THE RULES OF THE INVESTMENT INDUSTRY REGULATORY ORGANIZATION OF CANADA NOTICE OF HEARING

Transcription

1 IN THE MATTER OF: THE RULES OF THE INVESTMENT INDUSTRY REGULATORY ORGANIZATION OF CANADA AND JEAN-LOUIS TRUDEAU NOTICE OF HEARING An initial appearance ("Initial Appearance") will be held before a hearing panel ("Hearing Panel") of the Investment Industry Regulatory Organization of Canada ("IIROC") pursuant to Sections 8203 and 8205 of the Consolidated Enforcement, Examination and Approval Rules of IIROC in this matter. The purpose of the Initial Appearance is to schedule a hearing ("Hearing"). The Initial Appearance will be held on: September 12, 2017, at 9:30 a.m. The Initial Appearance will be held at: IIROC Salle Carmen Crépin 5 Place Ville-Marie, Suite 1550 Montréal, Québec The Respondent must serve a Response ("Response") to this Notice of Hearing and to the Statement of Allegations dated July 7, 2017 ("Statement of Allegations") in accordance with Section 8415 within 30 days from the effective date of service of this Notice of Hearing. If the Respondent does not file a Response in accordance with Section 8415(1), the Initial Appearance may immediately be converted to a Hearing. If the Respondent files a Response in accordance with Section 8415(l), the Initial Appearance will immediately be followed by an initial prehearing conference. In preparation for the prehearing conference, the Respondent must serve and file a prehearing conference form in accordance with Section 8416(5).

2 The purpose of the Hearing will be to determine whether the Respondent has committed the contravention alleged by Staff of IIROC ("Staff"), contained in the Statement of Allegations. Pursuant to Section 8409, the Hearing will be conducted as a[n]: Oral Hearing Electronic Hearing Written Hearing The Initial Appearance, the Hearing and all related proceedings will be subject to the Rules of Practice and Procedure as set out in Section Pursuant to the Rules of Practice and Procedure, the Respondent is entitled to attend the Hearing and to be heard, to be represented by counsel or by an agent, to call, examine and cross-examine witnesses, and to make submissions to the Hearing Panel at the Hearing. If the Respondent fails to serve a Response, the Hearing Panel may, pursuant to Section 8415(4): (a) (b) proceed with the hearing as set out in this Notice of Hearing, without further notice to the Respondent; accept as proven the facts and contraventions alleged by Staff of IIROC in the Statement of Allegations; and (c) order penalties and costs against the Respondent pursuant to Sections 8209, 8210 and 8214 and/or Rule and of IIROC s Dealer Member Rules and/or Rule 10.5 of the Universal Market Integrity Rules. If the Hearing Panel concludes that the Respondent did commit any or all of the contraventions alleged by Staff in the Statement of Allegations, the Hearing Panel may, pursuant to Sections 8209 and 8210 and/or Rules and of IIROC s Dealer Member Rules and/or Rule 10.5 of the Universal Market Integrity Rules, impose one or more of the following penalties:

3 Where the Respondent is/was a Regulated Person who is not a Dealer Member: (a) a reprimand; (b) disgorgement of any amount obtained, including any loss avoided, directly or indirectly, as a result of the contravention; (c) a fine not exceeding the greater of: i. $1,000,000 per contravention; and ii. an amount equal to three times the profit made or loss avoided by the person, directly or indirectly, as a result of the contravention. (d) (e) (f) (g) (h) (i) (j) suspension of the person's approval or any right or privilege associated with such approval, including access to a Marketplace, for any period of time and on any terms and conditions; imposition of any terms or conditions on the person's continued approval or continued access to a Marketplace; prohibition of approval in any capacity, for any period of time, including access to a Marketplace; revocation of approval; a permanent bar to approval in any capacity or to access to a Marketplace; permanent bar to employment in any capacity by a Regulated Person, and any sanction determined to be appropriate under the circumstances. Where the Respondent is/was a Dealer Member: (a) a reprimand; (b) disgorgement of any amount obtained, including any loss avoided, directly or indirectly, as a result of the contravention; (c) a fine not exceeding the greater of: i. $5,000,000 per contravention; ii. an amount equal to three times the profit made or loss avoided by the Member by reason of the contravention;

4 (d) suspension of the membership or of the membership rights and privileges of the Regulated Firm, including a prohibition from dealing with clients for any period of time and on any terms and conditions; (e) (f) imposition of any terms and conditions on the Dealer Member s continued membership, including access to a Marketplace; expulsion from membership and termination of the rights and privileges of membership, including access to a Marketplace; (g) a permanent bar to membership in IIROC; (h) appointment of a monitor; and (i) any other sanction determined to be appropriate under the circumstances. If the Hearing Panel concludes that the Respondent did commit any or all of the contraventions alleged by the Staff in the Statement of Allegations, the Hearing Panel may assess and order any investigation and prosecution costs determined to be appropriate and reasonable in the circumstances pursuant to Section 8214 and/or Rule of IIROC s Dealer Member Rules and/or Rule 10.7 of the Universal Market Integrity Rules. DATED this 7 th day of July National Hearing Coordinator NATIONAL HEARING COORDINATOR Investment Industry Regulatory Organization of Canada Suite 2000, 121 King Street West Toronto, Ontario, M5H 3T9

5 Unofficial English Translation IN THE MATTER OF: THE RULES OF THE INVESTMENT INDUSTRY REGULATORY ORGANIZATION OF CANADA AND JEAN-LOUIS TRUDEAU STATEMENT OF ALLEGATIONS Further to a Notice of Hearing dated July 7, 2017, Staff of the Investment Industry Regulatory Organization of Canada (IIROC) make the following allegations: PART I - CONTRAVENTIONS ALLEGED 1. During the period between January 29, 2013 and October 29, 2014, the Respondent executed unauthorized trades in a client's accounts, contrary to IIROC Dealer Member Rule Subsidiarily, between January 29, 2013 and October 29, 2014, the Respondent engaged in discretionary trading in a client s accounts, without the accounts having been preauthorized by the firm as discretionary accounts, contrary to IIROC Dealer Member Rules and PART II - PARTICULARS Registration History 3. The Respondent had been approved as a registered representative with IIROC, as well as with its predecessor, the Investment Dealers Association of Canada (IDA), since 2002.

6 4. On or around November 28, 2014, the Respondent left his job with Mackie Research Capital Corporation (Mackie) and has not been a registrant of IIROC since. 5. On June 14, 2007, the Respondent was the object of disciplinary sanctions in another matter, pursuant to a decision rendered by a Hearing Panel of the IDA. PARTICULARS 6. JR had been an accountholder with Mackie since On or around October 26, 2012, the Respondent began acting as the registered representative for JR with Mackie. 8. JR authorized FC, a longstanding friend and former registered representative who looked after her account with Mackie, to execute transactions in this account on her behalf. 9. At the time, JR was 64 years old, had worked as an artist for nearly two decades, and had limited knowledge of investing. 10. Between January 29, 2013 and October 29, 2014, the Respondent executed the following 33 trades in JR s account: N o Date Description B/S Quantity Price Net Amount Commission DIAMEDICA INC B 10, , TRANSALTA CORP B 1, , TREZ CAPITAL MIC CL-A B 1, , ING DVSF F/R SENIOR-U T/U B 1, , BCE INC B , BOMBARDIER INC CL-B SV S -4, , BCE INC B , ARGENT ENERGY TRUST T/U B 1, , CPB RS82 NCI 1.2% 1NV16 B 100, , CPB RS82 NCI 1.2% 1NV16 B 25, , PIMCO GLB INCM OPP-A T/U B 10, , , ATRIUM MORTGAGE INVT CORP B , GREAT-WEST LIFE-S 1ST PFD B , GOLDMAN US INCM BLD-A T/U B 5, , , INTEMA SOLUTIONS INC B 88, , KWG RESOURCES INC S -35, , KWG RESOURCES INC S -35, ,

7 N o Date Description B/S Quantity Price Net Amount Commission HB NYMEX CRUDE OIL BULL+* S , BRAND LEADERS PLUS T/U-A B 5, , , ADVANTAGE CDN H/YLD-A T/U B 2, , ADVANTAGE CDN H/YLD-A T/U B , ASTON HILL FINL INC B 8, , COXE GLOBAL AGRI INCM T/U S -1, , INDUSTRIAL ALL INS&FNL SV S , ING DVSF FR SR LOAN-A T/U B 2, , ISHARES S&P/TSX COMP ETF S , ASTON HILL FINL INC B BROMPTON LIFECO SPLIT-A B 2, , TAYLOR N/AMER EQY OPP T/U B 1, , NORANDA INCOME FD -A T/U B , EARTH ALIVE CLEAN TEC INC B , EARTH ALIVE CLEAN TEC INC B , ISHARES S&P/TSX COMP ETF S , Of these 33 trades, only three were solicited by FC pursuant to the authorization that he held for JR s account, namely trades Nos 1, 31 and 32 in the above table. 12. The 30 other trades listed in the above table were never previously discussed with JR or FC, and were executed without their knowledge. 13. JR s account had not been preapproved and accepted by Mackie as a discretionary account. 14. Between October 2012 and September 2014, JR only looked at her monthly account statements to make sure that her assets were not decreasing. 15. It was only in September 2014, after noticing a drop in the value of her account, that JR realized that there had been trading in her account without her prior consent or that of FC. 16. The 30 unauthorized trades executed by the Respondent in JR s account generated gross commissions of $10,776, and net commissions of approximately $3,000 for the Respondent. DATED at Montréal, Québec, on July 7, 2017.