disclose that he had personal holdings in five of the securities that he discussed in articles published in Forbes violated Standard IV(B.7). Finally, the panel concluded that although FINRA’s inquiry began in 2006, the Member did not disclose the matter to CFA Institute in his annual Professional Conduct Statement until 2008, after he had entered into the settlement with FINRA.

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On 30 October 2009, CFA Institute imposed the sanction of a Two-Year Suspension of membership and the right to use the CFA designation on a Charterholder Member, pursuant to a Stipulation and Consent for Disciplinary Action. CFA Institute found that the Member violated Standards IV(A.2) – Research Reports, IV(A.3) – Independence and Objectivity, and IV(B.6) – Prohibition Against Misrepresentation of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member issued a research report that was not balanced or accurate, contained a target price for which there was no reasonable basis, and failed to disclose material facts and risks.

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On 13 July 2001, a Hearing Panel imposed a Two-Year Suspension of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the violated the Standards I – Fundamental Responsibilities and III(C) – Disclosure of Conflicts to Employer of the AIMR Code of Ethics and Standards of Professional Conduct (1996).

In 1996, the Member opened a personal securities account with a broker/dealer. The Member did not disclose the personal account to his employer. Additionally, when opening the account, the Member did not disclose his association with his employer to the broker/dealer. The Member’s failure to disclose his affiliation with his employer, and his failure to disclose the account to his employer, violated NASD Rules. The Member’s failure to disclose the account to his employer also violated his employer’s policies. In September 1997, when his employer questioned him about his personal ownership of securities, the Member was not forthcoming regarding the location of his personal securities.

Timed Suspension – One Year

Effective 11 October 2016, CFA Institute imposed a One-Year Suspension of membership and of the right to use the CFA designation on a lapsed charterholder member. Professional Conduct found that the lapsed charterholder member violated the Code of Ethics and Standards of Professional Conduct:  I(A) – Knowledge of the Law; I(D) – Misconduct; and II(B) – Market Manipulation (2010).

While the lapsed charterholder member was a proprietary trader at a bank in Canada, he was the subject of a disciplinary action by the Investment Industry Regulatory Organization of Canada (IIROC), which investigated and identified twenty instances between August 2012 and November 2012 where the lapsed charterholder member entered non-bona fide, pre-opening orders. This pattern of order entry, a practice known as “spoofing,” misrepresented the supply, demand, and/or price for the securities.

As part of the settlement with IIROC, the lapsed charterholder member admitted that he entered orders that he ought reasonably to have known would create, or could reasonably be expected to create, a false or misleading appearance of trading activity in, or interest in the purchase or sale of, certain securities or an artificial sale price for the securities. The lapsed charterholder member agreed to a $10,000 fine, plus administrative costs, and a one-month suspension of access to IIROC-regulated marketplaces.

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On July 22, 2016, CFA Institute imposed a One-Year Suspension of membership and of the right to use the CFA designation on a charterholder member. This sanction was based on the determination that the charterholder member violated the CFA Institute Code of Ethics and Standards of Professional Conduct: l(A) – Knowledge of the law; l(C) – Misrepresentation; lll(A) – Loyalty, Prudence, and Care; and lll(C)(2) – Suitability (2005 and 2010).

Beginning in 2002, the charterholder member managed an asset management business called Joneldy Capital Inc., which was structured as a private investment company with several affiliated “investment vehicles” through which shareholders could invest in a portfolio managed by the charterholder member. In January 2008, the various investment vehicles were consolidated into a single entity, Les Investissements Archipel (“Archipel”), also managed by the charterholder member.

The charterholder member’s investment philosophy, which he communicated to investors, was “to produce a stable and positive return, irrespective of the direction of the market,” and to “minimize volatility and protect investors’ capital.” The charterholder member represented to shareholders that:  he would use a “disciplined and systematic approach” relying on fundamental analysis; he would invest only “for the long term”; the portfolio’s principal holding would be “made up of 15 to 25” stocks; he employed diversification and hedging techniques to reduce volatility and risks; he did  "not use any financial leverage”; and the correlation between the Joneldy portfolio and the financial markets was “very weak, allowing us to protect ourselves when the markets are falling.”

Before 2008, the charterholder member’s quarterly reports to his investors generally reflected this expressed preference for long-term investing and hedging and emphasized the cautious nature of the portfolio’s investments. But the reports that the charterholder member distributed to shareholders for the first three quarters of 2008 made misrepresentations and omissions of material facts about his investment strategy for Archipel.

From July 2008 until October 2008, the Archipel portfolio lost more than 50% of its value.  In October 2008, the charterholder member met with Archipel’s 35 shareholders to allow them to withdraw from Archipel at market value in exchange for releases, but he did not disclose in these meetings the significant changes to his investment strategy. Eleven of the shareholders accepted the offer and withdrew; 21 shareholders agreed to stay invested in Archipel. 

Three investors brought two separate claims, alleging that Joneldy’s misleading reports were a cause of their losses. One claim was settled. In the other, an arbitrator found that the charterholder member had significantly changed his investment strategy without informing his investors, and ruled in the claimant’s favor. 

The charterholder member admitted that he made serious errors in judgment while under severe stress during the global financial crises in 2008. He expressed remorse for his actions. As one of the largest shareholders in Archipel, the charterholder member shared in his investors’ losses and believed that he was acting in the best interests of Archipel’s shareholders, many of whom were family and friends.

In an unrelated matter, in May 2013 the Financial Markets Authority of Quebec (Autorité des Marchés Financières or “AMF”) fined Joneldy Capital and the charterholder member $17,600, based on the charterholder member’s admissions that, principally in 2010 and 2011, Joneldy, under independent legal advice, acted as an investment fund manager without timely registering with the AMF and failed to obtain required insurance in a timely manner, in violation of AMF rules.

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Effective 26 May 2016, CFA Institute imposed a One-Year Suspension of membership and of the right to use the CFA designation on a charterholder member. A Hearing Panel found that the charterholder member violated Standards of Professional Conduct: I(A) – Knowledge of the Law; III(A) – Loyalty, Prudence, and Care; III(C) –Suitability; and V(B) – Communication with Clients and Prospective Clients (2005).

In April 2011, the charterholder member entered into separate, but closely related, settlement agreements with the Investment Industry Regulatory Organization of Canada (IIROC) and the Ontario Securities Commission (OSC). In these agreements, the charterholder member admitted that between 2006 and 2010, while acting as Chief Executive of Trapeze Asset Management, Inc. and President of Trapeze Capital Corp. (collectively, “Trapeze”), he did not give sufficient weight to sector and individual security concentration risk, price volatility risk, and liquidity risk when making investment decisions on behalf of the firms’ clients. The charterholder member admitted that if he had done so, the securities he recommended to clients would have received higher than the “medium” risk ratings that he assigned to them. 

Because of the charterholder member’s misclassification of risk, and because his investments on behalf of virtually all of Trapeze’s clients were in securities of the same issuers, he failed to ensure that his investments during this period were suitable for all of the firms’ clients.  The charterholder member agreed that his conduct violated: IIROC Dealer Member Rules 1300.1(a), (p), and (q); and section 13.3 of National Instrument (NI) 31-103 and section 1.5 of OSC Rule 31-505, respectively. Because of the charterholder member’s failure to adequately assess the risks of the investments he made on behalf of clients, statements made in Trapeze’s marketing materials understated the risks associated with his investment strategy in violation of IIROC Dealer Member Rule 29.1.

In some cases, the charterholder member did not adequately ascertain clients’ investment needs, objectives, and risk tolerance. The vast majority of Trapeze’s clients were identified as having a “medium” risk tolerance. The charterholder member, who managed client assets on a discretionary basis, often invested those assets in securities that were more than medium risk or that, at times, became high risk. The charterholder member admitted that he violated section 13.2 of NI 31 103 and section 1.5 of OSC Rule 31-505 prior to section 13.2 of NI 31 103. Finally, the charterholder member admitted that, as one of the controlling and directing minds and senior executives of TAMI, he authorized, permitted, or acquiesced in TAMI’s breaches of Ontario securities law in violation of section 129.2 of the Securities Act. 

In his settlement with the OSC, the charterholder member agreed to a reprimand, and with his father and TAMI, he agreed to pay the OSC an administrative penalty of $1,000,000 and costs of $250,000 to offset the expense of the OSC’s investigation. In his settlement with IIROC, the charterholder member agreed to pay, jointly and severally with his father and TCC, a fine of $500,000 and costs of $200,000. In the settlement agreements with the OSC and IIROC, the charterholder member, his father, and Trapeze agreed to, and completed, certain undertakings, including reviews of TAMI’s and TCC’s Know-Your-Client and suitability practices and procedures by an independent consultant and account reviews for all client accounts.

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Effective 31 July 2015, CFA Institute imposed a One-Year Suspension of membership and right to use the CFA designation upon  a Charterholder Member. A Hearing Panel found that the Member violated the Code of Ethics and Standards of Professional Conduct: I(A) – Knowledge of the Law and II(A) – Material Nonpublic Information (2005).

The Member was working as a portfolio manager at Fidelity Management & Research Company (Fidelity) based in Boston, Massachusetts in 2009. On 15 June 2009, the Member participated in a conference call in which he received information about an upcoming placement of shares in Chaoda Modern Agriculture (Holdings) Limited (Chaoda), a Chinese agricultural company whose stock trading on the Hong Kong Stock Exchange. On the call, a placement of shares in the range of US$200 – 250 million at a price of HK$5 per share was discussed by Chaoda’s management. The call was one of six such calls that took place with different groups of institutional investors.

The Member held Chaoda stock in the portfolios of two Fidelity funds that he managed. After the call with Chaoda management, at approximately 10:30 p.m. EST on 15 June 2009, the Member entered a limit order to sell 374,000 shares of Chaoda common stock in one of the funds that he managed, the International Value Fund (FIV Fund), at a price of HK$5.30. The order represented one-third of the fund’s total Chaoda shares. The order was routed to the Hong Kong Stock Exchange and it was executed at approximately 4:00 p.m. Hong Kong Time on 16 June 2009.

After an overnight flight to London, at approximately 7:30 a.m. London Time (2:30 p.m. Hong Kong Time) on 17 June 2009, trading in the shares of Chaoda on the Hong Kong Stock Exchange was suspended pending the release of an announcement by the company regarding a placement of shares. At approximately 10:00 a.m. London Time (5:00 p.m. Hong Kong Time) on 17 June 2009, the Member then entered an order on behalf of the FIV Fund to purchase 630,000 shares of Chaoda common stock at a price of HK$4.60 per share which was relayed to the placement agent.

Prior to the opening of the Hong Kong market on 18 June 2009, Chaoda announced that it had conditionally agreed to place 388 million shares at a price of HK$4.60 per share to raise a total of approximately HK$1.785 billion. The resumption of trading in Chaoda on the Hong Kong market then occurred at approximately 9:14 a.m. Hong Kong time on 18 June 2009 and the Member’s order to purchase 630,000 shares of Chaoda was executed on 18 June 2009.

The Securities and Futures Commission of Hong Kong (“SFC”) investigated this matter and referred it to the Hong Kong Market Misconduct Tribunal for proceedings. On April of 2012, after a 16-day trial, the Hong Kong Market Misconduct Tribunal found that the Member had committed market misconduct under Hong Kong law by violating Section 271(1)(e) and Section 295(5) of the Securities and Futures Ordinance of Hong Kong, which prohibits the recipients of insider information from a person connected with a corporation from dealing in shares of that corporation. Thus, the Member was banned from trading in the Hong Kong securities markets for a period of two years and ordered to pay one-third of the costs of the government’s investigation.

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Effective 15 July 2014, CFA Institute imposed a One-Year Suspension of membership and the right to use the CFA designation upon a lapsed Charterholder Member. The Member was found to have violated the CFA Institute Code of Ethics and the following Standards of Professional Conduct I(A) – Knowledge of the Law, I(C) – Misrepresentation, and VI(A) – Disclosure of Conflicts (2005).

 

On 12 March 2013, the Securities and Futures Commission of Hong Kong (SFC) prohibited the Member from re-entering the securities industry for 14 months. The SFC found that the Member breached General Principles 6 and 7 and Paragraphs 12.2, 16.3, and 16.4 of the Code of Conduct for Persons Licensed by or Registered with the SFC. Specifically, the SFC found that, on four separate occasions, the Member filed mandatory account declarations with his employer that did not disclose his family members’ securities accounts at another institution. Additionally, between February and June 2010 the Member was involved in the preparation of research reports for three stocks that were also traded in his family members’ undisclosed accounts during that time. The trading occurred either one day before or on the same day as research reports issued by the Member’s research team. Lastly, the SFC found that the Member failed to disclose to his employer his personal interest in certain securities held in one of the related accounts.

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On 3 June 2011, a Hearing Panel imposed a One-Year Suspension of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the Member violated S
tandards I – Fundamental Responsibilities and IV(B.7) – Disclosure of Conflicts to Clients and Prospects of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999). This result was subsequently reviewed and affirmed by an Appeal Panel on 12 October 2011.

The NASD (now known as FINRA), a United States self-regulatory organization, found that on nine occasions, the Member purchased and/or sold securities in violation of NASD Rule 2711’s restricted period. On two occasions the Member also published research reports that failed to disclose his financial interests in the securities that were the subject of his reports. According to the NASD, the Member’s failure to make this disclosure violated Rule 2711’s requirement that a research analyst state in a research report whether he or she has a financial interest in the securities of the company that is the subject of the analyst’s report and the nature of that financial interest.

The NASD also found that the Member violated NASD Rules 3050(c) and 2110 when he failed to notify two firms where he was employed, promptly and in writing, that he held three accounts at other NASD member firms. He also failed to notify properly the firms at which he maintained these outside accounts that he was employed by another broker/dealer. Based on these violations, the NASD fined the Member US$10,000 and suspended him from associating with any NASD member in any capacity for 45 days.

The Hearing Panel determined that by failing to disclose his financial interests in securities that were the subject of his research report, the Member failed to disclose to clients and potential clients all actual and potential conflicts of interest that could reasonably be expected to impair the independence and objectivity of his research reports. Thus, the Member violated Standard IV(B.7). Finally, the panel determined that by violating NASD rules and CFA Institute Standard IV(B.7), the Member failed to maintain knowledge of and comply with applicable requirements governing his professional conduct in violation of Standard I.

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On 16 September 2010, a Hearing Panel imposed a One-Year Suspension of membership and right to use the CFA designation on a Charterholder Member. The panel found that the Member violated Standards I – Fundamental Responsibilities and III(C) – Disclosure of Conflicts to Employer of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The panel determined that the Member engaged in the activities which were conflicts of interest. The Member was obligated to disclose these activities to the Member’s employer in accordance with the terms of the Member’s employment contract and the employer’s compliance manual, but the Member failed to do so. More specifically, the Member participated in meetings with potential investors for a new firm that the Member was establishing, while still employed by the current firm. After the Member had given notice of resignation, but before leaving the current employer, the Member used his current employer’s e-mail system to contact several fund managers, with whom the current firm had investments in its fund-of-funds, to negotiate investment terms for the new firm similar to those the current firm enjoyed.

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On 26 February 2010, a Hearing Panel imposed a Public Censure and a One-Year Suspension of the Member’s CFA Designation on a Charterholder Member. The panel found that the Member violated Standards I – Fundamental Responsibilities and III(E) – Responsibilities of Supervisors of the CFA Institute Code of Ethics and Standards of Professional Conduct (1996)

The panel found that the Member violated Standard I by failing to maintain knowledge of and comply with the applicable securities laws and rules, and Standard III (E) by knowingly participating or assisting in violations by his firm. The panel also found that the Member violated Standard III(E) by not properly supervising so as to ensure that his firm executed trades in compliance with the securities laws and rules. The panel decided not to publish the Member’s name in the Notice of Disciplinary Action.

The Member was responsible for understanding and ensuring his investment company’s compliance with the securities laws and rules relating to the execution of cross-trades between firm clients, and between clients and certain affiliated entities of the investment company. The Member, however, admittedly did not know the applicable laws and rules even though he had been provided with written procedures for properly executing such trades. Instead, the Member allowed his firm’s traders, over whom he had authority and supervisory responsibility, to execute cross-trades using an improper methodology that resulted in excessive charges and improper expenses to clients.

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On 15 December 2009, a Hearing Panel imposed a Public Censure and a One-Year Suspension of his CFA Designation on a Charterholder Member. The panel found that the Member violated Standards I – Fundamental Responsibilities and IV(B1) – Fiduciary Duties of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999). This result was appealed and subsequently affirmed by a Review Panel on 10 March 2010.

In May 2008, the SEC found that the Member, while acting as a portfolio manager, negligently caused his firm to violate several antifraud provisions of federal securities laws, specifically Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, Section 206(2) of the Investment Advisers Act of 1940, and Section 34(b) of the Investment Company Act of 1940.

The SEC found that the Member granted permission to two broker/dealers to allow them to trade (on behalf of clients) in a fund, and it was the presence of approved market-timing trading that caused prospectuses for the fund to be materially false and misleading. The SEC concluded that the Member acted negligently because (1) he made no attempt to determine how frequently the first broker/dealer who approached him intended to trade in the fund and whether that trading would be disruptive; (2) he failed to read the prospectuses for his own fund, despite the fact that he was regularly sent copies; (3) he waited almost a year after the first broker/dealer began trading the fund before asking what his firm’s market-timing policy was; and (4) he failed to consider the possible costs of the market timers’ trading to the Fund’s longer-term shareholders.

As a result, the SEC ordered that the Member “cease and desist” from committing or causing any future violations – the only sanction available under those specific antifraud provisions. In imposing this sanction against the Member, the SEC noted that “[a]ny violation – even a negligent violation – of the antifraud provisions is serious.”

In its decision, the Hearing Panel found that the Member violated Standard I by failing to comply with the applicable federal securities laws, and by knowingly participating or assisting in violations of the securities laws. The panel also found that the Member breached his fiduciary duties to the fund’s shareholders and was in violation of Standard IV(B.1).

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On 19 February 2009, a Hearing Panel imposed a One-Year Suspension from Participation in the CFA Program on a Postponed Candidate. The panel found that the Candidate violated Standards I(A) – Knowledge of the Law and I(D) – Misconduct of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The Candidate offered for sale copies of copyrighted CFA exam preparatory materials on multiple internet message boards from approximately December 2006 to April 2007. Pursuant to the Code of Ethics, Standard I(A), and Standard I(D), the Postponed Candidate was required to act in an ethical manner, to understand and comply with all applicable laws, rules, and regulations, and not to engage in any conduct that reflected adversely on his professional reputation, integrity, or competence.

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On 6 March 2008, a Hearing Panel imposed a One-Year Suspension from Participation in the CFA Program on a Postponed Candidate. The panel found that the Candidate violated Standards I(A) – Knowledge of the Law and I(D) – Misconduct of the CFA Institute Standards of Professional Conduct (2005).

The panel found that the Candidate violated the copyright of CFA Institute by purchasing, duplicating, and selling unauthorized copies of copyrighted CFA Program study and examination preparatory materials, specifically the Standards of Practice Handbook (ninth edition), over the internet. Pursuant to the Code of Ethics, Standard I(A), and Standard I(D), the Candidate was required to act in an ethical manner, to understand and comply with all applicable laws, rules, and regulations, and was not to engage in any conduct that reflected adversely on her professional reputation, integrity, or competence.

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On 31 August 2000, AIMR imposed a One-Year Delay of awarding the charter on a Candidate.

The Candidate was convicted of petty larceny, a misdemeanor, in 1992. The Candidate took the Level I examination in 1997, the Level II examination in 1998, and the Level III examination in 1999. The Candidate failed to disclose the misdemeanor conviction on the Level I, Level II, and Level III Professional Conduct Inquiry Forms. He finally disclosed the conviction on his Pass III Datasheet/Professional Conduct Statement.

If the Candidate had disclosed the conviction on his 1997 Candidate PCS, he would have been denied admission into the CFA Program. However, he would have been allowed to take the exam in 1998 and 1999 based upon a revision to the admission policies.

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On 3 May 2000, AIMR imposed the sanction of a One-Year Suspension of membership and right to use the CFA Designation on a Charterholder Member, pursuant to a Stipulation and Offer of Consent for Disciplinary Action. AIMR found that the Member violated Standards I – Fundamental Responsibilities, III(B) – Duty to Employer, and III(D) – Disclosure of Additional Compensation Arrangements of the AIMR Code of Ethics and Standards of Professional Conduct (1996).

At all times relevant, the Member was a registered representative with his employer. In 1993, the Member acted as a market intermediary in a stock private placement. He received a commission for his services from the stock issuer in the form of restricted share certificates with a value of approximately C$5,000. The share certificates were paid to an offshore personal holding company of which the Member was the sole owner. The client transaction was not recorded on the books of the Member’s employer, and at no time did the Member inform his employer of the payment.

In 1995, the Member and a co-worker acted as a market intermediary in the placement of additional stock shares for the same issuer. The Member and the co-worker accepted a commission from the issuer of restricted shares of the stock, equivalent to C$10,000. The Member’s share of approximately C$5,000 in value was to be paid to an offshore personal holding company. The client transactions were not recorded on the books of the Member’s employer, and the Member did not inform his employer of the issuer’s payment of stock to him. The Member’s actions in 1993 and 1995 were in contravention of his employer’s policies, Investment Dealers Association Rules, and the AIMR Standards of Professional Conduct.

Timed Suspension – Nine Months

Effective 29 April 2016, CFA Institute imposed a Nine-Month Suspension of membership and of the right to use the CFA designation on a charterholder member. A Hearing Panel found that the charterholder member violated the CFA Institute Code of Ethics and Standards of Professional Conduct:  I(A) - Knowledge of the Law and I(C) – Misrepresentation (2010). These findings were later reviewed and affirmed by an Appeal Panel.

On 27 January 2014, the charterholder member entered into a settlement agreement with the Investment Industry Regulatory Organization of Canada (IIROC) that was subsequently accepted by an IIROC Hearing Panel. In the settlement agreement, the charterholder member admitted that in September 2010, she forged client signatures on various account documents for three related clients. IIROC accepted that the charterholder member had not embarked on this misconduct for personal gain, that her sole motive was to assist her clients, and that there was no loss or detriment to her clients. Nevertheless, IIROC found (and the charterholder member admitted) that when she forged her clients’ signatures she had engaged in conduct unbecoming or detrimental to the public interest, contrary to IIROC Dealer Member Rule 29.1. 

In settling with IIROC, the charterholder member agreed to a fine of C$15,000 and a suspension from registration in any capacity for a period of two months. She also agreed to rewrite the Conduct & Practices Handbook examination within six months upon any return to the securities industry and to pay costs to IIROC in the amount of C$1,000.

Timed Suspension – Six Months

Effective 19 October 2017, CFA Institute imposed a Six-Month Suspension of membership and of the right to use the CFA designation on a charterholder member. A Hearing Panel found that the charterholder member violated the CFA Institute Code of Ethics and Standards of Professional Conduct: I(A) – Knowledge of the Law, IV(A) – Duties to Employers – Loyalty, IV(B) – Additional Compensation Arrangements, and VI(A) – Disclosure of Conflicts (2014).

The charterholder member has been employed as a registered representative and portfolio manager at a firm since January 2014. While employed at the firm, the charterholder member continued to conduct a separate, undisclosed financial planning business to advise friends and family members. In addition to financial planning, he advised and assisted his clients in making and managing investments.

The charterholder member had the clients open and maintain investment accounts in their own names with various large, discount brokerages in Canada. These firms processed the trades and provided the clients with confirmations and account statements. In total, there were 31 clients with 54 accounts and assets under management of approximately $1.4 million (CAD).

Between January 2014 and February 2015, the charterholder member advised clients without notifying his employer. He placed trades in his clients’ accounts from the computer assigned to him at his employer and used the computer to create and store documents related to his outside business. He also conducted outside business on behalf of his clients during regular business hours, as well as during his personal time.

On 30 January 2014, the charterholder member signed an acknowledgment in which he agreed to follow the guidelines and rules in his employer’s compliance manual. The manual specifically prohibited his participation in any “outside activity” without prior firm approval and required that any “pro” (proprietary) accounts, including those in which he had trading authorization, be maintained at the employer.

Also on 30 January 2014, and again on 10 February 2015, the charterholder member signed his employer’s Annual Employee Disclosure Forms in which he was required to disclose any outside business activities or involvement in pro accounts. He did not disclose his outside business activities, receipt of fees from outside clients, or possession or use of discretionary trading authority on behalf of his clients.

The matter was also investigated by the Investment Industry Regulatory Organization of Canada (IIROC), which has Member Rules that: (1) require that registered representatives disclose all outside business activities to their employer and obtain prior approval; and (2) prohibit registered representatives from accepting remuneration from any party other than their employer for securities-related activities.  In August 2016, IIROC accepted the charterholder member’s offer of settlement. In doing so, the IIROC hearing panel noted that the charterholder member had answered his firm’s compliance questionnaire and falsely stated that he was not involved in any outside business activities. In settling with IIROC, the charterholder member agreed to pay a fine of $25,000 and costs of $2,500, and complete the Chief Compliance Officer’s Qualifying Examination.

The charterholder member’s actions deprived his firm of the opportunity to supervise his outside business activities, including the receipt of fees from clients for investment-related activities, and clients of the separate business were not properly protected by the securities regulatory system, such as oversight by IIROC.

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On 16 June 2015, a Review Panel affirmed CFA Institute’s imposition of a Six-Month Suspension of membership and the right to use the CFA designation upon  a lapsed charterholder member. CFA Institute found that the lapsed charterholder member violated the Code of Ethics and Standards of Professional Conduct I(A) - Knowledge of the Law; I(C) -  Misrepresentation; and III(A) - Loyalty, Prudence, and Care of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005). 

On 2 June 2014, the lapsed charterholder member entered into a settlement agreement with the Mutual Fund Dealers Association of Canada (MFDA) which was subsequently accepted by a MFDA Hearing Panel on 19 August 2014. In the settlement agreement, the lapsed charterholder admitted that from July 2007 until August 2009, he processed trades based on requests from someone other than the client, thus failing to obtain proper authorization for redemptions of approximately C$39,516 from the client’s account, contrary to MFDA Rule 2.3.1(a) and Rule 2.1.1. The lapsed charterholder also admitted that from May 2010 to August 2011 (when his membership in CFA Institute had lapsed), he failed to report to his employer that he had received a complaint about his processing trades based on requests from someone other than the client. The failure to disclose the complaint compromised his employer’s ability to supervise him properly and violated MFDA Rules 1.2.2(b) and 2.1.1, and section 4 of MFDA Policy No. 6.  The lapsed charterholder accepted a fine of C$10,000 and payment of costs of C$5,000

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On 25 February 2013, a Review Panel affirmed the imposition of a Six-Month Suspension of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the Member violated the CFA Institute Bylaws (2005, 2006, 2007) and Standards I – Fundamental Responsibilities and II(B) - Professional Misconduct (1999) and I(A) – Knowledge of the Law, I(C) – Misrepresentation, I(D) - Misconduct, and VII(A) - Conduct as Members and Candidates in the CFA Program (2005) of the CFA Institute Code of Ethics and Standards of Professional Conduct.

Specifically, during June and July 2005, the Member, a trader for a hedge fund, entered into numerous end-of-day purchases of shares of a thinly-traded stock on the Canada Venture Exchange, when he knew or ought to have known that this pattern of trading would contribute to a misleading price in the shares, in violation of the Ontario Securities Act. As a result of this misconduct, the Ontario Securities Commission suspended the Member from registration and trading for four months, imposed two years of special supervision by a registered trader, and ordered him to complete a conduct and practices course and to pay $7,000 in costs.

In addition, CFA Institute separately found that, although he knew that the Ontario Securities Commission began investigating him in July 2005, the Member falsely stated on his 2005, 2006, and 2007 Professional Conduct Statements that he was not subject to any investigation regarding his professional conduct.

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On 18 May 2010, CFA Institute imposed a Six-Month Suspension of membership and the right to use the CFA designation on a Charterholder Member. It was found that the Member violated Standards I(A) – Knowledge of the Law, III(E) – Preservation of Confidentiality, and IV(A) – Loyalty of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

In 2001, the Member signed an agreement with his firm that he would neither solicit nor accept business from the firm’s clients for three years, should he ever leave. On 22 January 2007, the Member resigned from the firm and went to work as a financial advisor at another firm that same day. Prior to joining the new firm, the Member raised the restrictive language in his 2001 agreement with the new firm’s attorneys. They advised him that it was unclear whether the agreement was legally enforceable and, in any event, they handled such matters routinely and they were resolved quickly.

Before leaving his firm, the Member printed and took home certain documents – including client information sheets, commission summaries, account working appraisal reports, and contact lists – that he thought would be helpful in servicing his former clients if they decided to change firms with him. Some of these documents contained confidential client information such as account numbers, social security numbers, commissions, assets, and trading information. The Member maintained the documents in a safe in his home and only shared the information with the new firm after the client consented. The Member took these documents without his previous firm’s or the clients’ prior knowledge or permission. The Member had an ethical duty to maintain the confidentiality of his clients’ personal information and should not have taken the documents without their prior knowledge or permission. Under the circumstances, he violated Standards I(A) and III(E).

Upon joining the new firm, the Member began contacting his former clients by telephone to let them know he had changed firms. In some of these conversations, if asked why he was changing firms, the Member said that he believed the new firm offered more investment options and could serve their investing needs better. If former clients expressed an interest in continuing to be advised by the Member at the new firm, he made follow up calls to them. He also met in person with a former long-time client and gave her documents to transfer her account to his new firm. In one instance, he left a voicemail message for a client one day before he actually resigned.

Finally, the Member, relying on advice of counsel at the new firm, ignored his agreement not to do business with any former clients for a period of three years after leaving the firm. In fact, several of his former clients opened accounts and transferred assets to his new firm shortly after he joined. Accordingly, the Member also violated his duty of loyalty to his former employer, in violation of Standard IV(A).

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On 4 December 2008, a Hearing Panel imposed a Six-Month Suspension of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the Member violated Standards I – Fundamental Responsibilities, II(B) – Professional Misconduct, and III(B) – Duty to Employer of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member, after resignation of his employment, continued to access and use information from his former employer’s proprietary website to perform some of his work functions, as well as allowed a co-worker to access the data on the website. Additionally, the Member, upon resignation of his employment, retained on his personal computer electronic files that were proprietary to and the property of his former employer. 

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On 26 August 2008, a Hearing Panel imposed a Six-Month Suspension of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the Member violated the Standards I – Fundamental Responsibilities, III(E) – Responsibilities of Supervisors, IV(B.4) – Priority of Transactions, IV(B.8) – Disclosure of Referral Fees, and V(B) – Performance Presentation of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The panel found that the Member, as president of his firm during the period 1995 to 2001, failed to establish an adequate compliance system for his firm and failed to make reasonable efforts to see that appropriate compliance procedures were documented and communicated, including internal policies to ensure client transactions had priority over personal transactions by the Member; failed to disclose consideration or benefit received or delivered to others for the recommendation of services to the client or prospective client; failed to accurately represent the firm’s asset turnover rate; and failed to comply with all applicable rules and regulations governing his professional activities, including maintenance of requisite books and records.

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On 14 December 2001, a Hearing Panel imposed a Six-Month Suspension of membership and the right to use the CFA designation on a Charterholder Member. The panel found that the Member violated Standards III(B) – Duty to Employer and IV(B.5) – Preservation of Confidentiality of the AIMR Code of Ethics and Standards of Professional Conduct (1996).

Pursuant to Standard IV(B.5) members are required to preserve the confidentiality of information communicated by clients in the client-member relationship, unless the information relates to illegal activities on the part of the client. Standard III(B) states that members that plan to leave their current employer have a duty of loyalty to their employer, which requires them to act in the best interest of their employer, until their resignations become effective.

In 1994, while making arrangements and preparations to go into a competitive business, the Member disclosed confidential client and employer information to a competitor, influenced the resignation of several of his employer's employees, and acted in a manner detrimental to his employer.

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On 3 May 2000, AIMR imposed a Six-Month Suspension of membership and the right to use the CFA designation on a Charterholder Member, pursuant to a Stipulation and Offer of Consent for Disciplinary Action. AIMR found that the Member violated Standards I – Fundamental Responsibilities; III(B) – Duty to Employer, and III(D) – Disclosure of Additional Compensation Arrangements of the AIMR Code of Ethics and Standards of Professional Conduct (1996).

At all times relevant, the Member was a registered representative with his employer. In 1995 the Member and a co-worker acted as a market intermediary in a private placement of stock shares. The Member and the co-worker accepted a commission of restricted stock shares from the issuer, equivalent to C$10,000. The Member’s share, approximately C$5,000 in value, was to be paid to an offshore personal holding company. The client transactions were not recorded on the books of his employer and the Member did not inform his employer of the stock payment. The Member’s actions were in contravention to his employer’s policies, Investment Dealers Association Rules, and the AIMR Standards of Professional Conduct.

Timed Suspension – Three Months

On 21 February 2013, a Review Panel imposed a Three-Month Suspension of membership and the right to use the CFA designation on a lapsed Charterholder Member. The panel found that the Member violated Standards I(A) – Knowledge of the Law and II(B) – Market Manipulation the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The Member was an institutional equity sales trader for a financial services firm in South Africa. In October 2007, the trading desk at the firm received an order prior to the opening of trading from one of its largest and most demanding clients to purchase a large number of shares of Imperial Ltd. on the Johannesburg Stock Exchange (JSE). The Member knew that the client evaluated the quality of its executions each day against the volume-weighted average price (VWAP) in the market.

As head of the trading desk, the Member passed the client’s order to a more junior trader who was responsible for trading in Imperial. About fifteen minutes after the market opened, the Member noticed there was unusually heavy volume in Imperial and the stock’s price had increased significantly – but her employer had not participated. It was quickly determined that the junior trader had neglected to monitor the market and, because he had not participated, the firm could not achieve a satisfactory VWAP for the client that day.

The Member knew that the junior trader had been given a final warning by the firm for similar mistakes, so she believed this incident would likely be a “dismissible offence.” She also worried that the firm might lose the client’s substantial business. So, to avoid losing both the junior trader and the business, she needed the client to be satisfied with the executions it received. To address the problem, the Member decided to report a series of fictitious “book-over” trades, which would increase the VWAP in the market that day. At the close, the prices at which the firm had purchased Imperial shares appeared sufficiently close to the VWAP that the client was satisfied with the quality of the executions it received. The following morning, the Member confessed what she had done to her managers. As a result, she was terminated and her conduct was reported to the JSE.

In November 2008, the Directorate of Market Abuse (DMA) found that the Member had engaged in a manipulative, improper, false, or deceptive trading practice in contravention of Section 75 of the Security Services Act 36 of 2004. According to the DMA, the Member admitted the alleged violation, while also presenting several mitigating factors, including: her loss of employment and poor prospects for future employment; that she self-reported her misconduct even though it likely never would have been discovered; that she had an unblemished record and derived no personal benefit from the misconduct; and that she had provided other useful information to the JSE. As a result, the DMA imposed a fine of R25 000.00 (about USD$3,000).

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On 26 March 2010, CFA Institute imposed a Three-Month Suspension of membership and the right to use
the CFA designation on a Charterholder Member. It was found that the Member violated Standards I – Fundamental Responsibilities and II(B) – Professional Misconduct of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

While in the process of winding up his firm’s business, the Member was placed on warning by the Investment Dealers Association of Canada (IDA) that the Member was required to file monthly financial reports and was not allowed to remove capital from the firm without the IDA’s consent. Despite his knowledge of these warnings, the Member made advancements to himself of capital from his firm and willfully failed to file the required monthly reports. The Member was subject to disciplinary action by the IDA based on this course of conduct.

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On 25 March 2010, CFA Institute imposed a Three-Month Suspension of membership and the right to use the CFA designation on a Charterholder Member. It was found that the Member violated Standards I – Fundamental Responsibilities, III(E) – Responsibilities of Supervisors, IV(A.3) – Independence and Objectivity, and IV(B.7) – Disclosure of Conflicts to Clients and Prospects of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

As director of research at his firm, the Member allowed a research analyst to participate in the preparation and approval of a research report without disclosing that the analyst had interviewed and received an offer of employment with the covered company. After learning of the analyst’s offer from the covered company, the Member failed to take proper actions to learn either the extent of the analyst’s outside contacts with the covered company or the details of the offer of employment. The Member nonetheless allowed the analyst to continue covering the company without restrictions or disclosures of any conflict of interest. The Member previously consented to findings that his actions violated the National Association of Securities Dealers’ Rules of Conduct relating to the disclosure of analyst conflicts of interest.

Censure

Effective 2 March 2017, CFA Institute imposed a Censure on a charterholder member. CFA Institute found that the charterholder member violated the Code of Ethics and Standard of Professional Conduct I(A) - Knowledge of the Law (2014).

The United States Congress created the Immigrant Investor Program, also known as the “EB-5” Program, to stimulate the economy through job creation and capital investment by foreign investors. EB-5 investments are typically offered as limited partnership interests. From January 2010 through May 2014, the charterholder member received $40,000, which constituted his portion of the commissions received from one EB-5 Investment Offerer. These commissions were paid pursuant to a written Agency Agreement between the charterholder member’s company, Nautilus Global Capital, LLC, and the EB-5 Investment Offerer.

On 7 December 2015, the U.S. Securities and Exchange Commission issued a Cease-and-Desist Order against the charterholder member. The SEC determined that the charterholder member had violated Section 15(a)(1) of the Exchange Act, which makes it unlawful for anyone not associated with a registered broker or dealer to make use of the mails or any instrumentality of interstate commerce “to effect any transactions in, or to induce or attempt to induce the purchase or sale of, any security” unless such party is registered in accordance with the Act. The charterholder member was not associated with a registered broker or dealer. As a result, the SEC required that the charterholder member: cease and desist from committing or causing any violations of Section 15(a)(1); and pay disgorgement of $40,000, prejudgment interest of $1,590, and a civil money penalty of $25,000.

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Effective 14 April 2016, CFA Institute imposed a Censure on a lapsed charterholder member. Professional Conduct found that lapsed charterholder member violated the CFA Institute Code of Ethics and Standard of Professional Conduct V(A) – Diligence and Reasonable Basis (2005).

Specifically, while working as a registered representative of TDS Securities in New York City in 2009, the lapsed charterholder member shared with approximately 30 individuals and clients a rumor he heard of a possible acquisition of one Canadian oil and gas company by another. The rumor turned out to be false. 

Professional Conduct found that the lapsed charterholder member negligently failed to know and follow TDS’s internal procedures designed to prevent insider trading, which required that he disclose the rumor to the firm’s compliance department. He also negligently failed to exercise diligence and have an adequate and reasonable basis, supported by appropriate investigation, to determine whether the rumor was based on material, non-public information improperly obtained from the company.

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Effective 5 January 2016, CFA Institute imposed a Censure on a Charterholder Member. A Hearing Panel found that the member violated the Code of Ethics and Standard of Professional Conduct  IV(A) – Duties to Employers - Loyalty (2010 and 2014); Article 3.5(a) of the organization’s Bylaws (as amended and restated 18 July 2013); and Rule 1.4 of the Rules Procedure for Professional Conduct (effective 1 May 2014).

The member made the decision to leave his employer at least five weeks before actually submitting his resignation. In the days and weeks preceding his resignation, the member spoke with many of his employer’s clients and informed them that he was leaving to join another firm -- even though he had not yet submitted his resignation. When asked by clients why he was going to leave, the member sometimes made disparaging comments about his then-employer. After submitting his resignation, the member immediately relayed to his new firm the names of the former employer’s clients who had previously indicated to him that they might be interested in receiving additional information about the firm he was joining. Following his resignation, the member began soliciting his former employer’s clients to transfer their accounts to his new firm. The hearing panel found that the member acted unethically and violated the duty of loyalty he owed to his employer prior to submitting his resignation.

Bylaws Article 3.5(a) and Rule of Procedure 1.4 state that members must produce all documents and information that the Professional Conduct Program requests, and otherwise “cooperate fully” in all investigations. The hearing panel found that the member entered into a Settlement Agreement with his former employer that he knew included a ‘non-cooperation clause’ that precluded anyone connected with the case, or their representatives, from cooperating in the Professional Conduct Program’s investigation of his conduct, when he clearly should have required that the final Agreement include a “carve out” provision that permitted the parties and their representatives to cooperate with the inquiry, as the Professional Conduct Program had previously requested. By disregarding the Professional Conduct Program’s request and agreeing to add a ‘non-cooperation clause’ in the Settlement Agreement, the member delayed the Professional Conduct Program’s investigation, in violation of Article 3.5(a) and Rule of Procedure 1.4.

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Effective 13 April 2015, CFA Institute imposed a Censure on a Charterholder Member.  A Hearing Panel found that the member violated Standards I(A) – Knowledge of the Law and VI(A) – Disclosure of Conflicts of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

Specifically, while working as a sell-side research analyst, the member and his wife engaged in personal trading in preferred stock and bonds issued by the same company for which he issued research reports regarding the common stock, during the prohibited period beginning 30 days before, and ending five days after, the publication of the reports, in violation of NASD Conduct Rule 2711(g)(2) and FINRA Rule 2010. The analyst also failed to disclose his and his wife’s financial interests in the related securities of two companies that were the subjects of his research reports, in violation of NASD Conduct Rule 2711(h)(1)(A) and FINRA Rule 2010.

The Hearing Panel found that the member failed to understand and comply with the rules pertaining to his work as a research analyst, and failed to disclose the actual or potential conflicts of interest posed by his and his wife’s ownership of the related securities of companies that were the subject of his research reports about the common stock.

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On 19 February 2015, a Review Panel affirmed CFA Institute’s imposition of a Censure upon a Charterholder Member. CFA Institute found that the member violated Standards I(D) – Misconduct and IV(A) - Loyalty of the CFA Institute Code of Ethics and Standards of Professional Conduct (Ninth Edition 2005).  

 While working as a research analyst and operations manager in 2010 at a capital management firm, the member violated his duty to his employer by working with two co-workers to set up a competing investment business. He improperly contacted the firm’s clients and worked to set up a competing office during business hours while working at the firm.

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Effective 10 September 2014, CFA Institute imposed a Censure on a lapsed Regular Member. A Hearing Panel found that the lapsed Member violated Standards III(A) – Loyalty, Prudence, and Care (to Clients), III(E) – Preservation of Confidentiality, and IV(A) – Loyalty (to Employer) of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

Specifically, upon her termination in June 2006, the lapsed Member removed a large volume of confidential client information belonging to her employer, including names and contact information, account types, and personal investment histories and performance results. She then used that confidential and proprietary client information to conduct a competing business.

By misappropriating the clients’ confidential information without their prior knowledge and permission, the lapsed Member failed to exercise prudent judgment and placed her own personal, financial, and business interests ahead of the clients’ privacy interests. The lapsed Member’s unauthorized removal and use of her employer’s confidential and proprietary client information also violated:  the terms of an agreement she had signed to become a co-owner of the firm; and her duty of loyalty, which included the obligation to follow her employer’s policies and procedures, and keep the firm’s client information strictly confidential.

Finally, the lapsed Member did not disclose in her annual 2008 and 2009 Professional Conduct Statements that she was the subject of allegations of misappropriation of client information in a Counterclaim filed by her former employer in connection with her lawsuit for wrongful termination. Although not cited as a violation of the Code and Standards, the lapsed Member’s failures to report significantly delayed the commencement of the Professional Conduct Program’s investigation and were taken into consideration in determining an appropriate sanction.

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On 8 July 2013, a Hearing Panel imposed a Censure on a Charterholder Member. The panel found that the Member violated Standards I(A) – Knowledge of the Law and III(D) – Performance Presentation of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

In January 2005, the Member began working as a senior equity analyst for a financial services firm based in Cape Town. His job was to analyze potential investments and strategies, and present them to the portfolio manager of a fund, who was then free to accept or reject the Member’s recommendations.

In August 2009, the Member resigned from the firm and started his own investment fund. As the portfolio manager at his fund, the Member researched and selected all of the investments for his new fund. As part of his marketing effort to attract prospective clients to his fund, the Member used written presentations that described his investment strategies and market trends.

The panel, however, found that several of the Member’s written presentations to prospective clients of the fund contained unsubstantiated and potentially misleading claims regarding his past performance results while an analyst at his former firm. In some of his materials, the Member did not identify or explain that the past performance results he provided were from when he was working as an analyst at his former firm, a previous employer, and not at his current fund. The Member’s presentations also failed to offer or provide prospective clients of the fund with supporting information explaining how his performance results were calculated. In fact, he had no such information in his possession. As a result, the panel determined that a Censure was appropriate.

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On 25 June 2013, a Hearing Panel imposed a Censure on a Charterholder Member. The panel determined that the Member violated Standards I(A) – Knowledge of the Law, I(C) - Misrepresentation, I(D) - Misconduct, and V(C) – Record Retention of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The panel found that the Member wrote articles for three editions of his firm’s investment newsletter that included several lengthy and detailed passages he plagiarized from copyrighted articles in The Wall Street Journal, USA Today, Investopedia, and The Economist. In some instances, the Member changed the passages he copied to the “first person” perspective to further enhance the impression that the words and insights were his own. The newsletters were then distributed to hundreds of the firm’s clients, prospective clients, and employees, and appeared on his firm’s external website. The panel also found that the Member failed to retain the notes and materials he used in preparing his articles.

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On 12 April 2013, a Hearing Panel imposed a Censure on a Charterholder Member. The panel determined that the Member violated Standards I(A) - Knowledge of the Law, I(D) – Misconduct, III(A) -Loyalty, Prudence, and Care, and V(A) - Diligence and Reasonable Basis of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

Specifically, the panel found that the Member learned that an advisory client wanted to buy put options for the purpose of protecting the value of certain shares she owned as a result of the acquisition of a large, publicly traded company that her family had founded. The client’s son, who advised his mother on financial matters, told the Member that he had identified on the Internet a specific put options that he believed might serve this purpose. The Member then purchased the put options for her client’s non-managed sub-account without performing any due diligence or giving proper consideration to whether the options made sense and were consistent with the client’s stated purpose for buying them. Several months later, the Member again, without conducting any due diligence or considering whether the options made sense and were consistent with the client’s stated investment purpose, purchased more of the same put options for her client’s sub-account at essentially the same price, even though the market price of the underlying stock had declined significantly during the intervening period.

The in-the-money put options that the Member purchased were originally issued by the company whose shares the client wanted to protect, but they had been adjusted subsequently by the Chicago Board Options Exchange to reflect the terms of the acquisition. As a result, the adjusted options required the payment of so much cash on exercise that they were worthless and provided no protection to the client. The adjusted put options had a price of less than US$0.30 per share, when the intrinsic value of a put option at that strike price would have been more than US$8.00 per share. In an earlier arbitration proceeding, that panel found that the disparities of the option premiums should have been “immediately obvious” to an experienced financial advisor like the Member and should have put her on notice to review the options carefully. The arbitration panel thus concluded that the bank that employed the Member had failed to exercise reasonable care and awarded her client more than US$650,000 in actual damages and costs. Likewise, the CFA Institute Hearing Panel found that the Member engaged in conduct that reflected adversely on her professional reputation and competence, failed to act with reasonable care and in a prudent manner to avoid harm to her client, and failed to exercise diligence and thoroughness in twice buying the worthless put options

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On 14 January 2013, CFA Institute imposed a Censure on a Charterholder Member. It was found that the Member violated Standards I – Fundamental Responsibilities and III(E) – Responsibilities of Supervisors of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999). In addition, it was found that the Member violated the CFA Institute Bylaws and Code of Ethics by filing incorrect Professional Conduct Statements.

Specifically, the CFA Institute found that FINRA suspended the Member from acting as a principal for 15 business days and fined him US$20,000 for failing to supervise outside business activities and failing to observe fair and equitable principles of trade. FINRA found that the Member failed to supervise two registered representatives who were distributing unregistered shares in a non-exempt private securities offering, in violation of Section 5 of the Securities Act. FINRA found the two employees received compensation for distributing the shares, and relatives of the Member had an interest in the issuer. In mitigation, it was found that the Member had not personally profited from the registered representatives’ misconduct; the registered representatives represented to the Member that the shares were exempt from registration; and, although he was exposed to red flags about the transactions, the Member did not know that the resale of the shares required the filing of a registration statement.

Although the Member was sanctioned by NASD in 2000 and investigated by FINRA in 2005 through 2006, he reported on applicable Professional Conduct Statements that there were no investigations related to his professional conduct. In mitigation, it was noted that the Member reported the latter investigation once FINRA settled the matter with him.

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On 7 September 2011, a Hearing Panel imposed a Censure on a Charterholder Member. The panel determined that the Member violated Standards I – Fundamental Responsibilities, IV(B.2) – Portfolio Investment Recommendations and Actions, and IV(B.7) – Disclosure of Conflicts to Clients and Prospects (1999) and Standards I(A) – Knowledge of the Law, V(B) – Communication with Clients and Prospective Clients, and VI(A) – Disclosure of Conflicts (2005) of the CFA Institute Code of Ethics and Standards of Professional Conduct.

Starting in late 2001 and continuing through early 2007, the Member co-authored a quarterly investment newsletter. The newsletter was distributed to approximately 2,000 individuals, including clients and potential clients of his firm. Each edition of the newsletter included a “Stock Pick” section that provided a brief analysis of a featured company, a recommendation to buy, and a specific price target.

In June 2009, FINRA accepted a Letter of Acceptance, Waiver, and Consent submitted by the Member to settle the self-regulatory organization’s allegations of misconduct. While neither admitting nor denying the allegations, the Member consented to the entry of findings that he violated Rules 2110, 2711(c)(2), 2711(g)(2), 2711(h)(1)(A), 2711(h)(7), and 2210(d)(1)(A), and 501(A) of SEC Regulation Analyst Certification.

Specifically, FINRA found that (1) the Member improperly shared a draft research report he had prepared with the CFO of a covered company, (2) he failed to disclose that he personally owned a small number of shares in three of the companies he featured as stock picks, (3) on at least four occasions, the Member purchased stocks for his own account, or accounts he controlled, within 30 days prior to when he featured the companies as stock picks, (4) he failed to disclose the valuation methods he used in determining price targets for eight of his stock picks, and (5) in seven stock picks he failed to include the required analyst certifications confirming that the reports accurately reflected his personal opinions of the subject securities and that he had not received any compensation that might have improperly influenced his opinions. As a result of the foregoing misconduct, FINRA suspended the Member for 30 days in all capacities and fined him US$10,000.

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On 18 May 2010, CFA Institute imposed a Public Censure on a Charterholder Member. It was found that the Member violated Standard I(D) – Professionalism of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

Specifically, the Member sent an e-mail message to 11 former clients that contained statements concerning his previous employer that he knew, or would reasonably have known, were false and potentially misleading. Pursuant to Standard I(D), the Member was required to act in an ethical manner and not to engage in any professional conduct that involved dishonesty or misrepresentation, or that reflected adversely on his honesty, trustworthiness, or professional competence.

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On 26 March 2010, CFA Institute imposed a Public Censure on a Charterholder Member, pursuant to a Stipulation and Consent for Disciplinary Action. It was found that the Member violated Standards I – Fundamental Responsibilities and IV(A.2) – Research Reports of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member issued a research report that was not balanced, contained a target price for which there was no reasonable basis, and failed to disclose material risks.

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On 23 March 2010, a Hearing Panel imposed a Public Censure on a Charterholder Member. It was found that the Member violated Standards I(A) – Knowledge of the Law and I(D) – Misconduct of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005)

It was found that the Member made misrepresentations to CFA Institute on his expense reimbursement vouchers. First, he claimed miles driven from his home to Charlottesville, Virginia, for examination grading when, in fact, he flew by private airplane. Second, he claimed tolls, although only airport parking charges were paid. Third, he claimed, in violation of the CFA Institute Rental Vehicle Policy, for a rental vehicle for personal use during examination grading.

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On 26 February 2010, a Hearing Panel imposed a Public Censure and a One-Year Suspension of the right to use the CFA Designation on a Charterholder Member. The panel found that the Member violated Standards I – Fundamental Responsibilities and III(E) – Responsibilities of Supervisors of the CFA Institute Code of Ethics and Standards of Professional Conduct (1996)

The panel found that the Member violated Standard I by failing to maintain knowledge of and comply with the applicable securities laws and rules, and Standard III (E) by knowingly participating or assisting in violations by his firm. The panel also found that the Member violated Standard III(E) by not properly supervising so as to ensure that his firm executed trades in compliance with the securities laws and rules. The panel decided not to publish the Member’s name in the Notice of Disciplinary Action.

The Member was responsible for understanding and ensuring his investment company’s compliance with the securities laws and rules relating to the execution of cross-trades between firm clients, and between clients and certain affiliated entities of the investment company. The Member, however, admittedly did not know the applicable laws and rules even though he had been provided with written procedures for properly executing such trades. Instead, the Member allowed his firm’s traders, over whom he had authority and supervisory responsibility, to execute cross-trades using an improper methodology that resulted in excessive charges and improper expenses to clients.

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On 15 December 2009, a Hearing Panel imposed a Public Censure and a One-Year Suspension of the right to use the CFA Designation on a Charterholder Member. The panel found that the Member violated Standards I – Fundamental Responsibilities and IV(B1) – Fiduciary Duties of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999). This result was appealed and subsequently affirmed by a Review Panel on 10 March 2010.

In May 2008, the SEC found that the Member, while acting as a portfolio manager, negligently caused his firm to violate several antifraud provisions of federal securities laws, specifically Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, Section 206(2) of the Investment Advisers Act of 1940, and Section 34(b) of the Investment Company Act of 1940.

The SEC found that the Member granted permission to two broker/dealers to allow them to trade (on behalf of clients) in a fund, and it was the presence of approved market-timing trading that caused prospectuses for the fund to be materially false and misleading. The SEC concluded that the Member acted negligently because (1) he made no attempt to determine how frequently the first broker/dealer who approached him intended to trade in the fund and whether that trading would be disruptive; (2) he failed to read the prospectuses for his own fund, despite the fact that he was regularly sent copies; (3) he waited almost a year after the first broker/dealer began trading the fund before asking what his firm’s market-timing policy was; and (4) he failed to consider the possible costs of the market timers’ trading to the Fund’s longer-term shareholders.

As a result, the SEC ordered that the Member “cease and desist” from committing or causing any future violations – the only sanction available under those specific antifraud provisions. In imposing this sanction against the Member, the SEC noted that “[a]ny violation – even a negligent violation – of the antifraud provisions is serious.”

In its decision, the Hearing Panel found that the Member violated Standard I by failing to comply with the applicable federal securities laws, and by knowingly participating or assisting in violations of the securities laws. The panel also found that the Member breached his fiduciary duties to the fund’s shareholders and was in violation of Standard IV(B.1).

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On 27 May 2009, CFA Institute imposed a Public Censure on a Candidate in the CFA Program. It was found that the Candidate violated Standards I – Fundamental Responsibilities and III(E) – Responsibilities of Supervisors of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

CFA Institute found that the Candidate allowed a mutual fund salesperson over whom he had supervisory responsibility to continue maintaining accounts and making trades, despite the fact that the employee’s license had been suspended in that jurisdiction for failing to satisfy continuing education requirements.

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On 27 May 2009, a Hearing Panel imposed a Public Censure on a Postponed Candidate in the CFA Program. The panel found that the Candidate violated the Article 12, Section 12.3(f) – Falsification of Information on CFA Program Enrollment Applications of the CFA Institute Bylaws (2001). The panel also voided the Candidate’s Level II examination results.

The Candidate failed to properly disclose a suspension imposed by a regulator on his 2002 CFA Program enrollment application. The suspension, had it been properly disclosed on the application, would have precluded the Candidate’s enrollment in the 2002 exam, as well as continued advancement in the CFA Program.

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On 5 May 2009, CFA Institute imposed a Public Censure on a Candidate in the CFA Program. It was found that the Candidate violated Standard I – Fundamental Responsibilities of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Candidate was employed as director of research and a research analyst at his firm. Between April and July 2005, the Candidate sold personally owned stocks of companies for which he also issued research reports. The Candidate’s sales were found by the NASD to be inconsistent with the recommendations made in his reports. Further, the NASD found that, between April 2004 and August 2005, the Candidate and his firm had issued research reports without including required charts and disclosures or directing readers where to obtain the information.

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On 24 February 2009, a Hearing Panel imposed a Public Censure on a Charterholder Member, pursuant to a Stipulation and Consent to Disciplinary Action. It was found that the Member violated Standard I – Fundamental Responsibilities of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

CFA Institute found that the Member violated Standard I(A) by engaging in a series of seven circular trades in which there was no change in beneficial ownership for the sole purpose of preserving a client’s short position. In doing so, the Member violated an industry regulation pertaining to market integrity. CFA Institute agreed that the Member had no manipulative or deceptive intent.

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On 19 February 2009, a Hearing Panel imposed a Public Censure on a Charterholder Member. It was found that the Member violated Standards I – Fundamental Responsibilities and IV(A.3) – Independence and Objectivity of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

Between 1999 and 2002, the Member, as a partner in his firm, participated in the preparation and review of independent audit reports that were based on accounting statements and financial reports that had also been prepared by his firm. The Member then allowed these audits to be used as part of the client company’s filings with the SEC for those years with knowledge that his firm also had prepared the underlying documents on which the independent audit reports were based. In doing so, the Member violated the SEC’s rules mandating auditor independence and the Generally Accepted Auditing Standards in the United States.

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On 8 January 2008, a Hearing Panel imposed a Public Censure on a Postponed Candidate in the CFA Program. The panel found that the Candidate violated Standards I(A)–Knowledge of the Law and I(D)–Misconduct of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The panel, after consideration of the evidence and testimony, found that the Candidate violated the copyright of CFA Institute by selling photocopied CFA Program curriculum materials on the internet. Pursuant to the Code of Ethics, Standard I(A), and Standard I(D), the Candidate was required to act in an ethical manner, to understand and comply with all applicable laws, rules, and regulations, and was not to engage in any conduct that reflected adversely on her professional reputation, integrity, or competence.

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On 17 September 2007, a Hearing Panel convened imposed a Public Censure on a Charterholder Member. The panel found that the Member violated Standard VII(C) - Fiduciary Duties (1992) and Standard IV(B.1) – Fiduciary Duties (1996) of the CFA Institute Code of Ethics and Standards of Professional Conduct.

The panel found the Member’s involvement in a soft dollar arrangement created a conflict between the Member’s interests and those of his clients. Specifically, payments were made as part of a soft dollar arrangement to business associates for past services that were not for the direct benefit of the Member’s clients.

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On 22 May 2000, AIMR imposed a Public Censure on a Member, pursuant to a Stipulation and Offer of Consent for Disciplinary Action. AIMR found that the Member violated the Standards I – Fundamental Responsibilities and III(C) – Disclosure of Conflicts to Employer of the AIMR Code of Ethics and Standards of Professional Conduct (1996).

In September 1997, while employed by Prudential Securities, the Member opened a joint account at another organization. When the account was opened, the Member did not disclose his employment with Prudential to the other organization. The Member also failed to disclose the existence of the outside account to his employer. The Member’s failure to disclose the outside account to his employer was a violation of Prudential’s policies and NYSE Rule 407(b).

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On 22 May 2000, AIMR imposed a Public Censure on a Candidate in the CFA Program, pursuant to a Stipulation and Offer of Consent for Disciplinary Action. AIMR found that the Candidate violated Standards III(B) – Duty to Employer, III(D) – Disclosure of Additional Compensation Arrangements, and IV(A.3) – Independence and Objectivity of the AIMR Code of Ethics and Standards of Professional Conduct (1996).

In December 1999, the Candidate received a US$5,000 monetary gift from a client. The Candidate retained the gift, but did not disclose the gift to his employer. The Candidate’s conduct was contrary to his employer’s policies regarding the disclosure of client gifts and contrary to AIMR’s Standards of Professional Conduct. In January 2000, the client disclosed the gift to the Candidate’s employer, and the gift was returned to the client.

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On 12 January 2000, AIMR imposed a Public Censure on a Charterholder Member, pursuant to a Stipulation and Offer of Consent for Disciplinary Action. AIMR found that the Member violated Standard III(B) – Duty to Employer of the AIMR Code of Ethics and Standards of Professional Conduct (1996).

As part of his employment, the Member signed an employment agreement with his employer in which he agreed to not remove any employer records upon termination of employment. The Member also agreed that during his employment, and for 45 days following the termination of his employment, he would not notify clients that he was anticipating or had accepted employment with another broker-dealer or investment banker, or solicit or aid in the solicitation of the transfer of accounts.

In 1995, the Member resigned. Prior to his resignation, the Member informed clients that he had received and was considering an offer from another employer. The Member copied client files, including written investment policies and client objectives. The Member also contacted clients of his former firm after his resignation, soliciting the transfer of their accounts to his new employer.

The Member’s conduct violated his employment agreement and AIMR’s Standards of Professional Conduct.

Private Reprimand

On 19 February 2015, CFA Institute imposed a Private Reprimand on a Covered Person. A Review Panel found that the covered person violated the Code of Ethics and Standard I(D) - Misconduct of the CFA Institute Code of Ethics and Standard of Professional Conduct (2010).

Specifically, CFA Institute found that the covered person surreptitiously accessed a colleague’s client contact information in Microsoft Outlook and changed the phone numbers and email addresses for clients to prevent them from being contacted directly.

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On 27 December 2013, a Hearing Panel imposed a Private Reprimand on a Charterholder Member. The Panel found that the Member violated Standards I(A) – Knowledge of the Law, III(E) – Preservation of Confidentiality, and IV(A) – Loyalty of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The Hearing Panel found that the Member violated his duty of loyalty to his employer by divulging the firm’s confidential and proprietary client information during his employment at the firm, for purposes other than to benefit his employer. The Member also failed to protect and preserve the confidentiality of personal and financial information entrusted to his firm by its clients, by copying and sharing that private information with a future employer without the clients’ prior knowledge or consent.

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On 7 February 2013, CFA Institute imposed a Private Reprimand on a Charterholder Member. It was found that the Member violated Standards I(A) – Knowledge of the Law and IV(A) – Loyalty of the CFA Institute Code of Ethi

cs and Standards of Professional Conduct (2005).

Specifically, CFA Institute found that the Member solicited two of his former employer’s employees prior to his resignation on behalf of a company the Member had formed. The Member used his former employer’s confidential information to assist him in estimating how much one of the employees would make if the employee went to the Member’s new company.

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On 4 February 2013, CFA Institute imposed a Private Reprimand on a Charterholder Member. It was found that the Member violated Standards I(A) – Knowledge of the Law and IV(A) – Loyalty of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

Specifically, the Member, a portfolio manager for an SEC-registered investment advisory firm, resigned from his employer and contrary to the terms of his Non-Competition and Confidentiality Agreement, provided his new employer with his client list from his previous firm. The Member’s new employer then used the client list to solicit clients from his previous firm, also in violation of the terms of the charterholder member’s Non-Competition and Confidentiality Agreement.

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On 14 January, CFA Institute imposed a Private Reprimand on a Charterholder Member. It was found that the Member violated Standards I(A) – Knowledge of the Law, IV(A) – Loyalty, V(B) – Communication with Clients and Prospective Clients, V(C) – Record Retention, and VI(A) – Disclosure of Conflicts of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

Specifically, CFA Institute found that the Member recommended that his clients invest in a company whose shares were thinly traded. When the company failed to perform as the Member had expected, he decided to act as counterparty and repurchase his clients’ shares at their purchase price. The Member, however, lacked written discretionary authority to trade in his clients’ accounts and failed to inform them of his plan to repurchase their shares. In addition, although he initially sought his firm’s advice about the proposed transaction, he purchased the shares despite his firm’s admonishment to wait until legal and compliance personnel had considered the issue. Upon learning of the Member’s purchase, his firm conducted an investigation into his conduct and fined him C$5,000, based in part upon the fact that no clients were injured and that the Member had cooperated fully in the investigation and did not profit from the transaction.

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On 14 January 2013, CFA Institute imposed a Private Reprimand on a Charterholder Member. It was found that the Member violated Standards I(A) – Knowledge of the Law, I(D) – Misconduct, and IV(A) – Loyalty of the CFA Institute Code of Ethics and Standards of Professional Conduct (2010).

In 2011, after an adversarial administrative hearing in his local jurisdiction, a governmental authority found that the Member made multiple unsolicited and unwanted sexual comments towards female coworkers, leered at his female coworkers, and made inappropriate comments about the appearance of his female coworkers, all in violation of both the policies of his employer and of local law. The Member received a formal notice of adverse action from his employer and was censured by his employer’s Board of Directors for his misconduct.

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On 19 December 2012, CFA Institute imposed a Private Reprimand on a Charterholder Member. It was found that the Member violated Standards I(A) – Knowledge of the Law and I(C) – Misrepresentation of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

While still a Level II Candidate and a newly hired analyst at a large investment bank, the Member was terminated from employment for plagiarizing portions of a report prepared in an internal training exercise.

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On 7 December 2012, CFA Institute imposed a Private Reprimand on a Charterholder Member. It was found that the Member violated Standards I(A) – Knowledge of the Law, III(E) – Preservation of Confidentiality, and IV(A) – Loyalty of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

CFA Institute found that the Member copied down email addresses of clients and business associates from his employer’s records for use in contacting clients on behalf of his new competing business. The Member also used the credentials he obtained through his employer to log in to vendor websites to obtain client account numbers. The Member retained this information after his employment ended without the permission of the clients or employer. He then used this information to send out approximately 180 letters to his former clients notifying them of his new firm.

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On 4 December 2012, CFA Institute imposed a Private Reprimand on a Covered Person. It was found that the Covered Person violated Standards I(A) – Knowledge of the Law, I(D) – Misconduct, and VII(A) – Conduct as Members and Candidates in the CFA Program of the CFA Institute Code of Ethics and Standards of Professional Conduct (2010).

The Covered Person filed Uniform Applications for Securities Industry Registration or Transfer with FINRA that failed to disclose a misdemeanor conviction he received for stealing a motor vehicle while he was an undergraduate college student. The Covered Person agreed to pay FINRA a fine of US$5,000 and serve a 30-day suspension from association with any FINRA member as a result of his submission of incorrect registrations. The Covered Person also failed to disclose his criminal conviction and FINRA’s investigation of his conduct to CFA Institute as required.

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On 3 December 2012, CFA Institute imposed a Private Reprimand on a Charterholder Member. It was found that the Member violated Standards I(A) – Knowledge of the Law and I(D) – Misconduct of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

Specifically, CFA Institute found that the Member violated Rule 105 of Regulation M of the Securities Exchange Act when he shorted three stocks during the Rule’s five-day restricted period before the pricing of secondary offerings and then purchased the same stocks in the secondary offerings. In mitigation, it was found that the Member’s violation was unintentional in that the Rule had recently been amended and he mistakenly followed the older version (which allowed such purchases if a trader first covered the shorts before buying the stocks in the secondary offering); when he discovered the mistake, the Member immediately reported it to his Compliance Department; and the Member fully cooperated with the SEC’s investigation of the matter and disgorged his profits from the trades.

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On 23 October 2012, CFA Institute imposed a Private Reprimand on a Charterholder Member. It was found that the Member violated Standards I(A) – Knowledge of the Law and IV(C) – Responsibilities of Supervisors of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The Member, the compliance officer of a hedge fund, consented to pay a monetary fine for failing to adequately supervise another employee of the fund who arranged for a trading firm to make undisclosed payments to the hedge fund to secure a more favorable fee for executing certain types of trades. The regulator found that the hedge fund’s disclosure that it could engage in unspecified outside business was inadequate under the circumstances. The hedge fund’s compliance procedures required that all financially related business relationships be fully disclosed to its investors. The Member knew that the hedge fund had a financially related business relationship with the trading firm, but he failed to supervise and make sure that it was fully disclosed to investors.

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On 15 December 2011, a Hearing Panel imposed a Private Reprimand on a Charterholder Member. The panel found that the Member violated Standards I(A) – Knowledge of the Law and I(D) – Misconduct of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The panel found that the Member, while a Level III candidate in the CFA Program, violated certain rules of a self-regulatory organization applicable to research analysts. Specifically, he executed three trades within the prohibited period beginning 30 days prior to his publication of several research reports on the subject company. His trades also were inconsistent with the recommendation expressed in his most recent research report.

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On 21 September 2011, CFA Institute imposed a Private Reprimand on a Charterholder Member. It was found that the Member violated Standard III(B) – Duty to Employer of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

In 2005, while arranging to move to a new firm, the Member participated in removing copies of his employer’s client lists, new account forms, account statements, and other documents and information to be used to solicit the employer’s customers to move their business to the new firm. In mitigation, the Member promptly returned the documents when asked to do so.

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On 21 September 2011, CFA Institute imposed a Private Reprimand on a Charterholder Member. It was found that the Member violated the CFA Institute Bylaws Articles 2.17 and 11.3, and Standards I(A) – Knowledge of the Law, I(C) – Misrepresentation, I(D) – Misconduct, and VII(A) – Conduct as Members and Candidates in the CFA Program of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

Between November 2007 and October 2010, the Member was a party in a lawsuit in which his professional conduct was at issue. But, in his 2008 and 2009 Professional Conduct Statements, the Member denied that he was a subject or defendant in any litigation in which his professional conduct was at issue. The omissions occurred because the Member improperly delegated his reporting obligations to a subordinate, and there was no evidence that the Member’s actions were taken intentionally to avoid or put off inquiry by the Professional Conduct Program.

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On 21 September 2011, CFA Institute imposed a Private Reprimand on a Charterholder Member. It was found that the Member violated Standards IV(A) – Loyalty and V(A) – Diligence and Reasonable Basis of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

In August 2008, the Member forwarded to several acquaintances in the investment community an e-mail description, prepared by an unidentified attendee, of a public company’s presentation to financial analysts. The Member noted in the cover line forwarding the report that there were rumors that this company was “committing accounting fraud” and could “go bust.” This e-mail was written and disseminated in such a way that it appeared to be a research opinion, unsupported by reasonable analysis, of the Member’s employer. The public company’s stock price declined. In mitigation, no nonpublic information was involved, and there was no indication that the Member intended to make a stock recommendation or manipulate the market when he imprudently forwarded the e-mail.

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On 21 September 2011, CFA Institute imposed a Private Reprimand on a Charterholder Member. It was found that the Member violated Standards I(A) – Knowledge of the Law, I(C) – Misrepresentation, IV(A) – Loyalty, and IV(B) – Additional Compensation Arrangements of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

In 2007 and 2008, the Member had an unauthorized oral agreement with an estate-planning specialist associated with his firm, pursuant to which the Member would refer clients to the specialist without actually talking to the clients before making the referral. This arrangement caused insurance companies to be informed, incorrectly, that the Member was servicing those clients, and allowed the Member to receive additional compensation from the specialist for making the referrals. The Member did not secure written authorization from his firm for the arrangement, which violated technical aspects of firm policy. The Member’s truthfulness and cooperation with the PCP were exemplary during inquiries, and there was no evidence of any actual damage to clients, the employer, or the insurance companies.

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On 23 June 2011, CFA Institute imposed a Private Reprimand on a Charterholder Member. It was found that the Member violated Standards I – Fundamental Responsibilities, II(B) – Professional Misconduct, III(E)—Responsibilities of Supervisors, and IV(A.1) – Reasonable Basis and Representations of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

In 2006, the Member was issued a Notice of Proposed Disciplinary Action by a securities regulator based on his role in preparing an application for listing a company on a stock exchange. The application, which was rejected by the exchange after five submissions, evidenced a lack of due diligence during the course of preparation. In September 2007, the regulator fined the Member, finding that he (1) failed to ensure that representations in the application were accurate, (2) failed to ensure that proper diligence was conducted, and (3) failed to properly supervise individuals working on the application. The findings of the regulator were upheld on appeal, although the fine was reduced.

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On 26 May 2011, CFA Institute imposed a Private Reprimand on a Charterholder Member. It was found that the Member violated Standards I(A) – Knowledge of the Law and IV(A) – Loyalty of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

In 2009, after resigning from his employer but before his last day of employment, the Member emailed information from his employer’s computer to his personal email address, including credit models, equity research models, client lists, training materials, and organizational charts. Upon discovering the Member’s email during a review, the Member’s employer contacted him and informed him that some of the information may be considered proprietary and confidential and requested him to delete all such information. The Member complied with this request and confirmed to his employer’s satisfaction that he had done so.

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On 19 May 2011, CFA Institute imposed a Private Reprimand on a Charterholder Member. It was found that the Member violated Standards I(A) – Knowledge of the Law and I(D) – Misconduct of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The Member intentionally altered an email message and then provided a copy to his firm’s compliance department in an attempt to prove that a personal trade fit within a “hardship exception” to the firm’s restriction on personal trading within certain periods. The Member admitted knowing that falsifying the email was improper and violated CFA Institute Standards of Professional Conduct. After conducting an internal investigation, the Member’s firm confirmed that the email at issue had never been sent and they terminated the Member. In determining an appropriate sanction, CFA Institute took into consideration the fact that the Member’s violation was an isolated occurrence involving a very small number of shares and that he self-disclosed the matter to CFA Institute, accepted full responsibility for his misconduct, and cooperated completely with the Professional Conduct Program’s investigation.

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On 22 November 2010, CFA Institute imposed a Private Reprimand on a Charterholder Member. It was found that the Member violated Standards IV(A) – Loyalty and VII(A) – Conduct of Members and Candidates in the CFA Program of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005), and CFA Institute Bylaws 2.17 and 11.3 relating to the Professional Conduct Statement.

In April 2006, the Member’s former employer sued him for soliciting the employer’s clients for his own business venture before and after he resigned his employment. The court granted an injunction against some of his activities, and the case was later settled. Believing that the lawsuit was a contractual matter that did not concern his professional conduct, the Member failed to report the lawsuit to CFA Institute on his 2006, 2007, and 2008 Professional Conduct Statements. The Professional Conduct Program discovered the lawsuit while researching another matter. The Member should have reported the matter in his annual Professional Conduct Statements because he was named as a defendant in a civil action in which his professional conduct (loyalty to employer) was at issue.

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On 28 July 2010, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standards I(A) – Knowledge of the Law and I(C) – Misrepresentation of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

These findings were predicated on the Member’s use of the title Doctor of Philosophy earned from an unaccredited university in apparent violation of the criminal code in the state where the Member’s firm does business. More specifically, by 2002 the Member had been informed that the institution, which had granted his PhD, had defrauded its students and awarded invalid degrees. Nevertheless, the Member continued to list his PhD on his business card and in documents that were made available to investors and potential investors in hard copy and on the internet as late as early 2009. Upon learning that his doctorate might not be recognized under state law, the member ceased using the designation and removed all references to his PhD from his firm’s website and literature.

Under Standard I(C), “Members and Candidates must not knowingly make any misrepresentation relating to investment analysis, recommendations, actions, or other professional activities.” The Standard defines a misrepresentation as “any untrue statement or omission of a fact or any statement that is otherwise false or misleading.” In the context of this standard, “knowingly” means that a member “knew or should have known that a misrepresentation was being made.” The Member knew or reasonably should have known that his representations that he had earned a doctorate degree were false and misleading. Because these representations were made on the firm’s website and in its publications, they clearly related to his professional activities and thus were in violation of Standard I(C).

The Member also violated Standard I(A) which requires Members and Candidates to “understand and comply with all applicable laws, rules and regulations...of any government, regulatory organization, licensing agency, or professional association governing their professional activities.” The criminal code where the Member does business makes it a misdemeanor to claim orally or in writing to have an academic degree unless that degree is from an accredited institution. The Member represented in writing that he held a PhD but the degree was from an unaccredited institution. Although the Member has not been charged with this violation, his public representations that he had earned a PhD appear to constitute a violation of the criminal code in the state where he does business. As a result, he violated Standard I(A).

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On 24 June 2010, CFA Institute imposed a Private Censure on a Charterholder Member for conduct while he was a Candidate in the CFA Program. It was found that as a Candidate he violated Standards I(A) – Knowledge of the Law, I(C) – Misrepresentation, and I(D) – Misconduct of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The Candidate negligently prepared and submitted a tax form that ostensibly had been completed and signed by his client, when that was not the case. Under Standard I(A), the candidate had a duty to know and follow all of the laws, rules, and regulations (including the CFA Institute Code and Standards) governing his actions. The Designated Officer determined that the Candidate violated Standard I(C), which prohibits misrepresentations, and Standard I(D), which prohibits dishonesty.

The Candidate’s client placed an order to purchase stock in a company in which the client was a director. The trade had to be completed quickly because the period in which the client could purchase shares was limited by company policy. The client promptly signed and returned a tax form that was required by the Candidate’s firm, but the form was later found to be incomplete.

Despite his best efforts, the Candidate could not reach the client, who was traveling. In an attempt to resolve the documentation problem, and believing that he was acting in the best interests of his client, the Candidate completed a new tax form, signed his absent client’s name to it, and then presented it to his firm for processing. The Candidate made no attempt to replicate the client’s signature, and when questioned by a manager, he immediately explained what he had done. The tax form in question was not required by the government, but was required to be on file according to the Candidate’s firm’s internal policies and procedures.

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On 17 May 2010, CFA Institute imposed a Private Censure on a former Charterholder Member. It was found that the Member violated Standards I(B) – Independence and Objectivity and VI(A) – Disclosure of Conflicts of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

Specifically, it was found that the Member broke certain rules pertaining to the timing of his purchases of securities issued by companies that he also followed in his capacity as a research analyst.

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On 9 March 2010, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standards I – Knowledge of the Law and III(E) – Responsibility of Supervisors of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member failed to ensure that proper formal internal accounting controls consistent with GAAP were in place while the Member was employed as the Chief Financial Officer of a publicly traded company. Further, the Member failed to properly police company employees who worked in the accounting department and who were discovered to have circumvented the company’s internal accounting controls and falsified the company’s books and records.

These fraudulent acts on the part of the subordinate employees likely led to an overstatement of revenue, which may have caused the company to make numerous false and misleading statements about its financial condition in annual and periodic reports filed with the SEC and in other public statements, including earnings releases. It was also determined that the Member may have failed to engage in sufficient due diligence in connection with two barter arrangements that lacked economic substance.

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On 1 December 2009, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standards I(A) – Knowledge of the Law and IV(A) – Loyalty of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The Member purposely took and used a contact list from her previous employer to contact clients on behalf of her new employer without the express written permission of the previous employer.

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On 1 December 2009, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standards I(A) – Knowledge of the Law and IV(C) – Responsibilities of Supervisors of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The Member allowed an employee to work from home, knowingly violating conditions imposed by an agreement with a self-regulatory organization. Further, upon discovery of the violation by SRO staff, the Member attempted to have the conditions changed, but made no attempt to bring his firm into compliance with the conditions in the meantime.

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On 11 August 2009, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard IV(B.7) – Disclosure of Conflicts to Clients and Prospects of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member published research reports concerning an issuer without disclosing that the Member owned substantial holdings in the issuer. The Member also published research reports about an issuer’s direct competitor without disclosing that the Member owned substantial holdings in the issuer.

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On 25 June 2009, a Hearing Panel imposed a Private Censure on a Candidate in the CFA Program. The panel found that the Candidate violated Standard IV(A) – Loyalty of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The Candidate, who works in a check clearing department, processed three checks for payment without obtaining the necessary confirmations from the customer, pursuant to his employer’s policies and procedures. Pursuant to Standard IV(A), the Candidate was required to comply with his employer’s policies and procedures.

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On 22 June 2009, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standards I – Fundamental Responsibilities, II(B) – Professional Misconduct, and III(E) – Responsibilities of Supervisors of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member provided marketing materials to a subordinate for an investment fund that was not authorized by his regulator. The subordinate, who was not licensed by the regulator, provided the materials to a client who was not qualified to judge unauthorized investment products. The Member’s conduct violated the CFA Institute Standards as the Member was required to maintain knowledge of and comply with all applicable laws, rules, and regulations governing his professional activities and not commit any act that reflects adversely on their professional reputation or competence. Additionally, the Member was obligated to exercise reasonable supervision over those subject to his authority to prevent violations of applicable laws, rules, and regulations.

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On 17 June 2009, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standards I – Fundamental Responsibilities and II(B) – Professional Misconduct of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member, in setting up an advisory account with a custodian, was informed by the custodian’s staff that the new clients had not signed all of the documentation required by the custodian. To remedy the deficiency, the Member took photocopied client signatures from other documents and affixed the copies to the incomplete form, then submitted the form via fax to the custodian.

In reaching the decision to impose a Private Censure in this matter, the Designated Officer found that there were unusual and mitigating circumstances involved.

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On 26 May 2009, CFA Institute imposed a Private Censure on a Candidate in the CFA program. It was found that the Candidate violated Article 3.5(a) of the CFA Institute Bylaws and Standard I(A) – Knowledge of the Law of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

In 2007 and 2008, the Candidate was the subject of an investigation by a regulatory agency, which concluded with an order being entered against the Candidate in his capacity as officer of a small company. The Candidate failed to disclose his involvement in the investigation and entry of the order to CFA Institute, either in his annual Professional Conduct Statements or by separate disclosure.

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On 29 April 2009, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard I(C) – Misrepresentation of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

In preparation of a research report, the Member used materials that had been taken negligently from a report that the Member had previously received from another institution. The Member did not seek prior permission of that institution to use the materials and did not give satisfactory accreditation of the source of the information.

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On 27 March 2009, CFA Institute imposed a Private Censure on a Postponed Candidate in the CFA Program. It was found that the Candidate violated Standards I(A) – Knowledge of the Law and I(C) – Misrepresentation of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The Candidate, in authoring a newspaper article, used verbatim or close to verbatim several portions of the CFA Institute Standards of Professional Conduct, a copyrighted document, without acknowledging the source of the material.

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On 10 February 2009, a Hearing Panel imposed a Private Censure on a Charterholder Member. The panel found that the Member violated Standard III(E) – Responsibilities of Supervisors of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member had supervisory responsibility over an individual who acted as the trader at his firm, but the Member failed to have adequate supervisory measures in place to prevent that individual from engaging in improper trading.

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On 12 February 2009, CFA Institute imposed a Private Censure on two Charterholder Members. It was found that the Members violated Standard I – Knowledge of the Law of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

Upon investigation of the Members’ firm, the U.S. Securities and Exchange Commission (SEC) determined that, between 2002 and 2004, the firm’s client records did not meet the requirement imposed by U.S. securities law and that the Members were responsible in part for this violation. The SEC further found that the Members’ firm had not met its disclosure obligations to its advisory clients.

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On 16 January 2009, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard IV(A) – Loyalty of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The Member personally purchased shares of a security within a period of time in which he should have concluded there was a reasonable probability that a client account would transact in the security. The Member’s purchase of this security was in violation of his employer’s Code of Ethics. Pursuant to Standard IV(A), the Member was required to comply with any prohibitions on activities imposed by his employer.

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On 16 January 2009, CFA Institute imposed a Private Censure on a Candidate in the CFA Program. It was found that the Candidate violated Standard IV(A) – Loyalty of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

On two separate occasions, the Candidate conducted personal securities transactions without meeting his employer’s preclearance requirements. Pursuant to Standard IV(A), the Candidate was required to comply with any prohibitions on activities imposed by his employer.

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On 16 January 2009, CFA Institute imposed the sanction of Private Censure upon a Charterholder Member. It was found that the Member violated Standard IV(A) – Loyalty of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

On two separate occasions, the Member conducted securities transactions without preclearance from his employer. The Member’s transactions were in violation of his employer’s personal trading policies. Pursuant to Standard IV(A), the Member was required to comply with any prohibitions on activities imposed by his employer.

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On 16 January 2009, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard IV(A)—Loyalty of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The Member conducted several securities transactions without preclearance as required by his employer’s policies. Pursuant to Standard IV(A), the Member was required to comply with any prohibitions on activities imposed by his employer.

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On 2 December 2008, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standards I – Fundamental Responsibilities and III(E) – Responsibilities of Supervisors of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

In 2004, the Member’s firm was found to have policies and procedures which did not comply with applicable laws and/or regulations. The Member was responsible for ensuring that his firm’s policies and procedures were in compliance with those laws and/or regulations. Pursuant to Standard I(A), the Member was required to maintain knowledge of and comply with all applicable laws, rules, and regulations of any government, governmental agency, regulatory organization, licensing agency, or professional association governing the Member’s professional activities. Pursuant to Standard III(E), the Member was required to exercise reasonable supervision over those within the Member’s supervision or authority to prevent any violation of applicable statutes, regulations, or provisions of the Code and Standards.

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On 1 August 2008, CFA Institute imposed a Private Censure on a Member. It was found that the Member violated Standards I(D) – Misconduct and IV(A) – Loyalty of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The Member directed her assistant to modify a letter of authorization, and the letter of authorization was submitted without the client’s original signature. The Member’s conduct violated her employer’s policy prohibiting employees from falsifying a client’s signature.

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On 1 August 2008 CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard I(C) – Misrepresentation of the CFA Institute Code of Ethics and Standards of Professional Conduct (2005).

The Member approved the re-authoring of two articles written by a former employee which were then posted on the website of the member’s employer.

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On 1 August 2008, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard III(B) – Duty to Employer of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

After leaving the employ of his former employer, the Member used a printout of his former employer’s client names and addresses to solicit business for his new employer. The Member also violated an agreement with his former employer that he would not solicit former clients for a period of 12 months after the termination of his employment. Pursuant to Standard III(B), Members have a duty to act in the employer’s best interests until their resignations become effective. In preparing for new employment, Members must not misappropriate clients and/or client lists belonging to their former employer.

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On 30 June 2008, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standards I – Fundamental Responsibilities, IV(A.1) – Reasonable Basis and Representations, and IV(B.2) – Portfolio Investment Recommendations and Actions of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member violated the aforementioned standards by recommending transactions to a client that failed to suit the client’s financial situation. The Member was investigated by an administrative body who determined that his conduct was incompatible with just and equitable principles of trade.

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On 10 March 2008, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard II(B) – Professional Misconduct of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member posted negative comments on the internet regarding a competitor of securities that the Member had invested in, both personally and on behalf of clients. Additionally, the Member failed to disclose the litigation the Member was involved in on his Professional Conduct Statement.

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On 1 February 2008, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard II(C) – Prohibition against Plagiarism of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member (either directly or indirectly) posted plagiarized information on his firm’s website without acknowledging or identifying the source of authorship. Once provided with notice that the website contained plagiarized information, the Member failed to promptly remove the plagiarized text from the website.

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On 14 January 2008, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standards I – Fundamental Responsibilities, II(B) – Professional Misconduct and IV(B.1) – Fiduciary Duties of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member came to know that some client portfolios had improperly elevated exposure levels in violation of the clients’ investment agreements, and breached his duties by failing to ensure timely disclosure of the material facts to the clients and failing to dissociate from the violations committed by others in a timely fashion.

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On 14 January 2008, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standards I – Fundamental Responsibilities, II(B) – Professional Misconduct, and V – Relationships with and Responsibilities to Clients and Prospects of the of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member disseminated an electronic communication concerning securities that caused misleading information to reach the marketplace. The Member disseminated the electronic communication without verifying the information contained in the electronic communication which negatively impacted the market. In so doing, the Member failed to comply with applicable laws and rules governing his conduct, engaged in conduct involving misrepresentation, and failed to make reasonable and diligent efforts to avoid dissemination of communications containing material misrepresentations.

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On 27 November 2007, a Hearing Panel imposed a Private Censure on a Charterholder Member. The panel found that the Member violated Standard III(C) – Disclosure of Conflicts to Employer of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The panel found that on two occasions, the Member purchased personal securities in contravention of his employer’s preclearance policy. Pursuant to Standard III(C), the Member was required to comply with any prohibitions on activities imposed by his employer.

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On 25 September 2007, CFA Institute imposed a Private Censure on a Member. It was found that the Member violated Standard III(B) – Duty to Employer of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member entered into an employment agreement wherein on terminating employment, he agreed to not take a position that was similar or with a direct competitor for one year. The Member tendered his resignation and immediately accepted a position with a competitor of his former employer, in contravention of the agreement with his former employer.

Pursuant to Standard III(B), the Member had a duty to act in his employers’ best interests and not engage in any activities that would conflict with this duty. Additionally, under the Code of Ethics, the Member was required to act in an ethical and professional manner when dealing with his employer.

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On 24 September 2007, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard III(C) – Disclosure of Conflicts to Employer of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member forwarded issues of sales commentary in contravention of his employer’s communications guidelines and on two occasions the Member executed personal trades without pre-approval in contravention of his employer’s personal trading policy. Pursuant to Standard III(C), the Member was required to comply with any prohibitions on activities imposed by his employer.

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On 28 August 2007, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard III(C) – Disclosure of Conflicts to Employer of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member failed to disclose to his employer two personal securities trading accounts over which he held power of attorney. Additionally, the Member failed to obtain preclearance for personal transactions made in one of the accounts as required by his employer’s personal trading policy. Pursuant to Standard III(C), the Member was required to disclose all matters that might reasonably be expected to interfere with his duty to his employer or ability to make unbiased and objective recommendations, and to comply with any prohibitions on activities imposed by his employer.

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On 17 July 2007, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard III(C) – Disclosure of Conflicts to Employer of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member engaged in personal trading in securities that were the subject of research reports/recommendations. The trading was in contravention of his employer’s personal trading policy; however, the Member’s employer had received duplicate account statements and confirmations on all of the Member’s personal accounts. Pursuant to Standard III(C), the Member was required to comply with any prohibitions on activities imposed by his employer.

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On 17 July 2007, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard II(B) – Professional Misconduct of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

Between 2003 and June 2005, the Member allowed an associate to complete some company-mandated, computer-based training courses on his behalf. The Member’s conduct violated Standard II(B) which required him to refrain from conduct that reflected adversely on his honesty, trustworthiness, and professional competence.

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On 17 July 2007, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard III(C) – Disclosure of Conflicts to Employer of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

On two occasions, the Member sold personally held securities on the same day he sold the same securities on behalf of a client, in contravention of his employer’s personal trading policy. Pursuant to Standard III(C), the Member was required to comply with any prohibitions on activities imposed by his employer.

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On 8 June 2007, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard III(B) – Duty to Employer of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member entered into an independent business without notifying and obtaining the consent of his employer. Pursuant to Standard III(B) the Member was not to undertake any independent practice that could result in compensation or other benefit in competition with his employer unless he obtained written consent from both his employer and the persons or entities for which he undertook independent practice.

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On 31 May 2007, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard II(B) – Professional Misconduct of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member obtained his supervisor’s authorization on a form; however, on being advised he needed a signature from his manager, the Member signed the form on behalf of the manager without the manager’s consent. Pursuant to Standard II(B), Members must not engage in any professional conduct involving dishonesty, fraud, deceit, or misrepresentation.

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On 31 May 2007, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard I – Fundamental Responsibilities of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member entered the Pacific Exchange’s trading floor without a valid badge in contravention of Pacific Exchange Rules. Pursuant to Standard I, Members must maintain knowledge of and comply with all applicable laws, rules, and regulations of regulatory organizations governing their professional activities.

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On 25 May 2007, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard I – Fundamental Responsibilities of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member paid a payment on a variable life insurance policy of a customer without the customer’s consent which violated NASD Conduct Rule 2110. Pursuant to Standard I, the Member was required to maintain knowledge of and comply with all applicable laws, rules, and regulations of any government, governmental agency, regulatory organization, licensing agency, or professional association governing his/her professional activities.

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On 25 May 2007, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard III(C) – Disclosure of Conflicts to Employer of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member received clearance to sell securities in her personal account. However, the Member executed the sale after the time period authorized. As the authorization was no longer valid at the time of the sale, the transactions were in violation of her employer’s compliance policies. Pursuant to Standard III(C), the Member was required to comply with any prohibitions on activities imposed by her employer.

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On 23 May 2007, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standards I – Fundamental Responsibilities and IV(B.7) – Disclosure of Conflicts to Clients and Prospects of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member, with respect to research reports the Member’s firm prepared on behalf of certain companies, failed to fully and properly disclose the receipt of compensation for the reports from issuers pursuant to Section 17(b) of the Securities Exchange Act. However, the Member did not have fraudulent intent regarding the insufficient general disclosures that were used. Pursuant to Standard I, Member must maintain knowledge of the laws and regulations of the relevant governing bodies of Member’s professional activities. Pursuant to Standard IV (B.7), Member must disclose to clients and prospects all matters which may affect the Member’s firm’s ability to remain unbiased and objective in its recommendations.

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On 23 May 2007, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard III(C) – Disclosure of Conflicts to Employer of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member engaged in personal trading in securities that were the subject of research reports/recommendations in contravention of his employer’s personal trading policy. Pursuant to Standard III(C), the Member was required to comply with any prohibitions on activities imposed by his employer.

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On 23 May 2007, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard III(D) – Disclosure of Additional Compensation Arrangements of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member accepted additional employment with an investment management firm without disclosing it to his employer, for whom he sold investment management software. Pursuant to Standard III(D), the Member was required to notify his employer of all forms of compensation he received for his services that are in addition to those he received from his employer.

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On 2 June 2006, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard III(C) – Disclosure of Conflicts to Employer of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

On three occasions in 2003, the Member bought and sold securities in contravention to his employer’s preclearance policy. For two of the transactions, the Member identified and self-reported the trading violation to his employer. Pursuant to Standard III(C), the Member was required to comply with any prohibitions on activities imposed by his employer.

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On 23 July 2004, a Hearing Panel imposed a Private Censure on a Charterholder Member. The panel found that the Member violated Standard II(C) – Prohibition against Plagiarism of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999). The Member requested a Review Panel, which affirmed the sanction.

The panel found that in an e-mail newsletter provided to clients and internal firm contacts, the Member used verbatim several portions of an already published article. The Member did not acknowledge or identify the name of the author, publisher, or source of the material in the newsletter.

Pursuant to Standard II(C) – Prohibition against Plagiarism, members shall not copy or use, in substantially the same form as the original, material prepared by another without acknowledging and identifying the name of the author, publisher, or source of such material. Members may use, without acknowledgement, factual information published by recognized financial and statistical reporting services or similar sources.

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On 10 May 2004, CFA Institute imposed a Private Censure on a Member. It was found that the Member violated Standards II(B) – Professional Misconduct and III(C) – Disclosure of Conflicts to Employer of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

In 2001, the Member submitted an annual holdings report to her employer wherein she inaccurately represented her personal holdings. Additionally, in July 2002, the Member made a personal investment in a stock which exceeded the number of shares precleared for purchase by her employer. The Code of Ethics of the Member’s employer required the Member to provide an accurate and complete holdings report on an annual basis and to obtain approval to trade in personal securities. Trading could not exceed the precleared number of shares. Standard III(C) – Disclosure of Conflicts to Employer requires members to obey internal directives of their employer that restrict actions and investment freedom to avoid conflicts and ensure that client interests come first.

In 2003, prior to completing her annual Professional Conduct Statement (PCS), the Member contacted the CFA Institute’s Professional Conduct Program to determine whether the matter involving her employer required disclosure. Although the Member was advised disclosure was required, the Member did not make disclosure on the PCS and certified the PCS response was truthful, accurate, and complete. Standard II(B) – Professional Misconduct states that members shall not engage in any misrepresentation that reflects adversely on their honesty or trustworthiness.

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On 26 March 2004, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard II(B) – Professional Misconduct of the CFA Institute Code of Ethics and Standards of Professional Conduct (1999).

The Member was responsible for managing an equity small capitalization fund. In this capacity, the Member was responsible for instructing trades that created or maintained an uptick, or prevented or rectified a downtick, in the closing price of a security on 10 occasions. This activity was contrary to the public interest and constituted a violation of the CFA Institute Code of Ethics and Standard II(B).

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On 26 March 2004, CFA Institute imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standards I – Fundamental Responsibilities, IV(B.1) – Fiduciary Duties, and IV(B.7) – Disclosure of Conflicts to Clients and Prospects of the CFA Institute Code of Ethics and Standards of Professional Conduct (1996).

The Member acts as an investment adviser and operates his own business. The Member failed to register with the appropriate regulatory authority on a timely basis and improperly charged a performance fee from the time he should have registered. Pursuant to Standard I, the Member was obligated to maintain knowledge of and comply with all applicable laws, rules and regulations of any regulatory organization governing his professional, financial, or business activities. The Member should have been aware of his registration obligations and how his client base affected his charging of commissions.

Additionally, the Member maintained a soft dollar arrangement with a broker, but the Member’s disclosure of the arrangement was not adequate. By not providing full disclosure of the arrangement, the Member breached his obligations to his clients and prospective clients. Additionally, a portion of the soft dollars were used for expenses that were not for the express benefit of the client.

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On 27 June 2002, AIMR imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard I – Fundamental Responsibilities of the AIMR Code of Ethics and Standards of Professional Conduct (1996).

The Member is president and owner of an investment adviser. For the first 17 years of its operations, the investment adviser had less than US$100 million in assets under management. Beginning the end of 1993, the investment adviser’s assets under management exceeded US$100 million, which made the adviser subject to Section 13(f) reporting requirements. From February 1994 through August 2000, the adviser failed to file a Form 13F disclosing its Section 13(f) holdings. The purpose of Form 13F is to collect and disseminate information about the holdings of institutional investment managers who exercise discretionary control over certain accounts.

Under the AIMR Standards of Professional Conduct, members are required to maintain knowledge of and comply with all applicable laws, rules and regulations of any government, governmental agency, regulatory organization, licensing agency, or professional association governing the members’ professional activities.

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On 9 October 2001, AIMR imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard I – Fundamental Responsibilities of the AIMR Code of Ethics and Standards of Professional Conduct (1996).

On three occasions, the Member executed trades for an account of a customer when there was reason to believe that the intended purpose of the action was to establish an artificial price or high closing price of a security. The Member’s conduct violated the General Bylaws of his regulator and Standard I of AIMR’s Standards of Professional Conduct.

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On 13 April 2001, AIMR imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard V(B) – Performance Presentation of the AIMR Code of Ethics and Standards of Professional Conduct (1996).

The Member was chairman and founding principal of an investment firm. The investment firm issued a quarterly report of performance of several funds managed which claimed compliance with AIMR-PPS Standards. The quarterly report was sent to institutional clients, prospects, and pension consultants. The performance presented in the quarterly report did not meet all presentation and disclosure requirements and did not use the appropriate disclosure statement to state compliance with the AIMR-PPS Standards. Firms must meet all composite, calculation, presentation, and disclosure requirements of the AIMR-PPS if claiming compliance with the Standards. Failure to meet all requirements of the AIMR-PPS while claiming compliance is a violation of Standard V(B) of the AIMR Standards of Professional Conduct.

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On 11 April 2001, AIMR imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard I – Fundamental Responsibilities of the AIMR Code of Ethics and Standards of Professional Conduct (1999).

The Member executed a series of orders for clients that resulted in an error. The Member did not immediately report the error to his branch manager, which was a violation of his employer’s compliance procedures. Additionally, the Member allowed unallocated shares to remain overnight in his employer’s TAPS account, which was also a violation of his employer’s policies. Under AIMR’s Standards of Professional Conduct, members are required to adhere to all policies and procedures of their employer.

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On 8 March 2001, AIMR imposed a Private Censure on a Candidate in the CFA Program. It was found that the Candidate violated Standards I – Fundamental Responsibilities and III(B) – Duty to Employer of the AIMR Code of Ethics and Standards of Professional Conduct (1999).

Prior to his employment resignation, the Candidate compiled and copied, in electronic and paper format, documents belonging to his employer. The compilation and copying of the documents violated a Confidentiality Agreement signed with his employer and AIMR’s Standards of Professional Conduct. The Candidate has destroyed all paper and electronic copies of the information.

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On 8 March 2001, AIMR imposed a Private Censure on a Candidate in the CFA Program. It was found that the Candidate violated Standard II(A) – Use of Professional Designation of the AIMR Code of Ethics and Standards of Professional Conduct (1999).

The Candidate stated on her business card, “Affiliations: CFA”. The candidate was enrolled to take the Level II examination, but was not an AIMR member or CFA charterholder. The Candidate’s reference on the business card was an inappropriate use of the CFA designation and was misleading. The Candidate removed the reference from her business card.

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On 8 March 2001, AIMR imposed a Private Censure on a Candidate in the CFA Program. It was found that the Candidate violated Standard II(A) – Use of Professional Designation of the AIMR Code of Ethics and Standards of Professional Conduct (1999).

The Candidate used the CFA designation after her name on her resume. The candidate had passed all three levels of the CFA examination; however, she had not met all of the CFA Program requirements and had not been awarded the right to use the CFA designation. The Candidate immediately removed the designation from her resume and updated her profile held by several online recruiting agencies.

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On 8 March 2001, AIMR imposed a Private Censure on a Candidate in the CFA Program. It was found that the Candidate violated Standard II(A) – Use of Professional Designation of the AIMR Code of Ethics and Standards of Professional Conduct (1999).

The Candidate placed “C.F.A. Level I Candidate” after his name on his resume. Although the candidate was a Level I candidate in the CFA Program, placing the statement after his name implied it was a partial designation, which is contrary to Standard II(A). The Candidate immediately removed all inappropriate references from his resume.

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On 31 July 2000, AIMR imposed a Private Censure on a Candidate in the CFA Program. It was found that the Candidate violated Standard II(A) – Use of Professional Designation of the AIMR Code of Ethics and Standards of Professional Conduct (1999) .

The Candidate placed “CFA Level I Candidate” after his name on his resume. Although the candidate was a Level I candidate in the CFA Program, placing the statement after his name implied it was a designation, which is contrary to Standard II(A).

The Candidate immediately contacted all of the recruiters to whom he sent his resume and asked that it be replaced by a corrected version. The Candidate also requested that if a resume had been sent to any prospective employers, that it be replaced by a corrected version.

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On 17 May 2000, AIMR imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard I – Fundamental Responsibilities of the AIMR Code of Ethics and Standards of Professional Conduct (1999).

At all relevant times, the Member was executive vice president and principal of a broker/dealer. For a period of time, the Member acted as a principal of the broker/dealer without proper registration. The Member entered into a Letter of Acceptance, Waiver, and Consent with the NASD wherein he agreed to a censure, monetary fine, and ten-day suspension from acting as a principal. The Member also took and passed the required Series 24 examination.

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On 17 May 2000, AIMR imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard I – Fundamental Responsibilities of the AIMR Code of Ethics and Standards of Professional Conduct (1999).

The Member signed a Confidentiality Agreement with his employer wherein he agreed that within a period of two years following his termination, he would not request or advise any entity having business dealings with the company to withdraw, curtail, or cancel such business dealings (solicit former clients), or disclose to any entity or enterprise the names of clients of the company. In January 1999, the Member resigned his position and began employment with a competitor.

Shortly after commencing his new position, the Member’s new employer sent an announcement of his affiliation with the company. The announcement was sent to the new employer’s existing clients, approximately 500 financial institutions, and several friends and business associations identified by the Member, some of which were employed by clients of his former employer.

The Professional Conduct Program deemed the announcement sent to be a solicitation of the Member’s former clients. This conduct was in contravention to the Member’s Confidentiality Agreement, and a violation of Standard I(A).

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On 17 May 2000, AIMR imposed a Private Censure on a Candidate in the CFA Program. It was found that the Candidate violated Standard II(A) – Use of Professional Designation of the AIMR Code of Ethics and Standards of Professional Conduct (1996).

The Candidate was responsible for a CFA examination seminar sponsored by his employer. The Candidate was also responsible for an advertisement and brochure for the seminar wherein several of the featured seminar leaders, including the Candidate, were incorrectly identified as holding the credential “CFA I” or “CFA II.” The advertising campaign, distribution of the brochure, and seminar were subsequently canceled.

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On 17 May 2000, AIMR imposed a Private Censure on a Charterholder Member. It was found that the Member violated Standard I – Fundamental Responsibilities of the AIMR Code of Ethics and Standards of Professional Conduct (1996).

At all relevant times, the Member was Chairman of a broker/dealer doing business in Tennessee. After one of the Member’s clients moved to Ohio, the broker/dealer and the Member conducted business in that state from 1993 to January 1997 although not licensed as a securities dealer in Ohio. The Member entered into a Consent Agreement wherein Ohio ordered the broker/dealer to cease and desist from further violations and offer rescission of all transactions to the Ohio client.

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On 15 February 2000, AIMR imposed a Private Censure upon a Candidate in the CFA Program. It was found that the Candidate violated Standard I – Fundamental Responsibilities of the AIMR Code of Ethics and Standards of Professional Conduct (1999).

During August and September 1997, the Candidate’s company, acting through the Candidate as its president and CEO, violated NASD rules by failing to report several National Market System and Small Cap Market trades, failing to report several trades in a timely manner, and failing to comply with the 90-second rule and thereby failing to obtain best execution for customers in several agency trades.

The Candidate and the company entered into a Letter of Acceptance, Waiver and Consent with the NASD wherein the Candidate received a censure and US$5,000 fine, jointly and severally, with the company.
Resignation
From 1 January 2000 to present, 48 individuals have permanently resigned the CFA Charter, CFA Institute membership, and/or membership in any CFA Institute member societies in the course of a CFA Institute Professional Conduct Program inquiry or proceeding.

Note: All personal identifying information has been removed. To verify whether someone has a public disciplinary history with CFA Institute or its predecessor organization, contact pcstatus@cfainstitute.org. Certain historical descriptions may include references to CFA Institute's predecessor organization, the Association for Investment Management and Research (AIMR).

View information relating to exam-related violations and associated sanctions.