INVESTMENT DEALERS ASSOCIATION OF CANADA ROBERT WILLIAM BOSWELL

Transcription

1 INVESTMENT DEALERS ASSOCIATION OF CANADA IN THE MATTER OF: THE BY-LAWS OF THE INVESTMENT DEALERS ASSOCIATION OF CANADA AND ROBERT WILLIAM BOSWELL NOTICE OF HEARING NOTICE is hereby given that pursuant to Part 10 of By-law 20 of the Investment Dealers Association of Canada (the Association ), a hearing will be held before a hearing panel (the Hearing Panel ) on September 6, 7 and 8, 2006, in the Plaza Room of The Metropolitan Conference Centre, th Avenue S.W., Calgary, Alberta, at 10:00 a.m., or as soon thereafter as the hearing can be heard. NOTICE is further given that pursuant to Rule 6.2 of the Association Rules of Practice and Procedure, that the hearing shall be designated on the: The Standard Track The Complex Track NOTICE is further given that the purpose of the hearing is to determine whether Robert William Boswell ( Boswell ) has committed the following contraventions that are alleged by the Association: Count 1 The Respondent made over 350 trades in the accounts of twenty-seven (27) clients without the prior knowledge and consent of the clients which conduct is unbecoming a Registrant of the Association and is detrimental to the public interest, contrary to Association By-law 29.1 Count 2 The Respondent offered to compensate a client for his investment losses and made a misrepresentation to the client that Research Capital Corporation ( Research ) would participate

2 - 2 - in reimbursing the client. The Respondent provided the client with a series of post dated cheques which were not honoured when presented to be cashed which conduct is unbecoming a Registrant of the Association and is detrimental to the public interest, contrary to Association By-law 29.1 Count 3 The Respondent traded out of the province of his registration with a total of eighteen (18) clients, which conduct is unbecoming a Respondent and detrimental to the public interest contrary to Association By-Law 29.1 and the Alberta Securities Act, British Columbia Securities Act, the Saskatchewan Securities Act, the Manitoba Securities Act, and the Ontario Securities Act. Count 4 The Respondent made misrepresentations to a client as to their proper account balance, which conduct is unbecoming a Respondent and detrimental to the public interest contrary to Association By-Law 29.1 Count 5 The Respondent was requested to provide records relating to the investigation into his conduct in this matter. The Respondent failed or refused to cooperate with the investigation and provide the requested records, which conduct is contrary to By-Law PARTICULARS NOTICE is further given that the following is a summary of the facts alleged and to be relied upon by the Association at the hearing: (A) Background 1. Boswell was at all material times a resident of the City of Calgary, in the Province of Alberta. He was registered with the Association and employed as follows: Issue Date Termination Date Employer (Sponsor) Registration Category February 18, 1998 July 13, 1998 CM Oliver Registered Representative July 16, 1998 September 14, 2000* Research Capital Registered Representative October 11, 2000 February 6, 2003 Research Capital Registered Representative February 17, 2003 October 25, 2003 Jennings Capital Registered Representative * Mr. Boswell s registration was suspended temporarily for failure to complete the PPFC. 2. The Association received a Uniform Termination Notice ( UTN ) from Research dated February 19, 2004 advising of the termination of the Respondent due to allegations of unauthorized trading. Subsequently, the Association received a UTN from Jennings

3 - 3 - Capital Corp. ( Jennings ) dated October 25, 2003 advising of the termination of the Respondent due to allegations of unauthorized trading. (B) Statement of Facts Research Unauthorized Trading 3. Kevin McQuaid, Director of Operations at Research submitted a memorandum to the Association dated February 19, 2003 outlining the suspected unauthorized trades and indicating whether Boswell admitted to those unauthorized trades to Officers of Research. 4. It was indicated that trades in the following client accounts were unauthorized and that this was admitted to by Boswell: Client Number of Unauthorized Trades Admitted LG 163 DBP 34 GN 6 PE Ltd. 37 CH Ltd. 7 MT 6 CT 3 IE Inc. 11 SR 3 TOTAL It was further indicated that trades in the following client accounts were alleged to be unauthorized but these were not admitted by Boswell: Client Number of Unauthorized Trades Alleged GN 8 WG 2

4 - 4 - RL 1 RD 1 Total As a result of some of the unauthorized trades alleged in paragraphs 4 and 5 Research terminated Boswell effective February 6, 2003 and filed an Uniform Termination Notice February 25, Research Offer of Compensation for Losses to a Client 7. As a result of losses in the client account of BM, Boswell assured the client that Research would compensate BM for one-third of the account losses, Boswell would compensate BM for one-third of the account losses and BM would be responsible for the remaining one-third. 8. Boswell provided five post-dated cheques to BM as a portion of the compensation. None of the cheques were honoured due to insufficient funds in the account they were drawn upon. Research Trading Out of Province of Registration 9. Boswell was registered as an Investment Advisor in Alberta. 10. Boswell admitted maintaining client accounts for clients that did not reside Alberta. In particular, 15 clients were resident in the Province of British Columbia; one was resident in the Province of Manitoba and 2 where resident in the Province of Ontario. Jennings Unauthorized Trading 11. Boswell began employment with Jennings on February 17, 2003 and was placed on strict supervision. 12. While Boswell was employed at Jennings six clients made allegations that trades were conducted in their account without their knowledge or consent. 13. One of the clients, DM, resides in Red Deer, Alberta. A review of long distance records of Jennings reveals that no calls were made from Jennings to either of DM s contact numbers. Boswell refused a request to provide his cellular phone records to substantiate his assertion that he contacted the client prior to each trade being made. 14. Boswell was terminated from Jennings on October 10, 2003 on suspicion of unauthorized trading.

5 - 5 - Jennings Refusal to Cooperate 15. As set out in paragraph 13 Boswell failed to comply with a reasonable and appropriate request to provide documents essential to an investigation to Association staff. This refusal compromised the Association s ability to conduct a full and complete investigation into this matter. GENERAL PROCEDURAL MATTERS TAKE FURTHER NOTICE that the hearing and related proceedings shall be subject to the Association s Rules of Practice and Procedure. TAKE FURTHER NOTICE that pursuant to Rule 13.1, the Respondent is entitled to attend and be heard, be represented by counsel or an agent, call, examine and cross-examine witnesses, and make submissions to the Hearing Panel at the hearing. RESPONSE TO NOTICE OF HEARING TAKE FURTHER NOTICE that the Respondent must serve upon the Association a Response to the Notice of Hearing in accordance with Rule 7 within twenty (20) days (for a Standard Track disciplinary proceeding) or within thirty (30) days (for a Complex Track disciplinary proceeding) from the effective date of service of the Notice of Hearing. FAILURE TO RESPOND OR ATTEND HEARING TAKE FURTHER NOTICE that if the Respondent fails to serve a Response or attend the hearing, the Hearing Panel may, pursuant to Rules 7.2 and 13.5: (a) proceed with the hearing as set out in the Notice of Hearing, without further notice to the Respondent; (b) accept as proven the facts and contraventions alleged by the Association in the Notice of Hearing; and (c) order penalties and costs against the Respondent pursuant to By-law 20.33, and PENALTIES & COSTS TAKE FURTHER NOTICE that if the Hearing Panel concludes that the Respondent did commit any or all of the contraventions alleged by the Association in the Notice of Hearing, the Hearing Panel may, pursuant to By-law and By-law 20.34, impose any one or more of the following penalties:

6 - 6 - Where the Respondent is/was an Approved Person: (a) (b) a reprimand; a fine not exceeding the greater of: (i) $1,000,000 per contravention; and (ii) an amount equal to three times the profit made or loss avoided by such Approved Person by reason of the contravention. (c) (d) (e) (f) (g) (h) (i) suspension of approval for any period of time and upon any conditions or terms; terms and conditions of continued approval; prohibition of approval in any capacity for any period of time; termination of the rights and privileges of approval; revocation of approval; a permanent bar from approval with the Association; or any other fit remedy or penalty. Where the Respondent is/was a Member firm: (a) (b) a reprimand; a fine not exceeding the greater of: (i) $5,000,000 per contravention; and (ii) an amount equal to three times the profit made or loss avoided by the Member by reason of the contravention; (c) suspension of the rights and privileges of the Member (and such suspension may include a direction to the Member to cease dealing with the public) for any period of time and upon any conditions or terms; (d) (e) (f) terms and conditions of continued Membership; termination of the rights and privileges of Membership; expulsion of the Member from membership in the Association; or

7 - 7 - (g) any other fit remedy or penalty. TAKE FURTHER NOTICE that if the Hearing Panel concludes that the Respondent did commit any or all of the contraventions alleged by the Association in the Notice of Hearing, the Hearing Panel may pursuant to By-law assess and order any investigation and prosecution costs determined to be appropriate and reasonable in the circumstances. DATED atvancouver, this 4th day of April, WARREN FUNT INVESTMENT DEALERS ASSOCIATION OF CANADA SUITE 1325, 650 WEST GEORGIA STREET VANCOUVER, BC. V6B 4N9 VICE-PRESIDENT, WESTERN CANADA, MEMBER REGULATION