Chief Compliance Officer’s Failure to Supervise – Re Menzel
By way of settlement agreement, an Ultimate Designated Person, Chief Compliance Officer and a Supervisor agreed to a fine of $20,000, a six-week suspension from registration as a Supervisor, and costs in the amount of $1,500 for failing to supervise a registered representative between January 2010 and January 2012. The registered representative had been previously fined $36,000 and suspended from registration for 6 months.
The matter concerned the registered representative opening of accounts in connection to the purchase of shares in MobileBits Holdings Corp. (“MBIT”), an OTCC Stock. MBIT shares were not legally qualified for distribution in Ontario and Québec, where clients were located. The registered representative was found to have failed to exercise due diligence when opening these accounts.
The CCO/UDP admitted to numerous allegations of inadequate supervision of the registered representative. Specifically, these included failing to make sufficient inquiries into the registered representative’s actions in relation to purchases of MBIT shares by his clients, and failing to review documentation concerning MBIT that had been provided by him.
IIROC took issue with the fact that the registered representative was allowed to work from a home office, from the offices of another company, and out of the country. The CCO/UDP admitted to never having inspected the home or other office. In addition, he admitted that allowing the registered representative to use an email address that was unaffiliated with the dealer prevented adequate supervision.
The full text of the reasons can be accessed here.
Non-Disclosure of Off-Shore Accounts – Re Kotar
By way of a settlement agreement, a registered representative admitted to maintaining an off-shore brokerage account (in Panama) without the knowledge and consent of his employer. The BC Securities Commission learned of the account during an informal meeting in respect of an investigation it was conducting into “foreign accounts generally”. The Respondent was not registered at the time of the settlement agreement. He agreed to a $20,000 fine, $2,500 in costs and a rewrite of the CPH.