An Investment Industry Regulatory Organization of Canada (IIROC) hearing panel has banned former portfolio manager Jayanth Noronha and ordered him to pay almost $900,000 for engaging in undisclosed, off-book transactions.

Specifically, Noronha has been ordered to disgorge almost $700,000, pay $60,000 in costs and a $200,000 fine after it was found he not only engaged in off-book transactions, but accepted compensation from issuers in connection with the off-book deals, failed to disclose the conflict of interest this created and deleted email records to hide the misconduct.

Noronha is no longer registered and did not participate in the regulatory proceedings against him. The violations occurred while he was a portfolio manager with Dundee Securities Ltd. and Raymond James Ltd. in Toronto.

According to the IIROC hearing panel, Noronha facilitated investments in a couple of issuers off the books; he accepted compensation from the issuers through his wife; and he failed to disclose the conflict of interest this created to his firm. IIROC staff sought disgorgement of the payments he received from the issuers, along with an additional fine of $100,000 and a ban from the investment industry.

However, the hearing panel ruled that the fine should be much higher than IIROC staff proposed in order “to properly reflect the seriousness of Mr. Noronha’s misconduct.” The panel stressed that a larger fine is necessary to have the desired deterrent effect.

“From every aspect, the misconduct of Mr. Noronha was as disgraceful and egregious as one could imagine in the investment industry,” the IIROC hearing panel stated. “Mr. Noronha placed himself in a direct conflict of interest by receiving undisclosed compensation from [the issuers] when he had a duty to provide independent advice to his clients who were investing in those companies. This is a classic example of a conflict of interest that totally undermines the public’s confidence in the investment industry.”

Moreover, the IIROC hearing panel noted that Noronha sought to hide his activities by having compensation from the issuers paid to his wife; and that he tried to prevent an investigation by his firm by deleting emails about the transactions.

“From the beginning to the end of this saga,” the hearing panel stated, “Mr. Noronha acted deliberately and dishonestly.”