The Investment Industry Regulatory Organization of Canada (IIROC) and Allen Samuel Mendelman, an advisor in Calgary, have agreed to a settlement of a $100,000 fine and suspension from the securities industry for 18 months for infractions that include engaging in personal financial dealings with a client and participating in unauthorized outside business activities (OBA).
Mendelman has also agreed that he must successfully rewrite the conduct and practices handbook examination before returning to the industry; he will be supervised closely for six months upon that return and he will pay costs to IIROC in the sum of $5,000.
The penalties are in response to various IIROC rule infractions committed when Mendelman was employed at Vancouver-based Canaccord Genuity Corp. or one of its predecessor firms.
Mendelman admits that he engaged in personal financial dealings with a client, who was also a longtime friend, when he borrowed $125,000 from that individual in 2001 or 2002. The loan was to help pay a fine of $255,000 from the Canada Revenue Agency, which was related to the advisor’s conviction for income tax evasion in 2001.
The conviction resulted in Mendelman being subject to increased supervision from his firm between 2001 and 2011. However, Canaccord did not become aware of the loan until September 2013, when the firm discovered an email between the advisor and his client that discussed the loan’s details.
The firm also became aware of an unauthorized OBA that occurred between February and April of 2013. Those dealings revolve around Mendelman’s efforts to help raise money for the financing of a Calgary-based energy company, whose CEO was a personal friend of the advisor. Mendelman solicited investments in a private placement for the company and was paid $57,225 for his efforts. These transactions were conducted outside of Canaccord’s books and records and without their knowledge or consent.
Mendelman is also being sanctioned for the dissemination of non-public, material information in November 2013. Mendelman had received details regarding an upcoming prospectus offering of a separate Calgary-based energy company and forwarded those details to 11 clients to solicit their interest in investing in the offering. None of the clients traded in the security or benefited financially from the information, notes the settlement agreement.
According to the settlement documents, Mendelman is currently an advisor with Toronto-based Integral Wealth Securities Ltd. He has been an advisor since 1968 and does not have a history of regulatory violations related to his work as a financial advisor.
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