Wall of Shame

From CFA Wiki
Jump to navigation Jump to search

The CFA institute takes ethics seriously. One of the reasons the CFA charter is respected globally is due to its strict focus on the weight on Ethics. Ethic questions account for 10% - 15% of the exam.

The wall of shame highlights those candidates and charterholders which have violated CFA Ethics in some shape or form. r/CFA community set a contest here. The CFA Institute releases the candidate's name, location and the nature of the violation. To many, the level of disclosure is rather comprehensive but highly entertaining to read.

Below are highlighted and most outrageous violations, voted by the r/CFA community.

Original source: https://cfainstitute.org/ethics-standards/conduct/current-sanctions

Enjoy!

Wall of Shame Winner 2020 - Wall Street Bets Shaalan

Effective 1 May 2019, CFA Institute imposed a Revocation of membership and of the right to use the CFA designation on Hussein Hamdy Shaalan, a lapsed charterholder member. A Hearing Panel found that Shaalan violated the CFA Institute Code of Ethics and Standards of Professional Conduct: I(C)- Misrepresentation; I(D) – Misconduct; III(A) – Duties to Clients (Loyalty, Prudence, and Care); III(C) – Suitability; and V(C) – Record Retention (2014). The Hearing Panel’s decision was subsequently reviewed and affirmed on appeal.

CFA Institute found that, starting in June 2016, an investor in the United Arab Emirates hired Shaalan to manage and invest money she had set aside for retirement. He met with the investor and told her about his investment strategies. Afterwards, Shaalan emailed her a document in which he downplayed the extreme risks associated with his strategies, putting the potential loss at 10% or less, while the potential profit was touted as 60% to 80% per annum.

Shaalan instructed the investor to open a brokerage account with Saxo Bank and to provide him with her username and password so that he could then gain access and trade in the account. In just 22 days, however, Shaalan had lost $195,000 of the $200,000 that the investor had deposited into the account.

Despite having lost almost all of the client’s money, Shaalan requested that she wire him additional money to invest. This time, he instructed her to send the funds directly to his personal bank account. As a result, the client wired Shaalan an additional $45,000 to invest. Shaalan told her that the $45,000 infusion would help him tune the mathematical and cognitive limits of his investment strategy and potentially recover the $195,000 lost.

Within several weeks of receiving the additional $45,000, Shaalan informed the client that he had invested and lost it all. The investor’s total loss of $240,000 represents approximately 80% of the money she had saved for retirement.

Machine Gun Gary

On 2 January 2020, CFA Institute imposed a Summary Suspension on Gary Mark Hill, (Midvale, Utah), a charterholder, terminating his membership and right to use the CFA designation. Because he did not request a review, the summary suspension automatically became a Revocation on 24 January 2020.

On 18 December 2019, Hill was found guilty in the U.S. District Court, District of Utah, of: unlawfully engaging in the business of importing or dealing machineguns; and illegal possession or transfer of machineguns. Because he was convicted of a crime “punishable” by more than one year in prison (regardless of the sentence received), he was subject to a summary suspension by CFA Institute.

Get in my Caravan Hanrahan

On 3 June 2016, CFA Institute imposed a Summary Suspension on Mark A. Hanrahan (US), 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, Hanrahan was arrested and charged with second-degree kidnapping, after ordering a person to get into his car at gunpoint. According to police, Hanrahan then demanded that the victim help him find cocaine. On 14 May 2015, Hanrahan 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

Even Jesus can't save Korchevsky

Institute imposed a Summary Suspension on Vitaly V. Korchevsky (Glen Mills, Pennsylvania), a lapsed charterholder member, terminating his membership and right to use the CFA designation. Because he did not request a review, the summary suspension automatically became a Revocation on 10 August 2018.

Korchevsky, a pastor and former hedge fund manager, was found guilty of several counts of securities fraud and conspiracy in federal district court in Brooklyn. He was alleged to have participated in an elaborate, international scheme designed to make millions of dollars by illegally trading on corporate press releases that were stolen by hackers shortly before the information was released to the public. The government said three newswire services were hacked and more than 150,000 press releases with confidential earnings information were stolen. Korchevsky and others then used the non-public information to trade securities and reap unlawful profits of over $100 million. Traders allegedly gave the hackers “shopping lists” or “wish lists” of the press releases they wanted to see in advance and on which they intended to trade. Ten people have been convicted or pleaded guilty for their roles in the scheme.

Champagne with a Pellegrino chaser

CFA Institute found that in May 2018, while employed as an analyst for Sidoti & Company, Pellegrino made a video of himself spraying champagne in the office, smashing a keyboard, removing an office nameplate from the wall and spraying it with champagne, and spraying champagne on papers and business cards. Pellegrino included written comments in the video about Sidoti & Company that were derogatory and unprofessional. In the video, which was posted on Instagram, Pellegrino made it clear that he intended to resign from his position at Sidoti & Company the following morning. However, before Pellegrino was able to resign, Sidoti & Company discovered the video and summarily terminated his employment.

Superior Returns Gauranteed Hnatiuk

On 7 August 2019, CFA Institute imposed a Summary Suspension on Michal Hnatiuk, (Wroclaw, Poland), a lapsed charterholder member, terminating his membership and right to use the CFA designation. Because he did not request a review, the summary suspension automatically became a Revocation on 29 August 2019.

Hnatiuk’s membership was suspended and subsequently revoked because he was found guilty of misleading a group of investors in the District Court in Wroclaw. Hnatiuk, along with three others, made promises to investors that they did not intend to keep and made misleading statements regarding progress on developing the business in order to obtain funding for an investment fund sales platform. As a result of his conviction, Hnatiuk was sentenced to 30 months in prison.

Sharing isn't Caring Chaudhary

Effective 2 April 2019, CFA Institute imposed a One-Year Suspension on Kanishk Chaudhary (Ghaziabad, India), a Level II candidate in the CFA Program. A Hearing Panel found that Chaudhary violated the CFA Institute Code of Ethics and Standards of Professional Conduct: I(C) – Misrepresentation; I(D) – Misconduct; and VII(A) – Conduct as Participants in CFA Institute Programs (2014).

In March 2018, Professional Conduct discovered that a group of CFA Program candidates had colluded to unlawfully resell and distribute study materials developed and owned by a CFA-approved exam preparation provider. In doing so, they infringed the prep provider’s intellectual property rights.

Chaudhary purchased CFA Level II study materials from the prep provider by subscribing to his website and paying INR13000 (approximately USD$195). He then contacted a chat group comprised of other Level II candidates and offered to sell them the study materials he had purchased. He then created a Google Drive online storage file and uploaded the study materials to be resold. Through the efforts of Chaudhary and other candidates in the chat group, the materials that he purchased were resold and/or distributed to approximately 21 other candidates.

On 28 April 2018, Chaudhary wrote in response to Professional Conduct’s Notice of Investigation, that he had not shared any study materials that he had purchased in exchange for any form of a fee. On 6 May 2018, he again stated that he had not resold study materials to other candidates, although he acknowledged that it had been discussed in chat groups. These statements were false and misleading.

Professional Conduct confronted Chaudhary with copies of some of his text messages to other chat group participants. He then apologized to Professional Conduct “for not communicating in a full fair manner” and for denying that he had resold the prep provider’s study materials. He explained that he was not selling the materials for a profit but was simply looking for a way to share their cost with other candidates.

Andrew the Hit Man Gordon

On 19 October 2015, CFA Institute imposed a Summary Suspension on Andrew S. Gordon (US), 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, Gordon 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, Gordon was sentenced to 3 to 5 years in prison, followed by 3 years of probation, and barred permanently by a regulator.

Gordon 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 Gordon’s intentions to the police. In addition, on 23 July 2015, Gordon was permanently barred by the Financial Industry Regulatory Authority (FINRA) as a result of his failure to produce requested information.