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Status: You are viewing the version of the handbook as on 2016-02-03.

APER 4.1 Statement of Principle 1

APER 4.1.1G

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APER 4.1.1AGRP

5The Statement of Principle 1 (see APER 2.1A.3 P) is in the following terms: "An approved person must act with integrity in carrying out his accountable functions."

APER 4.1.2ERP
APER 4.1.3ERP

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

  1. (1)

    a client; or

  2. (2)

    his firm (or its auditors or an actuary appointed by his firm under SUP 4 (Actuaries)1); or

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  3. (3)

    the FCA or the PRA;5

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falls within APER 4.1.2 E.

APER 4.1.4ERP

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 an actuary appointed by the firm under SUP 4 (Actuaries)1);

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  11. (11)

    providing false or inaccurate information to the FCA or the PRA;5

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  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 FCA or the PRA;5

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  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.

APER 4.1.5ERP

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.

APER 4.1.6ERP

Deliberately failing to inform, without reasonable cause:

  1. (1)

    a customer; or

  2. (2)

    his firm (or its auditors or an actuary appointed by his firm under SUP 4 (Actuaries)1); or

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  3. (3)

    the FCA or the PRA;5

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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.

APER 4.1.7ERP

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.

APER 4.1.8ERP

Deliberately preparing inaccurate or inappropriate records or returns in connection with an accountable function,5 falls within APER 4.1.2 E.

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APER 4.1.9ERP

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.

APER 4.1.10ERP

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

APER 4.1.11ERP

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.

APER 4.1.12ERP

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

APER 4.1.13ERP

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.

APER 4.1.14ERP

2Deliberately not paying due regard to the interests of a customer falls within APER 4.1.2 E.

APER 4.1.15ERP

2Deliberate acts, omissions or business practices that could be reasonably expected to cause consumer detriment fall within APER 4.1.2 E.