The Investment Dealers Association of Canada expelled Jerry Johnson from membership in the association, at a hearing held on October 21.
Johnson was a rep with the Lethbridge, Alta. sub-branch office of Union Securities Ltd.
The IDA suspended Johnson’s registration and approval on June 15, 2005. The suspension came as a result of the termination of Johnson’s employment by Union Securities due to his personal financial dealings with clients.
At the hearing, the panel heard that between September 2004 and April 2005, Johnson entered into a number of agreements with clients variously entitled “Loan Agreements” or “Investment Agreements.”
The panel found that Johnson admitted that he borrowed approximately $400,000 from Union Securties clients, without ever advising his employer of that fact.
The panel also found that Johnson acknowledged that since sometime in 2003 he had borrowed a total of approximately $1 million in this manner, mostly from people in Lethbridge. Johnson acknowledged that the people who have lent him money are not aware that he has been making the payments to date using money borrowed from other such lenders. He also acknowledged that the people who have lent him money are not aware that he has invested the bulk of that money with an entity called “Fast Market Ltd.” which has offices in Miami, Florida and Nassau, Bahamas and promises returns of up to 2.5% per day.
Johnson was previously sanctioned by the IDA for borrowing over $340,000 from clients during the period from March 15, 1995 to July 18, 2000. He declared bankruptcy in April 2002 and was discharged from bankruptcy on November 29, 2004.
In its reasons for decision, the Panel noted that “we are unable to ignore the alarming similarity between Mr. Johnson’s admitted activities and a Ponzi scheme. We must also express our dismay at Mr. Johnson’s offshore investment of virtually the entire remaining amount of the money he has borrowed.”
The panel concluded that “by secretly borrowing from clients and thereby repeating the misconduct for which he was previously sanctioned by the Association, Mr. Johnson has demonstrated that he is ungovernable.” To protect the investing public from Johnson, the panel ordered that Johnson be expelled from the IDA.