A former mutual fund rep has been fined and banned after regulators found that he misappropriated money by using a client’s identity to open and use banking products, including a line of credit.

A hearing panel of the Canadian Investment Regulatory Organization (CIRO) ordered a $100,000 fine and imposed a permanent ban against Dejan Ristovski, a former rep with CIBC Securities Inc. in Calgary. It also ordered $11,000 in costs against him.

The sanctions followed a disciplinary hearing that found Ristovski breached CIRO’s rules by misappropriating money, engaging in undisclosed personal financial dealings with a client, and refusing to cooperate with the SRO’s investigation. He also didn’t participate in the hearing.

According to the panel’s reasons, the misappropriation that took place wasn’t directly from a client. An investigation by the bank found that Ristovski opened a bank account in a client’s name — along with line of credit and a credit card — by forging her signature on the opening documents.

It alleged that he used the line of credit to keep up with alimony payments, ultimately leaving $8,227 owing when the bank closed it. He also charged $500 to the credit card.

The panel called the case unusual in that he didn’t take money from the client — because she never actually had the money — but instead essentially borrowed on her credit.

“Both accounts were in deficit when the bank stepped in to stop activity. These activities may be called a form of misappropriation and could be said to trigger an obligation to account for funds. They may also be viewed as a form of identity theft,” it said.

It also found that he engaged in undisclosed personal financial dealings with the same client, although as “he did not cooperate with [SRO] staff, the exact nature of the dealings between the parties is obscure.”

“However, we are willing to accept the admission that [Ristovski] made as accurate and he was indebted to [the client],” it said.

The panel ordered the sanctions sought by CIRO staff, noting that the misconduct was “extremely serious.”

“The conduct was flagrant and deceptive to such an extent that the panel’s view is that he would pose a serious risk were he to seek to act as a mutual fund dealing representative again,” it said.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.

Another lawsuit over mutual funds paying trailer commissions to discount brokers has been certified to proceed as a class action.

Ontario’s Superior Court of Justice certified a proposed investor class action against CIBC and CIBC Trust Corp., alleging that investors who bought CIBC mutual funds through a discount broker were harmed when those funds paid trailers to discount brokers, in part for advice the brokers didn’t provide.

“The plaintiff alleges that the trailing commissions are improper, unreasonable, and unjustified, and were paid by the defendants in breach of their duties to the class members who held those mutual funds,” the court said in its decision.

Similar actions against bank-owned fund firms have already been certified as class actions after contested hearings (TD Asset Management Inc. and BMO Investments Inc.), while others are still in the pre-certification stage. A case against Bank of Nova Scotia subsidiary 1832 Asset Management L.P. was certified late last year.

The allegations have not been proven, and CIBC did not oppose the certification order in this case, which “tracks in large measure the certification orders already issued in those other matters,” the court noted.

In certifying this case, the court largely adopted the conclusions of the previous rulings — including that there’s a viable cause of action, that the claim raises common issues, that there’s an identifiable class of investors, and that it makes sense to use a class action to adjudicate these common issues.

In certifying the case as a class action, the court also endorsed the proposed plaintiff in the case, the proposed litigation plan, and the proposed notices and opt-out form.

While there have now been several suits certified as class actions against fund firms, a proposed class action against a number of the discount brokers themselves for accepting trailer fees has been repeatedly rejected by the courts.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.

The operators of a failed blockchain development project agreed to pay more than $1.5 million in sanctions and will be permanently banned over an unregistered offering of crypto tokens, which, they admitted, functioned as securities.

The Capital Markets Tribunal approved a settlement with Nicholas Agar and Paul Ungerman, the operators of Axia Project who admitted to violating securities law by distributing securities without a prospectus, trading without registration, and making misleading promotional statements.

According to the Ontario Securities Commission (OSC), the Axia Project raised approximately US$41 million from investors, including $9 million in Ontario, from the sale of crypto tokens Axia Coins. The tokens were supposed to be used as the medium of exchange on its planned blockchain platform. However, the regulator alleged that they promoted the tokens as investments, too.

In the settlement, Agar and Ungerman admitted that the tokens served as securities, that they were issued without a prospectus, and that they traded without registration.

In its reasons, the tribunal noted that the agreement marks the first time the OSC has settled allegations relating to the promotion and sale of crypto tokens, and that the tribunal hasn’t ruled on any cases involving the sale of crypto tokens and whether they count as securities.

“While we have not had the benefit of detailed argument concerning the attributes of the Axia Coin, we are satisfied that the parties to this settlement agreement have admitted and agreed to circumstances that justify the imposition in the public interest of sanctions related to the promotion and sale of the coin and rights to receive the coin in future,” the panel said.

The project’s founders also admitted to making misleading statements about the purported assets backing the tokens — including that it held over US$29 billion in reserves — and to making misleading statements to regulators about the project, which prevented early detection of the misconduct.

In late 2022, the Axia Project was suspended and an outside governance and compliance firm was hired to review it. As a result of that review, in March 2023, the project was terminated and efforts to wind it down were started, with the remaining funds to be returned to investors.

The tribunal said the effort to wind down the project and return money to investors was a mitigating factor in the case, along with the fact that the respondents cooperated with the regulator’s investigation and accepted responsibility for their misconduct by reaching a settlement.

To settle the OSC’s case, Agar and Ungerman each agreed to pay $550,000 penalties. Ungerman agreed to disgorge $318,686 to the OSC, and Agar agreed to disgorge $50,000. Both men also agreed to pay $50,000 in costs.

Ungerman has paid the sanctions ordered against him, and Agar has paid $200,000, with the balance to be paid in nine monthly installments.

In addition to the financial sanctions, they also agreed to permanent trading bans, director and officer bans, and registration bans.

“In our view, given the mitigating factors, the significant financial sanctions, the permanent market bans, Agar’s irrevocable direction, and the avoidance of the time and expense required for a contested hearing, it is in the public interest for us to approve the settlement,” the tribunal said in its reasons.

“The settlement will, in our view, achieve specific and general deterrence and convey a strong message to market participants that compliance with Ontario securities laws is required in the context of the promotion and sale of cryptocurrency tokens.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.

A regulatory hearing panel has sanctioned a mutual fund rep for failing to disclose that he was granted power of attorney and named the beneficiary of the accounts of a client, who was also a long-time friend. But the penalty was much less severe than regulators sought.

A hearing panel of the Canadian Investment Regulatory Organization (CIRO) found that Simon Christopher Kelly, a former rep with Investia Financial Services Inc. in Calgary, violated the self-regulatory organization’s rules and his firm’s policies.

In an agreed statement of facts with the SRO, Kelly admitted that he was designated as the beneficiary of a client’s investment accounts, which represented a conflict of interest that he did not disclose to his dealer.

He was also granted power of attorney over the client’s financial affairs, giving him decision-making authority. He didn’t disclose that until his client fell into a coma in August 2019, and Kelly informed his branch manager that he had authority over the client’s finances.

Ultimately, the accounts were transferred to another dealer to address the conflict, but the client died soon after. Kelly was terminated by his dealer at the end of the year.

While the facts of the case were not disputed, the SRO panel was left to determine sanctions. It ordered a $70,000 fine and a six-month suspension, along with $10,000 in costs against Kelly.

The sanctions were far below what the SRO counsel sought. They argued for a permanent ban and a fine of at least $250,000, along with $10,000 in costs.

However, the panel ruled that a much smaller financial penalty and a six-month suspension were warranted.

In its decision, the panel noted that Kelly had no disciplinary record, cooperated with the investigation, and that there was no evidence of coercion or undue influence in the client naming him as beneficiary and power of attorney.

“While we consider the respondent’s misconduct to be serious, we do not find that it is at the highest end of severity which is reserved for conduct which is, for example, deliberately misleading, deceitful or fraudulent or which exploits a client who is vulnerable,” the panel said in its reasons.

The panel concluded that the less severe sanctions would achieve the goal of deterrence and send the message to the industry that “sanctions for misconduct of this nature will be more than just the cost of licensing.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.

Investors who don’t care about and don’t understand investing delegate the activity to advisors, with little understanding of the fees they pay or their advisor’s qualifications, according to research from FAIR Canada.

The Toronto-based investor advocacy group published the results of focus groups carried out by The Strategic Counsel, a market research firm. The research sought to understand the attitudes of ordinary retail investors.

Participating investors weren’t particularly interested in the chore of managing their finances.

“The task of investing is not an activity that engenders a lot interest and engagement despite its importance to their household finances. [Participants] prefer to allocate more of their personal time to other areas — working, children, recreational activities, among others,” the report said.

Additionally, the investors encountered high barriers to learning about investing for themselves.

“They perceive the terminology and language of the industry as hard to understand,” the report noted, saying investors also found investment documents difficult to review.

Given these factors, most participating investors were content to outsource the activity to advisors or frontline reps at their banks, the report said.

“Due to their low overall interest in investing, few expressed a desire to spend additional time and effort acquiring knowledge in this area. Many believed that it was preferable to rely on the knowledge and advice of industry professionals rather than learning about investing on their own.”

As a result, investors placed a great deal of trust in both their advisor and their firm. This trust was grounded in several factors, including longstanding relationships with advisors, positive historical returns and the firm’s reputation.

“Much of the trust was not necessarily earned by the advisors but rather given to them by their clients,” the report found. “Many investors seemed to have ‘blind trust’ in their advisor.”

For example, while participants said they viewed their advisors’ qualifications as important, most didn’t know or understand those qualifications.

And “while they accepted their advisor should get paid, participants did not understand how their advisor was compensated” or how those fees impacted their returns over the long run, the report noted.

Investors defined fairness in the context of investing as recommending investments in the interests of the client; providing clarity around advisor compensation; communicating using terminology that’s easy to understand; and willingness to help and guide small investors.

“In a time of rising interest rates and affordability crisis, Canadians are often placing their future in the hands of investment advisors without asking the right questions,” said Jean-Paul Bureaud, executive director of FAIR Canada, in a release. “Investors told us they not only struggle to understand the products they were recommended, but many also didn’t understand the type of advisor they were dealing with.”

Bureaud suggested the findings represented an investor protection concern.

“Most investors in the advisor channels found investing difficult to comprehend and learn. So, it is no surprise to observe a tendency to blindly trust whatever their advisors told them. This exposes them to potential risks and makes them more vulnerable to bad advice,” he said. “[W]e need to do a better job of educating and preparing Canadians to invest.”

The focus groups were conducted online with 49 participants who represented a mix of DIY and advised investors with at least $10,000 invested.

Last week, a study from the CFA Institute found that Gen Z investors tended to take advice from finfluencers because cost was a barrier to accessing a professional financial advisor, but that only 20% of finfluencer content containing investment recommendations had disclosures of any kind.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.

Many of Canada’s big banks and insurers aren’t on track to meet regulatory deadlines for climate risk management, according to the Office of the Superintendent of Financial Institutions (OSFI).

Guidance around climate risk management issued by OSFI last year set implementation deadlines of October 2024, 2025, and 2026 for various elements.

The federal financial regulator issued a report detailing the results of a survey of financial institutions to assess their readiness for those deadlines, finding that most firms have “started, or have planned work, to manage their climate-related risks.”

Yet some financial institutions “are at very early stages of considering climate-related risks and how they will manage them, and more work is needed to accelerate progress in time for the guideline implementation dates.”

In particular, OSFI found that, while financial firms are making progress at adding climate considerations to their governance processes, they haven’t made as much headway when it comes to quantifying the impacts of climate-related risks.

“Climate-related risks are forward-looking risks, where empirical data and traditional risk management approaches and tools may not sufficiently identify and account for these risks. This could, in turn, lead to an inadequate capture of the potential risks and risk response,” the report said.

Among other things, the regulator found the industry still needs to ramp up its assessments of the impact of climate risks on their other financial and non-financial risks.

For example, about half of the survey’s respondents have assessed less than 20% of their various portfolios for climate-related risks. “This signals that [firms] need to accelerate their assessments across all key risk categories,” the report said.

It also found that financial institutions aren’t yet factoring climate considerations into their capital and liquidity adequacy assessments, and most haven’t started building climate transition plans.

The regulator reported that over 40% of financial firms have started, or plan to, use scenario analysis to assess climate-related risks, “with slightly more progress reportedly made on physical risks than transition risks.”

OSFI also found that between 75% and 85% of respondents said they are using a five-year timeline to assess climate-related risks, with fewer firms looking out longer than five years.

“More life insurers reported examining climate-related risks for longer-term time horizons than [banks] and P&C insurers,” it said. “However, this is expected given the nature of life insurers’ assets and liabilities.”

Despite climate risk assessments being at early stages, most firms indicated they are prepared to meet climate-related financial reporting requirements, the report also noted.

In the meantime, OSFI said it has embarked on several initiatives that aim to help financial firms improve capacity to assess climate risks, including its upcoming standardized climate scenario exercise.

Additionally, the regulator said it will engage with the industry later this year on the results of its readiness survey, while also monitoring evolving practices and standards to assess the need for additional guidance.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.

Canadian Western Bank has a new regional wealth hub and banking centre in Toronto to help it target business-owner clients, offering an alternative to the Big Six banks.

Stephen Murphy, group head of commercial, personal and wealth at the Edmonton-based bank, said the downtown location is convenient for business owners even if they’re located in other areas. “You’re leveraging that that’s where all the other banks are,” he said.

In September, CWB completed the move of 14 Toronto-based CWB Wealth advisors into its office tower on Adelaide Street, consolidating its office space in the city. In November, CWB opened a branch at the location, offering clients commercial and personal banking services.

Murphy said he’d underestimated the benefit of “having a tower with your logo on it” in the financial district. “It really kind of amplifies our visibility [with clients] as a national player.”

The moves are part of the bank’s broader initiative to build out its business in Ontario, which began in 2020 when CWB opened a full-service branch in Mississauga, just outside Toronto. In 2022, it opened another branch in Markham, north of Toronto.

“[Our] priorities were around opening where the business owners are,” Murphy said.

Later this year, the bank says it will open a branch in Kitchener, Ont. For now, it has no further plans to open branches in Toronto.

“From a [Greater Toronto Area] perspective, in our model, we don’t need a branch at every corner — the triangle of Mississauga, Markham, downtown Toronto is adequate for us.”

CWB focuses on providing commercial banking, personal banking and wealth advisory services to small and medium-sized business owners.

Murphy said CWB can be nimbler than some of its competitors, such as the big banks, when it comes to holistic solutions for clients. “They’re just so big they need to be organized a certain way, and when you’re organized that way, it’s hard to deliver a really strong integrated solution,” he said.

In 2021, CWB merged its legacy private wealth businesses under the CWB Wealth brand, following CWB’s acquisition of T.E. Wealth and Leon Frazer in 2020.

“We were a meaningfully sized wealth business, but we weren’t big enough and we didn’t have enough capability, particularly in Ontario, so that was a really necessary platform-building acquisition for us,” Murphy said.

Today, CWB is home to 49 advisors, including four advisors in its T.E. Wealth Indigenous Services business.

As of Oct. 31, 2023, the bank had $7.9 billion in assets under management and administration on its CWB Wealth platform, and $2.1 billion in assets under advisory in its T.E. Wealth Indigenous Services business, for a total of $10 billion in assets under supervision. That compared to $9.6 billion in assets under supervision on Oct. 31, 2022.

Murphy said the bank is focused more on growing its wealth platform organically than by acquisition, but it would be open to a deal if it added capability. In its primary markets of Alberta and Ontario, “I’d say we’re fine,” Murphy said, but in Vancouver, “we don’t have the scale that I would like to have in terms of advisors.”

A key project for the bank this year is the continued rollout of a “revised” private banking model across the country, which leverages the wealth platform’s existing advisory capabilities while hiring where necessary, to move it toward a more segmented approach of serving clients.

“There’s not necessarily innovation in terms of the product or the offering,” Murphy said. “It’s really just about ensuring we’ve got the right client experience with the right talent, [aligned] in the right way [so] that all of the people involved in that relationship work together.”

Starting the revised private banking model in Ontario from scratch has meant the bank is “further along in the execution because we’ve hired into the model,” Murphy said.

Rudy Mezzetta

Rudy is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on tax, estate planning, industry news and more since 2005. Reach him at rudy@newcom.ca.

A former investment dealer rep has been fined and permanently banned in a settlement with regulators after admitting to misappropriating clients’ money.

A hearing panel of the Canadian Investment Regulatory Organization (CIRO) approved a settlement with Domino Au-Young, a former rep with National Bank Financial Ltd. (NBF) in Richmond, B.C. The settlement included a $125,000 fine, costs of $7,500 and a permanent ban from the industry.

According to the settlement, Au-Young admitted to misappropriating funds from clients’ accounts, failing to get approval for outside business activity, using unapproved communications methods, and misleading both his firm and the self-regulatory organization in their investigations.

Specifically, regulators found that Au-Young misappropriated US$45,000 from one client and $30,000 from another using forged letters — purportedly from the clients — that instructed his firm to issue cheques to Vancouver Bullion & Currency Exchange, “where he then had the monies transferred into his own bank accounts.”

His firm at the time, NBF, repaid the clients and Au-Young repaid the firm when he was terminated, the settlement noted.

The settlement also said that Au-Young gave false statements about the misappropriations when he was interviewed in NBF’s internal investigation, and in a sworn interview with the SRO’s investigators.

Additionally, he admitted to not getting approval for outside business activity (not related to the financial industry) and that he used WeChat to communicate with several clients, in violation of his firm’s policies.

“The misconduct here took place over a prolonged period of time and was in some instances egregious (misappropriation of funds, deception of the firm and of regulatory investigators),” the panel said in its reasons for approving the settlement.

“In the end, no member of the public was out of pocket, but the damage to the reputation and integrity of the market remained.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.

Award-winning advisors should consider scrubbing their online profiles of related entries and celebratory posts, a lawyer suggests, even if regulators may show mercy in their first year of enforcing policies related to referencing awards based on sales, assets under management or revenue generation during client-facing interactions.

“From my conversations with dealers, a small percentage of advisors participate in award contests generally, so I don’t think it’s going to have an outsized impact. I think it’s manageable from a training and compliance standpoint,” said Matthew Latimer, executive director of the Federation of Mutual Fund Dealers, referring to the Canadian Securities Administrators’ (CSA) and the Canadian Investment Regulatory Organization’s (CIRO) recent warning.

Nonetheless, “it’s good that the regulators gave us a heads up in front of our audits so that dealers have an opportunity to get ahead of these potential deficiencies,” Latimer said, adding that he hopes the regulators will be more “understanding and accommodative in the first year.”

Noah Billick, partner and director of regulatory, funds and compliance with Renno & Co., a law firm based in Montreal, said that hope is likely to be realized.

“I only see [award promotion] being an enforcement issue if it’s part of a larger pattern of non-compliance,” Billick said, such as an advisor using their award to gain clients and then take advantage of them in some way. “I think at first, you’re going to get a warning.”

Nonetheless, “my advice would be to take it down,” said Billick, who has previously worked as a financial advisor and chief compliance officer.

The warning also applies to displaying awards in offices, mentioning them in client emails, speaking about awards to clients and referencing awards in media interviews.

Latimer said he hopes any regulatory activity related to this file will be “rolled out in a consistent and harmonized manner across all registrants, to maintain a level playing field as we [continue] to work with our new harmonized SRO.”

Advisors who are only licensed to sell life insurance, however, have not received similar communications about awards and recognition from provincial insurance regulators. In response to a question from Advisor.ca as to whether the Canadian Council for Insurance Regulators would be issuing similar guidance concerning awards, the CCIR reiterated its requirements surrounding the fair treatment of customers and placing customer interests ahead of the advisor’s own.

A joint publication from the Canadian Insurance Services Regulatory Organizations and the CCIR acknowledges that “recognition programs that are designed to increase sales volumes” may “increase the risk of unfair outcomes to customers,” but does not explicitly prohibit referencing them in client-facing interactions.

Joining the President’s Club

Registrants scouring their social media profiles may also want to look for celebratory posts about becoming members of their firm’s “President’s Club” — a club that often requires hitting revenue or AUM goals.

According to the CSA, such posts violate National Instrument 31-103.

“[W]e have specifically stated that if, for example, membership in a registered firm’s ‘President’s Club’ is based partly or entirely on a registered individual’s sales activity or revenue generation, the registered individual who interacts with clients must not use that recognition or award,” stated Ilana Kelemen, senior strategic advisor with the CSA, in an email.

The statement was added to the companion policy to NI 31-103 in June 2022.

“The guidance is quite clear that if there is a sales or revenue component, you can’t promote it,” Billick said. “What I think the dealers will do is find some way to separate [recognition] from those things.”

Latimer said he’s sympathetic to the need for dealer firms to motivate their employees, but stresses that motivation must be done compliantly.

“Members participating in a business should be able to retain recognition and incentive programs for these businesses,” as long as they are fair and justifiable, Latimer said. He added that including revenue generation as a criterion can make sense, as long as the program is “separate, distinct and behind closed doors from clients, where the tailored and professional advice clients need to receive should not be influenced by those factors.”

An industry practitioner in the compliance space with an Ontario-based mutual fund dealer said he agrees with the policy on President’s Clubs, noting that clients often confer more prestige to a title like “president” than may be justified. (Advisor.ca granted anonymity to the practitioner so they could speak without fear of reprisal.)

Billick added that publicizing membership in an organization or association that requires a certain level of production to gain entry — even if it’s not technically an award — could be non-compliant.

However, joining these associations represents “an accomplishment that you have reached a certain level of production,” the compliance practitioner said, lamenting that advisors are losing an opportunity to showcase a hard-earned achievement. “The disconnect is the regulators may be tying [the association membership] to productivity. But achievement and productivity are two different things.”

The practitioner conceded, however, that many clients will simply see the prestigious-sounding name of the association and not ask for the requirements for joining, which could potentially lead to misconceptions.

Billick believes that awards focused on client satisfaction, outcomes and expertise can thrive, pointing out that the law profession has long-running, prestigious awards of this nature that don’t include revenue as a criterion.

But he said the recent guidance from regulators points to a wider push to eliminate what the CSA and CIRO see as conflicts of interest.

“I think regulators are uncomfortable with the idea of how much money advisors make and the way advisors are compensated,” Billick said. “I think regulators would be more comfortable with a model that disincentivized some of the more aggressive sales things that advisors do.”

Melissa Shin

Melissa is the editorial director of Advisor.ca and leads Newcom Media Inc.’s group of financial publications. She has been with the team since 2011 and been recognized by PMAC and CFA Society Toronto for her reporting. Reach her at mshin@newcom.ca. You may also call or text 416-847-8038 to provide a confidential tip.

After partly upholding a rep’s appeal of a disciplinary decision against him last year, Ontario’s Capital Markets Tribunal has now also trimmed the sanctions that were imposed on him.

Last October, the tribunal tossed out one of the allegations against Mark Odorico, a former rep and portfolio manager with CIBC Wood Gundy Inc., who had been accused of unauthorized trading, misappropriating client money and failing to cooperate with regulators.

In 2022, a hearing panel of the Investment Industry Regulatory Organization of Canada (IIROC) found the allegations against him had been proven, and ordered a $125,000 fine, $579,000 in disgorgement, and $25,000 in costs against him, along with a permanent ban.

On appeal, the tribunal found the hearing panel had erred and set aside one allegation that he misappropriated client money.

On Thursday, the tribunal also reduced the sanctions imposed on Odorico, cutting the disgorgement order by $150,000 and reducing the fine by $10,000.

According to the tribunal’s decision, Odorico sought to have all sanctions imposed by the SRO panel reduced, including those not directly related to the allegation that was set aside. He also argued that the costs order should be reduced.

However, the tribunal declined to interfere with most of the sanctions, and didn’t overturn any of the other allegations against Odorico — namely that he also misappropriated $429,000 from another client, engaged in unauthorized trading in their account, and failed to cooperate with the SRO’s investigation.

The reduced disgorgement order reflects that the tribunal set aside the allegation that Odorico misappropriated $150,000 from a couple of clients.

The tribunal also reduced the fine imposed on him by the SRO for misappropriating client money from $50,000 to $40,000, but didn’t alter the other components of his fine and declined to convert his permanent ban into a temporary suspension, or to reduce the costs order.

“The separate fines imposed on Odorico for unauthorized trading ($25,000) and for the failure to co-operate with CIRO’s investigation ($50,000) were distinct from the finding of misappropriation and we see no reason to disturb them,” the tribunal said in its reasons.

“They were not unduly severe in the circumstances,” it said, adding it reduced the fine for misappropriation in proportion to the total amount that was misappropriated (from $579,000 to $429,000).

The tribunal also ruled that the permanent ban “should be upheld on the basis of the surviving contraventions” along with sanctions principles, SRO guidance, previous decisions and the facts of this case.

And, it declined to lower the costs order, noting that it already reflected a significant reduction from the actual costs incurred by the SRO, down to $25,000 from approximately $165,000.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.