APER 4.1 Statement of Principle 1

In the opinion of the FSA, conduct of the type described in APER 4.1.3 E, APER 4.1.5 E, APER 4.1.6 E, APER 4.1.8 E, APER 4.1.10 E, APER 4.1.12 Eor APER 4.1.13 E does not comply with Statement of Principle 1 (APER 2.1.2 P).

Deliberately misleading (or attempting to mislead) by act or omission:

1. (1)

   a client; or

2. (2)

   his firm (or its auditors or appointed actuary); or

3. (3)

   the FSA;

falls within APER 4.1.2 E.

Behaviour of the type referred to in APER 4.1.3 E includes, but is not limited to, deliberately:

1. (1)

   falsifying documents;

2. (2)

   misleading a client about the risks of an investment;

3. (3)

   misleading a client about the charges or surrender penalties of investment products;

4. (4)

   misleading a client about the likely performance of investment products by providing inappropriate projections of future investment returns;

5. (5)

   misleading a client by informing him that products require only a single payment when that is not the case;

6. (6)

   mismarking the value of investments or trading positions;

7. (7)

   procuring the unjustified alteration of prices on illiquid or off-exchange contracts, or both;

8. (8)

   misleading others within the firm about the credit worthiness of a borrower;

9. (9)

   providing false or inaccurate documentation or information, including details of training, qualifications, past employment record or experience;

10. (10)

    providing false or inaccurate information to the firm (or to the firm's auditors or appointed actuary);

11. (11)

    providing false or inaccurate information to the FSA;

12. (12)

    destroying, or causing the destruction of, documents (including false documentation), or tapes or their contents, relevant to misleading (or attempting to mislead) a client, his firm, or the FSA;

13. (13)

    failing to disclose dealings where disclosure is required by the firm's personal account dealing rules;

14. (14)

    misleading others in the firm about the nature of risks being accepted.

Deliberately recommending an investment to a customer, or carrying out a discretionary transaction for a customer where the approved person knows that he is unable to justify its suitability for that customer, falls within APER 4.1.2 E.

Deliberately failing to inform, without reasonable cause:

1. (1)

   a customer; or

2. (2)

   his firm (or its auditors or appointed actuary); or

3. (3)

   the FSA;

of the fact that their understanding of a material issue is incorrect, despite being aware of their misunderstanding, falls within APER 4.1.2 E.

Behaviour of the type referred to in APER 4.1.6 E includes, but is not limited to, deliberately:

1. (1)

   failing to disclose the existence of falsified documents;

2. (2)

   failing to rectify mismarked positions immediately.

Deliberately preparing inaccurate or inappropriate records or returns in connection with a controlled function, falls within APER 4.1.2 E.

Behaviour of the type referred to in APER 4.1.8 E includes, but is not limited to, deliberately:

1. (1)

   preparing performance reports for transmission to customers which are inaccurate or inappropriate (for example, by relying on past performance without appropriate warnings);

2. (2)

   preparing inaccurate training records or inaccurate details of qualifications, past employment record or experience;

3. (3)

   preparing inaccurate trading confirmations, contract notes or other records of transactions or holdings of securities for a customer, whether or not the customer is aware of these inaccuracies or has requested such records.

Deliberately misusing the assets or confidential information of a client or of his firm falls within APER 4.1.2 E.

Behaviour of the type referred to in APER 4.1.10 E includes, but is not limited to, deliberately:

1. (1)

   front running client orders;

2. (2)

   carrying out unjustified trading on client accounts to generate a benefit (whether direct or indirect) to the approved person (that is, churning);

3. (3)

   misappropriating a client's assets, including wrongly transferring to personal accounts cash or securities belonging to clients;

4. (4)

   wrongly using one client's funds to settle margin calls or to cover trading losses on another client's account or on firm accounts;

5. (5)

   using a client's funds for purposes other than those for which they were provided;

6. (6)

   retaining a client's funds wrongly;

7. (7)

   pledging the assets of a client as security or margin in circumstances where the firm is not permitted to do so.

Deliberately designing transactions so as to disguise breaches of requirements and standards of the regulatory system falls within APER 4.1.2 E.

Deliberately failing to disclose the existence of a conflict of interest in connection with dealings with a client falls within APER 4.1.2 E.