IIROC has ordered a former advisor to pay $55,923 in fines and disgorgements, and another $24,500 in costs, for borrowing money from a client and misleading his employer about the loan.
Andrew Paul Rudensky, an advisor at Richardson GMP Limited from November 2009 until his resignation in September 2015, borrowed $3 million from a client in April 2015 to finance a US$7.47 million short sale, IIROC’s penalty decision says. He then shared the profit with the client.
Rudensky himself earned US$21,415 (CDN$25,923 on April 27, 2015) from the long and shorting transaction connected to the loan, the penalty decision says.
When asked where he obtained the money to finance the transaction, Rudensky told his employer the money came from a loan collateralized on his condo.
While the client was “sophisticated” and did not suffer from the misconduct, the penalty decision says, the loan created conflicts of interest that Richardson GMP was unable to identify and respond to as a result of Rudensky’s “deception.”
Rudensky was registered for eight years with IIROC before the loan and had no other disciplinary history. Because his conduct didn’t harm his client, he argued that disgorgement wasn’t appropriate, the decision said.
However, IIROC found the “dishonesty was detrimental to the reputation of the industry” and that allowing Rudensky to keep the money “would not provide the necessary deterrent message.”
In addition to the $30,000 in fines and $25,923 disgorgement, Rudensky was suspended for two years. He’s also required to pay costs of $24,500.
Rudensky no longer works for an IIROC-registered firm.
Read the penalty decision here.