OSC imposes permanent ban on Sam Bouji

A hearing panel of the OSC on Tuesday accepted the terms of a joint settlement agreement between Bouji, Global RESP and GGAI, and the OSC.

GGAI will continue as a registrant but will operate under several terms and conditions that will limit its growth and ensure its independence, according to the agreement. GGAI will continue to serve existing unitholders in plans sold through Global RESP.

The agreement is designed to facilitate Global RESP’s exit from the capital markets, preserve the assets in existing scholarship plans and cause “the least amount of disruption to the subscribers and beneficiaries,” the agreement says.

In the agreement, Bouji admitted to acting as a de facto officer of Global RESP in the period between 2015 and 2017, breaching an order imposed in 2014 banning him from performing the duties of a director or officer for a period of nine years. The 2014 order was imposed in response to various disclosure, registration and supervisory failures.

Global RESP and GGAI admitted to various compliance failures, as well as breaches of Ontario securities rules and regulations.

Under the agreement, Bouji has also been ordered to pay $190,000 toward OSC costs (which he has already paid).

On a joint and several basis, Global RESP and GGAI will compensate underpaid eligible beneficiaries, who have not received a full reimbursement of enrolment fees, owing in the amount of at least $900,000, the settlement agreement states. GGAI is expected “to make all reasonable efforts to do so within nine months” from today.

The agreement states that GGAI is not permitted to act as investment fund manager for any investment fund other than the Global scholarship plans and the Global Iman Fund, and is prohibited from distributing new units except to existing subscribers. GGAI will also retain the services of a third-party consultant, already hired in 2019, to examine GGAI’s operation and compliance procedures and policies. Finally, GGAI’s board will consist entirely of independent members.

After an interim period, Bouji will place GGAI, of which he is a sole shareholder, into an irrevocable blind trust. Neither Bouji nor any Bouji family member may provide services to GGAI, or participate in its operation or management.

“Persistent and serious regulatory violations put investors at risk,” said Jeff Kehoe, director of enforcement at the OSC in a press release announcing the approval of the settlement agreement. “This settlement holds Mr. Bouji and the firms accountable for their misconduct and supports parents who save for their children’s education.”

Counsel for Bouji had not provided a comment about the agreement by press time.

The directors and management of Global RESP and GGAI stated in a press release that they are pleased to reach a settlement with the OSC and are committed to meeting the terms of the agreement.

“[GGAI] subscribers’ investments will continue to be professionally managed,” the release stated, “and the company remains committed to ensuring that families across Canada continue to receive the quality of service the companies have been providing for years. [GGAI] is committed to living up to its obligations to its subscribers and to fully complying with the OSC rules.”

In a May 2018 statement of allegations against Bouji, the staff of the OSC’s enforcement branch alleged that Bouji had been in breach of a 2014 order. In addition, the 2014 order had required him to pay a fine of just under $2 million and permanently suspended him from his position as ultimate designated person of Global RESP and GGAI. Bouji stepped down as an officer in his companies and paid the required penalties.

In the May 2018 statement of allegations, OSC staff alleged that Bouji had been acting as a de facto vice president of sales of Global RESP for a three-year period, in “disregard” of the order. These activities included recruiting, hiring, firing, and setting compensation for sales staff — functions the OSC said are normally performed by officers.

During the nearly two-year proceedings, Bouji, through counsel, brought forward several motions before the commission, including a motion in 2019 claiming the OSC did not have jurisdiction to hear the allegations against him. That motion was ultimately dismissed.

In February 2020, OSC vice chair Grant Vingoe, who had been serving on a three-person panel adjudicating the proceedings against Bouji, stepped down from the panel. That development followed the news, announced in mid-January, that Vingoe would be taking over as acting chair of the OSC in April, replacing outgoing chair Maureen Jensen. The panel said it made the decision to avoid the appearance of bias had Vingoe remained on the panel. The proceedings continued with a two-person panel.

The Global Financial Group also includes mutual fund dealer Global Maxfin Investments Inc. and Global Insurance Solutions Inc. Last year, Global Financial sold its IIROC-regulated platform Global Maxfin Capital Inc., which included $280 million of assets and 12 advisors, to Integral Wealth Securities of Toronto.