Before crossing any regulatory lines, you should seriously consider how past mistakes can come back to bite you.
Last year, two mutual fund salesmen, Sanjiv Sawh and Vlad Trkulja, applied for reinstatement of their MFDA registrations, after 18 months of suspension.
They were unsuccessful; the OSC cited their past mistakes as major roadblocks to reinstatement, leaving the men out in the cold.
In April 2010, both reps, along with Investment House of Canada, agreed to a settlement with the MFDA in which they admitted to 11 violations of MFDA rules.
Both were founders of the company—then registered as an MFD and limited market dealer. Sawh was chief compliance officer, executive vice president and managing director, while Trkulja was president and CEO. Both collectively held all of the company shares.
Following the 2010 hearing, the company had to resign its membership, and the men were suspended. The company is now registered as an exempt market dealer.
“If a registered firm’s registration in a category is suspended, the registration of each registered dealing, advising or associate advising representative acting on behalf of the firm in that category is suspended until reinstated or revoked under securities legislation,” says the OSC.
Unfortunately for them, it seems time has healed no wounds; the OSC “denied the reinstatement of the applicants’ registrations as dealing representatives of a mutual fund dealer. The Director found neither demonstrated the required integrity or proficiency of securities professionals, and finds their reinstatement objectionable.”
Commenting on their refusal, they said Sawh and Trkulja’s “failure to appropriately disclose or otherwise manage the conflicts or potential conflicts of interest” didn’t meet the standards of ethical conduct required of reps. “Their continued denial at the hearing and review of the need to disclose or otherwise manage such conflicts further prevents us from concluding they’ll address conflicts of interest in accordance with requirements in the future.”
In response, both men argue “the Director made important findings of fact based on a misapprehension of the evidence and on an incomplete record.” They say she relied solely on the previous agreement and on former client affidavits, rather than on new evidence.
“The Applicants further submit the director’s decision fails to deliver proper reasons, because it provides little to no evidence of her reasoning, or why she reached the conclusion she did,” says the OSC. They say they didn’t receive a fair hearing due to her bias.
Read the OSC’s decisions and reasoning.