ALTAMIRA
COULD NOT HAVE HAPPENED TO A MORE APPROPRIATE FUND:
Mersch hit with six-month trading ban
By BRENDA BOUW
The Financial Post
ÿLying to regulators has landed once-renowned mutual fund manager Frank Mersch a six-month trading ban and left a "black mark" on the industry, in the words of the Ontario Securities Commission.
ÿIn a settlement approved yesterday, the OSC said Mersch admitted during an investigation he "deliberately misled commission staff and that his conduct in doing so was contrary to the public interest."
ÿMersch, 44, is barred from trading securities until mid-December, or just before the busy mutual fund buying season. After that he may reapply for his registration, which he lost last month after resigning from his 11-year position as portfolio manager with Altamira Investment Services Inc. in light of the OSC investigation.
ÿBut Mersch hinted after yesterday's ruling there's a chance he may not return to the profession.
ÿ"After 20 high-pressure years as a fund manager, I welcome the break and the chance to reflect, recharge and evaluate both the future of the industry and my role in it," he said in a statement.
ÿThe penalty is said to be one of the most severe given in the industry.
ÿOSC counsel Tim Moseley said it's the first time a Canadian fund manager has been punished for lying to regulators and called it "very serious misconduct by a registrant."
ÿMoseley said the OSC considered in its decision the fact Mersch had no previous infractions and there were no victims. He called the ban "a significant period of time ... something like a number of years would probably be too harsh."
ÿThere was no financial penalty.
ÿMersch's settlement came after the commission last month alleged he made false statements in 1996 when questioned about shares in a private placement in Diamond Fields Resources Inc. he bought for his own account in 1993.
ÿHe had claimed the purchase was made by a holding company, Dass No. 25 Holdings Ltd., owned by his childhood friend Peter Cunti. Cunti, an electronics store manager, told the same story and both were charged with lying to the OSC after it discovered Mersch was Dass's beneficial owner. Cunti wasn't part of the Mersch settlement and is scheduled to appear before the commission on Aug. 18.
ÿMersch's statement said he didn't benefit from the investment and did not consider himself an owner of Dass at the time, but he "now understands that his actions may not have been consistent with that state of affairs."
ÿSome say the OSC findings are worse than the actual punishment.
ÿ"The main penalty, more than anything else, is the embarrassment of being singled out and sanctioned," said Bill Riedl, president of Fairvest Securities Corp., a shareholder rights advocate for institutional investors.
ÿ"It certainly leaves a black mark on the industry in terms of conduct." Riedl said he hopes the ruling will be a lesson for other money managers. |
