Ontario’s Capital Markets Tribunal dismissed a former mutual fund representative’s appeal and upheld the decisions of a Canadian Investment Regulatory Organization (CIRO) hearing panel, which sanctioned the rep for violating its rules.
Earlier this year, a CIRO panel ruled that Leszek Dziadecki, a former rep with Global Maxfin Investments Inc., should be permanently banned, fined $300,000 and ordered to pay $30,000 in costs after finding he breached the self-regulatory organization’s rules when he recommended syndicated mortgage investments to certain clients, and on a radio show.
Dziadecki appealed both decisions to the tribunal, which has now rejected those appeals, upholding both the SRO panel’s ruling that he breached the rules and the penalties imposed for those violations.
In its decision, the tribunal said the hearing panel didn’t make any error in concluding that Dziadecki engaged in securities-related business when he sold investments, known as BioNorth SMI.
According to the tribunal, Dziadecki argued that, while he provided positive opinions about the investments both on the radio and to several clients, “he did not actually sell these securities, but instead referred his clients to mortgage brokers to complete the transactions.”
However, the tribunal agreed with the SRO panel, which, it said, “correctly interpreted the allegation as whether Dziadecki engaged in ‘trading or advising’ in securities rather than whether [he] ‘sold’ the securities.”
“The definition of trading in the [Securities] Act is broader than simply a determination that a security was sold,” it said.
It added, “The evidence of the investors supported the CIRO panel’s finding that Dziadecki’s activities related to BioNorth SMIs fell within this expansive definition of trading.”
The tribunal also upheld the finding that Dziadecki engaged in an unapproved outside business activity when he engaged in trading the investments, which was not disclosed to his dealer.
And it ruled that the penalties handed down by the panel were appropriate.
According to the tribunal, Dziadecki argued that the “financial penalties and costs awarded against him are excessive,” but he did not object to the ban from the industry.
However, the tribunal fully upheld the panel’s ruling on penalties.
“The CIRO panel considered the seriousness of Dziadecki’s misconduct, his past discipline by both the tribunal and the MFDA, his experience in the capital markets, his failure to recognize the seriousness of the misconduct, the harm suffered by investors, the benefits gained by Dziadecki, and the need for specific and general deterrence,” it said in rejecting the penalty appeal.