Effective 1 May 2019, CFA Institute imposed a Revocation of membership and of the right to use the CFA designation on Hussein Hamdy Shaalan (Montreal, Quebec), 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.