The operators of an unregistered scheme that touted contracts for difference (CFD) trading are facing a series of sanctions from Ontario’s Capital Markets Tribunal.
Back in January, the tribunal ruled that Radhakrishna Namburi and his company, VRK Forex & Investments Inc., violated securities rules by trading and advising in securities without registration in connection with a CFD trading program that they heavily promoted.
“The respondents solicited investors, provided advice related to CFD trading, and conducted CFD trading in investor accounts, sometimes on a discretionary basis,” the tribunal noted in its decision. Investors lost $1.9 million as a result of the scheme, it said, while Namburi and his firm garnered approximately $430,000 in commission rebates and profit-sharing payments.
In its ruling on sanctions, the tribunal imposed a 10-year ban on both Namburi and VRK. It also ordered $430,000 in disgorgement, along with a $250,000 penalty and $200,000 in costs against them.
Namburi and VRK consented to the 10-year ban, but indicated that they would be unable to pay financial sanctions.
While the tribunal ordered the full amount of the disgorgement sought by staff of the Ontario Securities Commission (OSC), it ordered both penalty and cost awards that were about $50,000 less than OSC staff requested in the case.
In handing down the sanctions, the tribunal said a market ban was necessary in order to “send a strong message to others who might be inclined to engage in similar activity.”
In determining the size of the penalty, the tribunal said it was “particularly influenced by the seriousness of the conduct as evidenced by the significant losses suffered by investors and by the recurrent nature of the respondents’ conduct.”
It added that “there is no evidence Namburi set out to deprive the investors in any way. Despite that, the misconduct was serious and warrants a strong response.”