Unofficial English Translation

Transcription

1 1 Unofficial English Translation CANADA PROVINCE OF QUÉBEC QUÉBEC DISTRICT COUNCIL DISTRICT OF MONTRÉAL HEARING PANEL INVESTMENT DEALERS ASSOCIATION OF CANADA BEFORE: Me Alain Arsenault Mr. Gilles Archambault Mr. Pierre Godbout IN THE MATTER OF THE SETTLEMENT AGREEMENT BETWEEN: The Investment Dealers Association of Canada; Petitioner -and- Gilbert Pelletier Respondent DECISION [1] After investigation, the Staff of the Investment Dealers Association of Canada (hereinafter, the IDA) has concluded that Gilbert Pelletier (hereinafter, the Respondent) committed a certain number of violations, defined as follows: Count 1 In 2000 and until February 2001, the Respondent, personally or through his team, recommended options strategies to several clients of his team and requested the opening of numerous options accounts for these clients, whereas neither he, nor his fellow team member, was approved to trade options, contrary to Association Regulation (b).

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3 3 Count 2 In 2000 and until February 2001, despite the stated objective of certain clients to reduce their risk, the Respondent recommended that these clients open options accounts, and requested that their accounts be approved for high-risk options strategies, contrary to Association regulation (p). Count 3 In 2000 and until February 2001, the Respondent requested or permitted options trades to be effected in the options accounts of many of his team s clients, whereas neither he, nor his fellow team member, was approved to trade options, contrary to Association Regulation (b). Count 4 From February 2001 to October 2001, although he was not approved to trade options, the Respondent himself executed or permitted his team to execute numerous options trades for several clients, without referring them to the options representative designated for this purpose by management in February 2001, thereby engaging in conduct unbecoming and contrary to Association Regulation (b) and By-law Count 5 Between 2000 and 2002, the Respondent himself, or through his team, recommended or executed trades for certain clients, without regard for their true investment objectives and risk tolerance, and failed to use due diligence to ensure that these trades were suitable for these clients, contrary to Association Regulation (q). Count 6 Without the knowledge and prior authorization of his firm s Designated Registered Options Principal, the Respondent prepared and submitted to a client incomplete monthly valuations of his holdings that were of a nature to be misleading as to the true value to of the assets in his accounts, thereby engaging in conduct unbecoming, contrary to Association By-law 29.1 and By-law 29.7 (1) (a).

4 4 [2] On August 30 and September 6, 2007, the Respondent and the IDA signed a Settlement Agreement, a copy of which is attached to this Decision and is deemed to be an integral part thereof; [3] By this Settlement Agreement, the Respondent acknowledges his guilt on all six (6) counts and agrees to the penalty of a permanent bar from approval in any registration category of the IDA; [4] Pursuant to this agreement, a settlement hearing was set for November 2, 2007 at the IDA, in accordance with Rule 15 Part B of the Association Rules of Practice and Procedure; [5] The Respondent was represented by Me Olivier Laurendeau, while the Association was represented by Me Sylvie Poirier; [6] At the start of the hearing, the Chair of the Hearing Panel informed the parties that he had, more than twenty years ago, required the professional services of the Respondent s counsel, Me Laurendeau; [7] The Chair of the Hearing Panel informed the Respondent s counsel that he had represented the IDA in the past, on various hearing panels, and that these mandates were completed more than three years ago; [8] The parties made no objection and uttered no requests in this regard and the hearing was able to continue; [9] The Respondent and the IDA asked the Hearing Panel to accept the Settlement Agreement concluded between them; [10] It is important to emphasize that, by virtue of Association By-Law 20.36, this Hearing Panel is authorized to accept or reject the agreement reached by the parties, but it may not modify its content; [11] To reject the Settlement Agreement concluded between the parties, the Hearing Panel must, after hearing the parties representations, consider it as falling outside a reasonable range 1 ; [12] The parties presented the particular facts of the matter which justify the Settlement Agreement concluded between them; 1 Re Union Securities Ltd. and John P. Thompson, IDA Bulletin No. 3531, April 18, 2006; Re Milewski, [1999] I.D.A.C.D. No. 17, July 28, 1999; Re Clark (1999) I.D.A.C.D. No. 40, November 29, 1999

5 5 [13] First, the counsel for the Petitioner presented the aggravating circumstances surrounding the Respondent s misconduct, and second, the mitigating circumstances; [14] The mitigating circumstances: - the Respondent s full cooperation in the IDA s investigations; - there was no systematic deception of the public; - the Respondent s admission of guilt on all six counts; - the frankness that the Respondent showed his employer relative to the facts in this matter; - the employer s lack of monitoring and supervision with regard to the Respondent; - the compensation paid to the injured clients by the Respondent s employer, National Bank Financial. [15] The aggravating circumstances: - the serious prejudice caused to the clients; - these trades required a great deal of planning; - it was not an isolated incident; - the length of time the operation went on; - the fact that, on a few occasions, reports were manufactured for a client, which contained false information on the value of the holdings, all without the employer s knowledge; - the fact that he overstepped his authority and usurped that of his superiors; - the lack of approval for options. [16] For his part, the counsel for the Respondent acknowledge the mitigating and aggravating circumstances mentioned by the counsel for the Petitioner, but emphasized other aspects which, in his opinion, are in the Respondent s favour; [17] More specifically, he emphasized: - the absence of any prior disciplinary history; - the loss of a fulfilling career; - the employer s acquiescence to some degree, and the lack of adequate supervision; - a major health problem, which left him totally disabled for a long period; - his client s desire to put an end to the whole matter by cooperating fully in the IDA s investigation and agreeing to a permanent bar on approval; - a huge financial loss for the Respondent and his family.

6 6 [18] The parties acknowledge that the facts in the matter are quite exceptional and that the penalty they are recommending takes the exceptional nature of the facts into account; [19] The Hearing Panel, in determining the penalties, must be guided by the following objectives: - protection of the investing public; - protection of the integrity of the IDA s process; - protection of the integrity of the securities markets; - prevention of a repetition of conduct of the type under consideration. [20] Consequently, this Hearing Panel must analyze the content of the Settlement Agreement concluded between the parties in light of these objectives, and must ensure that it satisfies each of these objectives; [21] After analysis and deliberation, the Hearing Panel has decided to accept the Settlement Agreement proposed by the parties; FOR THESE REASONS, THE HEARING PANEL: [22] ACCEPTS AND GIVES EFFECT to the Settlement Agreement dated August 30 and September 6, 2007 in respect of the Respondent Gilbert Pelletier. Montréal, November, 2007 Montréal, November, 2007 Me Alain Arsenault, Panel Member Gilles Archambault, Panel Member Montréal, November, 2007 Pierre Godbout, Panel Member