An appeal panel of the Investment Dealers Association of Canada (IDA) has dismissed an appeal brought by Stephan Katmarian.

Katmarian was an approved person with Rampart Securities Inc. (Rampart), a former member of the IDA.

The appeal was of two decisions of a hearing panel of the Ontario District Council. The first, dated Aug. 9, 2005, found that Katmarian had contravened By-law 29.1 and Regulation 1300.1 (a) and (b) (as they were in 2000) of the IDA.

The second, dated Jan. 10, 2006, imposed sanctions on Katmarian of a ban from registration for a period of 15 years, a total fine of $275,000, disgorgement of commissions of $47,983.50 and $85,875.27 in costs.

In regards to the contravention of By-law 29.1, Katmarian, together with Sean Shanahan and Nicole Brewster, was found guilty of participating in a ‘mark-up scheme’ with the shares of Alive International Inc. for the purposes of unduly benefiting one Rampart client to the detriment of other Rampart clients. The hearing panel found as fact that Katmarian, Shanahan and Brewster had a conscious involvement or knowledge of the scheme and had therefore willingly participated in the scheme.

Katmarian based his appeal concerning the By-law 29.1 contravention on the grounds that the findings of the hearing panel were not in accordance with the evidence presented and that erroneous conclusions were reached. In considering the proof in its entirety, the appeal panel held that the hearing panel’s interpretation of the facts was reasonable and that the proof was clear and convincing and based upon cogent evidence. Further, the appeal panel supported the finding of the hearing panel that Katmarian’s participation in this scheme was intentional.

With respect to the contraventions of Regulation 1300.1 (a) and (b), Katmarian, together with Shanahan, was found to have failed to use due diligence relative to a group of clients who opened accounts for the purpose of purchasing shares in three private corporations which were found to be part of an RRSP stripping scheme. The appeal panel agreed with the conclusions of the hearing panel that Katmarian had not learned the essential facts relative to the clients and that transactions involving a locked-in RRSP stripping scheme could not be considered good business practice.

The appeal panel also found that the hearing panel weighed all relevant factors when considering sanctions. The appeal panel found that the sanctions imposed upon Katmarian, in the Jan. 10, 2006 decision, were reasonable and dismissed his appeal with respect to sanctions.

In addition, the appeal panel decided that Mr. Katmarian’s motion to introduce fresh evidence was denied. This was a final decision following an interim ruling dated Aug. 29, 2006, in which the appeal panel permitted Katmarian to refer to this evidence during the appeal under reserve of the final ruling contained in the November 14, 2006 decision. The appeal panel ruled that the evidence, though relevant, was neither decisive nor potentially decisive and that it could not reasonably, when taken with other evidence, have affected the result found by the hearing panel.

Katmarian is no longer a registrant with an IDA member firm.