Defined Terms:
NI 14 101 section 1.1(3) – “securities regulatory authority”
NI 21-101 section 1.1 – “regulation services provider” and “self-regulatory entity”
UMIR section 1.1 – “employee”, “Market Regulator”, “marketplace”, “Subject Person” and “Requirements”
UMIR section 1.2(2) – “person”
Regulatory History:
Effective September 1, 2016, the applicable securities commissions approved amendments to Rule 10.5 which include the repeal of subsection (1) as it will be replaced by the consolidated rule 8209. See IIROC Notice 16-0122 - “Implementation of the consolidated IIROC Enforcement, Examination and Approval Rules” (June 9, 2016).
Disciplinary Proceedings: In the Matter of Global Securities Corporation (“Global”) (June 20, 2003) Decision 2003-004
Facts – Between May 1, 1997 and January 31, 1998, Global failed to diligently supervise its employees. The Committee found that the infractions alleged against Global were proven. A number of prior settlement agreements approved by either the Alberta Stock Exchange or the Vancouver Stock Exchange which had been place before a prior committee of the TSX Venture Exchange where not approved. The only issue before the current Committee was the appropriateness of the penalty to be levied against Global.
Held - The fact that Global suffered a loss of approximately $1.7 million as a result of the conduct of the investment advisors was not in the view of the Committee a factor of significant weight. In considering an appropriate penalty, the Committee looked at earlier unrelated settlement agreements.
Comparable UMIR Provision – Rule 10.5
Sanction - $135,000 fine and costs of $12,000; disgorgement of $4,330 in profits
Disciplinary Proceedings: In the Matter of Global Securities Corporation (“Global”), Robert Semple (“Semple”), Robert Tassone (“Tassone”) and Bruce McConnachie (“McConnachie”) (January 5, 2004) Decision 2004-001
Facts - Between November 1994 and August 1996, Semple and Tassone, while approved persons at Global failed to ensure that their recommendations were suitable for their clients and also provided advice respecting options trading without being qualified. McConnachie, who was the Branch Manager, failed to diligently supervise the trading that was carried out by Semple and Tassone in the clients’ accounts. Semple and Tassone repaid all of the commissions and losses, with interest and penalty, to the clients, and have been placed under strict supervision for a period of seven years. They have also paid significant legal fees in connection with the related civil action launched by the clients. Based on the above, they submit that they should not have to pay the additional fines levied by the Canadian Venture Exchange.
Held – In light of the adverse impact of being under strict supervision, damage to their reputations, and other factors which Tassone and Semple have suffered as a result of this matter, the Panel ordered that the sanctions imposed on both men be reduced. Due to unrelated personal matters affecting McConnachie, his fine was also reduced.
Comparable UMIR Provision – Rule 10.5
Sanction –
Semple - $15,000 fine and costs of $10,000; successful rewrite of the Conduct and Practices Handbook examination
Tassone - $10,000 fine and costs of $10,000; successful rewrite of the Conduct and Practices Handbook examination
McConnachie - $20,000 fine and costs of $5,000; successful rewrite of the Branch Manager’s Examination