INVESTMENT DEALERS ASSOCIATION OF CANADA
IN THE MATTER OF:
THE BY-LAWS OF THE INVESTMENT DEALERS
ASSOCIATION OF CANADA
AND
STEPHEN TAUB
NOTICE OF HEARING
TAKE NOTICE that pursuant to Part 10 of By-law 20 of the Investment Dealers Association of
Canada (“the Association”), a hearing will be held before a hearing panel (“the Hearing Panel”)
on a date to be fixed by the Hearing Panel on Friday, November 25, 2005, at The Mediation
Place, 390 Bay Street, 3rd Floor at 9:00 a.m., or as soon thereafter as the hearing can be heard.
TAKE FURTHER NOTICE that pursuant to Rule 6.2 of the Association Rules of Practice and
Procedure, that the hearing shall be designated on the:
The Standard Track
The Complex Track
THE PURPOSE OF THE HEARING is to determine whether Stephen Taub (“Taub” or “the
Respondent”) has committed the following contraventions that are alleged by the Association:
COUNT 1
Between November 1998 and June 2003 (the “Material Time”), the Respondent engaged in
conduct unbecoming contrary to Association By-law 29.1 in that he failed in his role as
gatekeeper and facilitated certain trading activity for certain clients including trading activity that
appeared to be or was consistent with market manipulation or deception and improper control
block distributions.
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COUNT 2
During the Material Time, the Respondent engaged in conduct unbecoming contrary to
Association By-law 29.1 in that he circumvented IDA and SEC rules by opening accounts and
accepting orders from clients outside his jurisdiction of registration.
COUNT 3
During the Material Time, the Respondent engaged in conduct unbecoming contrary to
Association By-law 29.1 in that they provided confidential account information to, and accepted
instructions from, individuals who were not the registered account holders and had no connection
with the account.
COUNT 4
During the Material Time, the Respondent engaged in conduct unbecoming contrary to
Association By-law 29.1 in that he misled his Member Firm with respect to the involvement in
certain accounts of certain individuals.
PARTICULARS
TAKE FURTHER NOTICE that the following is a summary of the facts alleged and to be
relied upon by the Association at the hearing:
A. Registration
1. The Respondent Taub commenced employment in the securities industry as a junior
analyst with Wood Gundy in January 1988. Since that time, he has been registered as a
registered representative with the following Member Firms:
Firm Dates of Employment
Scotia McLeod April 1988 – June 1988
Richardson Greenshields June 1988 – September 1988
Yorkton Securities September 1988 – November 1991
Merit Investments Corp. November 1991 to April 1995
Brant Securities Ltd. April 1995 to September 2001
Research Capital Corp. September 2001 to September 2004
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Taub is currently not registered with a Member Firm.
B. Description of Taub’s Book of Business
2. During the Material Time, Taub’s book of business dealt substantially with client
accounts (the “Accounts”) that traded stocks on the Canadian over-the counter market
(the “OTC”) and the U.S. Over-the-Counter Bulletin Board (the “OTCBB”). These
stocks were frequently traded by individual clients or small groups of clients. Most of
Taub’s clients were corporate clients and many were offshore entities.
3. In addition, during the Material Time, Taub’s book of business involved clients’ selling
shares pursuant to Securities and Exchange Commission (“SEC”) Rule 144 exemptions
which allows public resale of restricted and control securities if a number of conditions
are met.
4. On numerous occasions, Taub acted for individuals and one or more corporate accounts
for which the same individuals had influence over trading decisions and who appeared to
act in concert. Frequently, these client groups traded heavily in the same limited group of
securities.
5. In addition, many of Taub’s clients frequently transferred securities in from third parties
that were ostensibly provided as compensation for services rendered or as repayment for
debts owed.
6. Some Accounts were owned or operated by, or associated with non-residents of Canada
who were experienced market participants, such as insiders, control persons, promoters or
persons engaged in investor relations activities
7. Some Accounts were owned, operated by, or associated with persons with criminal or
securities regulatory histories. Particulars of certain individuals with criminal or
regulatory histories who owned, operated or were associated with Accounts for which
Taub was the registered representative include:
Name History
Rakesh Saxena Saxena was arrested in BC in connection with
a bank fraud case in which it is alleged that
Saxena embezzled $88 million from a bank in
Thailand. He is currently under house arrest in
Vancouver awaiting the outcome of extradition
proceedings.
Harvey Rubenstein Rubenstein is a former stockbroker and stock
promoter who has served multiple prison
sentences in Canada and the U.S. for fraud and
wash trading. Rubenstein has since been
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pardoned.
Ivan Cavric Cavric is known to Taub as a business
associate of Saxena and Rubenstein
May Joan Liu Liu is a known stock promoter resident in
Vancouver B.C.
Stephen Marek (aka the “Volume King”) In April 2000, the SEC charged Marek with
making false and misleading statements
concerning the promotion of 25 micro-cap
companies through the internet. In January
2001, Marek settled the SEC charges
Regis Possino Possino is a California-based former lawyer
who was disbarred after his conviction for
selling drugs to undercover agents.
In 1995, Possino pleaded guilty in a Los
Angeles federal court to participating in a
fraudulent scheme to use overvalued stocks to
inflate an insurance company’s balance sheet.
Phillippe Hababou (aka Phillippe
Solomon)
Hababou was arrested in France and sentenced
to 3 years in prison on April 16, 2004 for
providing false banking statements in
connection with Aerolyon (now L’Air
Holdings)
A U.S. Department of Justice news release
dated June 18, 1999 indicated Hababou
represented himself as an investment banker.
He has been charged with a 23 count
indictment in which it is alleged that he, along
with co-conspirators, laundered more than $5
million from stock sales from the acquisition
and sale of a shell corporation
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Rafi Khan In May 2000 the SEC barred Khan from
associating with any broker or dealer (with a
right to reapply for association after five years)
for his role in the manipulation of several
stocks. In 2002 the SEC alleged that Khan had
violated the terms of his order and sought
testimony from Khan’s wife, Rubina Khan.
The SEC alleges that Rubina Khan and other
family members allowed Khan to use
brokerage accounts held in their names.
Iain Brown Sr. and Iain Brown Named as defendants along with other
individuals in a SEC action relating to a broker
bribery scheme involving the stocks of nine
public companies
John Switzer A U.S. resident who has been disciplined by
the SEC for promoting penny stocks on the
internet
8. Throughout the Material Time, certain of the Accounts displayed activities and
characteristics that would have caused a reasonable registrant to investigate the owners
and operations of the Accounts, because each activity, alone or in combination, is
potentially a symptom of illegal conduct or conduct contrary to the public interest,
including share manipulation and improper control block distributions.
9. Throughout the fall of 2001, Taub opened accounts for residents of B.C. Taub did not
apply for registration in B.C. until a month after he began working at Research Capital
Corporation (“Research”). His application was ultimately granted subject to a condition
of strict supervision. Taub was not prepared to accept such condition, so he withdrew his
application for B.C. registration. By this time, B.C. accounts had been opened and were
actively trading.
C. Gatekeeper Issues
Taub’s Involvement with Rakesh Saxena
10. During the Material Time, Taub opened numerous accounts at Brant Securities Ltd.
(“Brant”) for the following individuals and entities:
a. Tidewater Management Corp., (“Tidewater”), a corporate entity controlled by
Rakesh Saxena, (“Saxena”). Saxena was referred to Taub by another one of
Taub’s clients, Harvey Rubenstein (“Rubenstein”);
b. Amrit Sarup, (“Sarup”) who is Saxena’s mother. Saxena had trading authority
over Sarup’s account;
c. Rubenstein;
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d. Ivan Cavric, (“Cavric”) a business associate of Saxena and Rubenstein whom
Taub considered to be the “dealmaker” for these individuals;
e. Fred Kimber, (“Kimber”), a business associate of Cavric.
f. Americo de Rosa, (“De Rosa”), a business associate of Cavric.
g. Join Kind Ltd., (“Join Kind”), a corporate account over which Saxena had trading
authority.
11. Tidewater, Saxena, Sarup, Rubenstein, Cavric, Kimber, Rosa and Join Kind engaged in
trading activity which appeared to be or was consistent with market manipulation or
deception. Trading activity in the securities of Wavetech Networks Inc. (“Wavetech”),
Millenium Equities Limited (“Millenium”), Digital Cybernet Corporation (“Digital”) and
Armac Capital Corp. (“Armac”) exhibited characteristics that should have caused to Taub
to ensure that the trading activity was not manipulative or deceptive.
12. Each of Wavetech, Millenium, Digital and Armac traded on the former CDN market in
Canada. The pattern of trading activity involved the delivery in of a large quantity of
physical share certificates by Cavric or one of his associates to accounts at Brant. These
physical certificates would represent anywhere from 35 to 45% of the issued and
outstanding shares. The certificates would then be transferred to other accounts at Brant
or other Member Firms, but controlled by the same individuals. The transfers would take
place by way of journal entries or by way of buy-sell transactions.
13. Furthermore, many of the transfers of Wavetech, Millenium, Digital and Armac shares
constituted distributions from control block positions which did not comply with the
requirements of the Ontario Securities Act regarding control block distributions.
14. By facilitating this activity, Taub failed in his duties to act as a gatekeeper for the
securities industry.
Taub’s Involvement with May Joan Liu
15. During the Material Time, Taub opened certain accounts at Brant which were connected
to an individual named May Joan Liu (“Mrs. Liu”).
16. Between July 1997 and April 1999 Taub opened accounts (the “Brant Liu-Related
Accounts”) for:
a. Mrs. Liu in her personal capacity;
b. her husband, Stephen Liu (“Mr. Liu”), over which Mrs. Liu had trading authority;
c. Palisades Financial Ltd. (“Palisades”), a corporate account controlled by Mr. Liu;
d. Mo Ching Chan, Mrs. Liu’s mother and a resident of Hong Kong;
e. Compte de Sierge Accomodative Corp. (“Compte de Sierge”), a Panamanian
corporate account over which Mrs. Liu had trading authorization; and
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f. YENN Asset Management, a seemingly unrelated company which was referred to
Taub by Mr. Liu, but for which Taub’s sales assistants’ rolodex indicates Mrs.
Lius as the contact person.
17. Commencing in November 1998, the above-noted accounts engaged in trading activity in
two OTC-BB traded securities:
a. Factory 2U Stores Inc. (formerly known as Golden Spirit Minerals, formerly
known as 2U Online Dotcom Inc., formerly known as Power Direct Inc.); (“2U
Online”) and
b. Avalon Gold Corp. (formerly known as Asdar Group Inc., formerly known as
Asdar Inc., formerly known as Iceberg Brands Corp., formerly known as Precise
Life Sciences Ltd.), (“Precise Life”).
18. 2U Online owns more than ten percent of Precise Life. The telephone number for Precise
Life is Mrs. Liu’s office telephone number. The telefax number for 2U Online is Mrs.
Liu’s telefax number.
19. The pattern of trading activity in Brant Liu-Related Accounts was similar. Large blocks
of physical share certificates of 2U Online and Precise were received into the accounts.
Once received, the shares were actively traded in the open market. Hundreds of
transactions were conducted in such fashion that no payment was ever required for the
purchases.
20. These transactions continued through the Brant Liu-Related Accounts until October 2001
when Taub transferred his registration to Research. Accounts were opened for each of
the above-noted clients at Research (the “Research Liu-Related Accounts”). Trading
authority was identical for the Research Liu-Related Accounts as the Brant Liu-Related
Accounts with the exception of Compte de Sierge, which did not provide trading
authority to Mrs. Liu.
21. In January 2002, when Research compliance personnel required Taub to close his B.C.
accounts, the shares of 2U Online and Precise Life in the Research Liu-Related Accounts
were transferred to various other Member Firms.
22. Shortly after closing the Research Liu-Related accounts, Taub opened two new off-shore
corporate accounts in the Cayman Islands, (the “Cayman Accounts”). The signatories,
addresses, telephone numbers and telefax numbers for these two Cayman companies are
the same as for YENN Asset Management. Within a few weeks the shares of 2U Online
and Precise Life were received in from other Member Firms to the Cayman Accounts.
23. Furthermore, Taub was responsible for placing Mrs. Liu in touch with Stephen Marek,
(“Marek”), who describes himself as the “Volume King”.
24. On September 28, 2001 and October 10, 2001, Taub placed long distance calls to Marek.
On October 10, 2001, Taub received an e-mail response from Marek describing his
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standard fee and suggesting to Taub that he could “add whatever he felt the client could
pay” on to his standard fee.
25. On May 10, 2002, Taub placed a long distance call to Marek. On May 11, 2002, Marek
sent an e-mail to Liu in which he makes reference to the referral from Taub and also
comments that “[Precise Life] is an interesting stock” and that the price “is essentially
stuck between 0.33 and 0.39”.
26. Trading activity in 2U Online and Precise Life continued in the Research accounts until
November 2002 when, in response to questions raised by an IDA Sales Compliance
Review, Research compliance personnel required these accounts to be closed.
27. Throughout this entire period, Taub and his sales assistants placed over 880 calls to Mrs.
Liu, however, no calls were made to Panama regarding Compte de Sierge trading
activity. When Taub was required by Research compliance personnel to close the
accounts, he did not contact anyone in Panama. He did, however, at this time, place a
number of calls to Mrs. Liu’s cell phone number.
28. By facilitating this activity, Taub failed in his duties to act as a gatekeeper for the
securities industry.
Taub’s Involvement with Regis Possino and Phillippe Hababou (a/k/a Phillippe Solomon)
29. During the Material Time, Taub was involved in a series of transactions regarding L’Air
Holdings Inc. (“L’Air”), a company whose securities trade on the OTCBB. L’Air was
formerly known as Superior Networks Inc., (“Superior Networks”).
30. Also involved in the series of L’Air transactions are the following individuals:
a. Phillippe Hababou (a/k/a Phillippe Solomon, a/k/a Haim Hababou), (“Hababou”);
b. Regis Possino, (“Possino”), a personal friend of Taub and resident of the United
States;
c. Frank MacKay, (“MacKay”);
d. Nazim Gallani (“Gallani”), a personal friend of Taub and a B.C. resident; and
e. John Switzer (“Switzer”), a U.S. resident who has been disciplined by the SEC for
promoting penny stocks on the internet.
31. On or about January 8, 2003, Taub opened the following accounts at Research:
a. Geneva Equities Ltd., (“Geneva Equities”), a Panamanian company apparently
connected to Possino;
b. Phillippe Solomon in his personal capacity; and
c. Universal Capital Partners Corp., (“Universal Capital”) a corporate account
controlled by Hababou/Solomon.
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32. Prior to the opening of the above-noted accounts, in October 2002, Superior Networks
shares were crossed in accounts for which Taub was the registered representative,
including his mother’s corporate account, Monmouth Consulting Inc. and Verdun
Investments Ltd. No cash was deposited into these accounts in furtherance of the
transactions.
33. On January 15, 2003, within one week of the accounts being opened, Taub received by email
transmission from Possino, a draft copy of a Consulting Agreement as between
L’Air and Geneva Equities. Taub was asked to provide any questions or comments and
Possino noted that they “were anxious to move ahead”.
34. On January 21, 2003, Taub received a second e-mail form Possino with the draft
Consulting Agreement and the advice that “$50K for Harry and everyone’s a happy
camper”.
35. On January 23, 2003, Taub forwarded the draft Consulting Agreement to his assistant.
Minutes later, phone logs show that Taub contacted Possino’s telephone number in
California.
36. Over the next two weeks, trading activity occurred in the Solomon and Universal Capital
accounts which appeared to be or was consistent with market manipulation or deception.
37. Also during this time period, between February 11 and 25, 2003, Taub contacted Switzer
in the U.S. on more than 25 occasions. Switzer was responsible for public relations and
promotions of L’Air in the U.S.
38. On February 26, 2003, Research compliance personnel discovered that the Geneva
Equities account was apparently connected to a company of the same name in California
whose president (Possino) was a former lawyer who had been disbarred for drug
trafficking. Research compliance personnel advised Taub that only sales at low volume
of L’Air shares would be permitted or that the L’Air shares could be delivered out to
another firm.
39. On February 27, 2003, Research compliance personnel learned further that Universal
Capital was an investor relations firm for L’Air. Accordingly, Research compliance
personnel prohibited any buying or selling of L’Air securities by Solomon, Universal
Capital or any one connected to it.
40. On February 26 and 27, 2003, Taub made 12 calls to Possino in California and no calls to
Geneva Equities in Panama.
41. Shortly after the trading in L’Air was stopped by Research compliance personnel, the
volume of transactions and price of L’Air shares collapsed.
42. By facilitating and participating in this activity Taub failed in his duties to act as
gatekeeper for the securities industry.
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Taub’s Involvement with FIDRA Holdings and Iain Brown
43. During the Material Time, Taub opened off-shore corporate accounts at Brant for an
individual named Iain Brown (“Brown”) in the name of FIDRA Holdings Ltd., FIDRA
Holdings Ltd. 001, FIDRA Holdings Ltd. #2, FIDRA Holdings Ltd. #3 and FIDRA
Holdings Ltd. #4, (collectively , “FIDRA”).
44. Taub routinely accepted hundreds of cheques from third parties for deposit into the
FIDRA accounts. Over a 14-month period, Taub wired a total of $8,700,000 from the
FIDRA accounts to its off-shore bank accounts.
45. Taub made no, or minimal, efforts to determine the economic basis for the wire transfers.
His only knowledge was that he “believed the accounts belonged to wealthy Canadians”
who “had little private dealings”.
46. Ultimately, Brant compliance personnel required Brown to take his business elsewhere
and required the FIDRA accounts to be closed.
47. The transactional activity in the FIDRA accounts would have required a reasonable
registrant to make appropriate inquiries as to the purpose of the transactions. In failing to
do so, Taub failed in his duties to act as gatekeeper for the securities industry.
D. Opening Accounts and Trading for Parties Outside of his Jurisdiction of Registration
Taub’s Involvement with Harvey Rubenstein / Monmouth Beach Consulting Inc.
48. During the Material Time, in late March 1999, Taub opened an account at Brant for
Monmouth Beach Consulting Inc., (“Monmouth”). This account appears to have been a
nominee account for Rubenstein. The account opening documentation lists an address in
Vancouver, B.C., but a telephone number in New Jersey. The President and signing
officer for Monmouth is identified as one Stanley Merdinger, a U.S. national. The
address on the Monmouth account is identical to an address used by Rubenstein.
49. As of February 2000, the account statements for the Monmouth account were delivered to
an address in Markham, Ontario. The Markham address was also an address used by
Rubenstein.
50. In October 2001, when Taub had transferred his registration to Research, an account was
opened there for Monmouth. The address on the account opening documentation was the
same Vancouver address and New Jersey telephone numbers as had been used to open
the Monmouth account at Brant.
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51. In early 2002, when Taub was required by Research compliance personnel to close his
accounts with B.C. residents, he provided a letter to Research advising that Monmouth’s
Vancouver address had been closed effective immediately and that all business would
now be conducted out of an address in Markham, Ontario. The Markham address is the
same address that had been used by Monmouth at Brant after February 2000. In late
February, the address was changed to a different location in Markham. Both of the
Markham locations were identical to addresses used by Rubenstein.
52. Notwithstanding the information on the account opening documentation, Taub and his
sales assistants delivered over 40 faxes to New Jersey and placed in excess of 200
telephone calls to the former New Jersey telephone number listed on the account.
53. Taub is not registered to deal with U.S. residents nor does the account opening
documentation accurately reflect the involvement of Rubenstein in the account.
Accordingly, Taub circumvented IDA and SEC rules by opening accounts for and
accepting orders from clients outside his jurisdiction of registration.
Taub’s Involvement with Marc Sporn
54. During the material time, Taub opened an account at Research for an off-shore corporate
entity, Investment Management Inc. (“Investment Management”). The principal for
Investment Management and the individual who provided trading instructions was Marc
Sporn (“Sporn”).
55. While reviewing the exercise of stock options by Investment Management for a company
called Universal Ice Blast (“Universal Ice”), Research compliance personnel discovered
that Sporn, who was noted on the Investment Management NCAF as residing in Hong
Kong, was actually a resident of Boca Raton, Florida.
56. Research compliance personnel also raised concerns that the Universal Ice stock options
were originally for the account of Marc Siegel, an individual who was understood by
Research Compliance personnel to have been the subject of an informal SEC
investigation. When these concerns were raised with Taub, a letter was produced later
that same day indicating that the Universal Ice options should be for the account of
Investment Management, rather than Siegel.
57. Research compliance personnel required the Investment Management account to be
closed as a result of Sporn’s U.S. residency.
58. Furthermore, over an extended period of time, Taub’s staff sent daily faxes to Sporn at a
telefax number in Florida.
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59. Taub is not registered to deal with U.S. residents. Accordingly, he circumvented IDA
and SEC rules by opening accounts and accepting orders from clients outside his
jurisdiction of registration.
E. Dealing with Individuals other than the stated Account Holder
Taub’s Involvement with Rafi Khan
60. During the Material Time, Taub opened an off-shore corporate account at Research for
Aura PVT Ltd. (“Aura”), ostensibly for Qaiser Imran (“Imran”), a resident of Pakistan.
There was no third party trading authority given over the account.
61. Imran is the brother of Rubina Khan (“Mrs. Khan”) and the brother-in-law of Rafi Khan
(“Khan”).
62. In March 2002, Research was contacted by the SEC and asked for information
concerning the relationship between Taub and Khan. The SEC had obtained an
injunction against Khan prohibiting him from trading securities in the U.S. on the basis of
allegations that he had been involved in price manipulation schemes.
63. In April 2002, Taub provided a declaration to the SEC that, although he communicated
on the telephone with Khan, they did not discuss the Aura account.
64. In December 2002, the SEC moved to enforce an investigative subpoena against Mrs.
Khan, on the basis that Khan may have been violating the terms of the injunction. The
SEC expressed concerns that Khan may have been circumventing the restrictions on his
ability to trade by using accounts in the name of family members (including Mrs. Khan)
and Pakistani entities to conceal his involvement.
65. When Research compliance personnel became aware of the SEC concerns, they inquired
into the details of Aura and its connection to Khan.
66. In early January 2003, Taub’s assistant confirmed by e-mail to Research compliance
personnel that the Aura account was in no way connected to Khan and that all
instructions came from Imran in Pakistan.
67. However, in June 2003, Taub’s assistant exchanged e-mails with Khan and arranged for
certain share certificates of SVI Solutions Inc. (“SVI Inc.”) in the name of Khan to be
transferred into the name of Aura. Khan describes Taub’s assistant as “Aura’s broker” to
the lawyer for SVI Inc. who was to deal with the transfer of certificates.
68. Other e-mails from Taub’s assistant indicate that in response to questions about Aura
account activity from Khan she provided such advice to him, despite the fact that she told
Research compliance personnel that Khan had nothing to do with the account.
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69. Further, telephone and fax records indicate that Taub’s assistant was frequently in touch
with Khan. Taub’s assistant acknowledges that she was acting on instructions from
Taub.
70. Taub ought not to have provided, or instructed his assistant to provide, Khan with
confidential information regarding Aura account activity.
Taub’s Involvement with Paul Taylor
71. During the Material Time, Taub opened 21 accounts at Research for Costa Rican entities,
including Z3 Limited (“Z3 Ltd.”). Trading authority over these accounts was provided to
three individuals including David Ricci (“Ricci”).
72. Ricci is also connected with a Costa Rican company, Red Sea Management (“Red Sea”),
which shares the same business address as the Costa Rican accounts. Red Sea is engaged
in the business of setting up off-shore asset protection structures and only operates on a
referral basis. Taub referred Red Sea to Saxena.
73. Z3 Ltd. held shares of an issuer, Trezac Ltd (“Trezac”). Paul Taylor (“Taylor”) is the
CEO of Trezac. Taylor has no connection with the Z3 Ltd. account in that he is not a
principal or authorized signatory, nor does he have trading authority.
74. Taub’s assistant, acting on instructions from Taylor, attempted to journal 500,000 shares
of Trezac from Z3 Ltd. to Sharpe Capital Ltd. (“Sharpe Ltd.”), a company for which
Taub was the registered representative.
75. When research compliance personnel rejected the journal request, new documentation
was prepared by Taub’s assistant in which Frank Carino, the principal of Sharpe Ltd.
stated that the journal request related to a personal settlement between the principals of
Z3 Ltd. and Sharpe Ltd. and, further, that the journal request was made “without
involvement of any other companies, including Trezac”.
76. Taub’s assistant acknowledges that she had oral instructions from Taub to deal with
Taylor.
77. Taub ought not to have taken instructions from or instructed his assistant to take
instructions from Taylor regarding the Z3 Ltd. transaction described above.
F. Misleading their Member Firm
78. Taub misled his Member Firm when asked about the potential connection between Aura
and Khan and thereby engaged in conduct unbecoming a registrant contrary to
Association By-law 29.1.
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79. Taub misled his Member Firm regarding the Z3 Ltd. transaction and thereby engaged in
conduct unbecoming a registrant contrary to Association By-law 29.1.
GENERAL PROCEDURAL MATTERS
TAKE FURTHER NOTICE that the hearing and related proceedings shall be subject to the
Association’s Rules of Practice and Procedure.
TAKE FURTHER NOTICE that pursuant to Rule 13.1, the Respondent is entitled to attend and
be heard, be represented by counsel or an agent, call, examine and cross-examine witnesses, and
make submissions to the Hearing Panel at the hearing.
RESPONSE TO NOTICE OF HEARING
TAKE FURTHER NOTICE that the Respondent must serve upon the Association a Response
to the Notice of Hearing in accordance with Rule 7 within twenty (20) days (for a Standard
Track disciplinary proceeding) or within thirty (30) days (for a Complex Track disciplinary
proceeding) from the effective date of service of the Notice of Hearing.
FAILURE TO RESPOND OR ATTEND HEARING
TAKE FURTHER NOTICE that if the Respondent fails to serve a Response or attend the
hearing, the Hearing Panel may, pursuant to Rules 7.2 and 13.5:
(a) proceed with the hearing as set out in the Notice of Hearing, without further notice to the
Respondent;
(b) accept as proven the facts and contraventions alleged by the Association in the Notice of
Hearing; and
(c) order penalties and costs against the Respondent pursuant to By-law 20.33, 20.34 and
20.49.
PENALTIES & COSTS
TAKE FURTHER NOTICE that if the Hearing Panel concludes that the Respondent did
commit any or all of the contraventions alleged by the Association in the Notice of Hearing, the
Hearing Panel may, pursuant to By-law 20.33 and By-law 20.34, impose any one or more of the
following penalties:
Where the Respondent is/was an Approved Person:
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(a) a reprimand;
(b) 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 such
Approved Person by reason of the contravention.
(c) suspension of approval for any period of time and upon any conditions or terms;
(d) terms and conditions of continued approval;
(e) prohibition of approval in any capacity for any period of time;
(f) termination of the rights and privileges of approval;
(g) revocation of approval;
(h) a permanent bar from approval with the Association; or
(i) any other fit remedy or penalty.
Where the Respondent is/was a Member firm:
(a) a reprimand;
(b) a fine not exceeding the greater of:
(i) $5,000,000 per contravention; and
(ii) an amount equal to three times the profit made or loss avoided by the Member
by reason of the contravention;
(c) suspension of the rights and privileges of the Member (and such suspension may
include a direction to the Member to cease dealing with the public) for any period of
time and upon any conditions or terms;
(d) terms and conditions of continued Membership;
(e) termination of the rights and privileges of Membership;
(f) expulsion of the Member from membership in the Association; or
(g) any other fit remedy or penalty.
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TAKE FURTHER NOTICE that if the Hearing Panel concludes that the Respondent did
commit any or all of the contraventions alleged by the Association in the Notice of Hearing, the
Hearing Panel may pursuant to By-law 20.49 assess and order any investigation and prosecution
costs determined to be appropriate and reasonable in the circumstances.
DATED at Toronto, this 21st day of October, 2005.
Aleksander Popovic
Vice-President, Enforcement
INVESTMENT DEALERS ASSOCIATION OF CANADA
Suite 1600
121 King Street West
Toronto, Ontario
M5H 3T9 |
