An Ontario man hung out his advisory shingle without any kind of licensing or regulatory approval reminding industry players why regulation does nothing to stop those intent on breaking the law.
In a case of avarice, 80-year old Toronto resident Joseph Bochner and his personal holding company, Gatekeepers of Wealth Inc., have been found by OSC staff to have participated in the trading of securities without being registered and to have committed securities fraud over seven years between 2006 and 2013.
Earlier this week the OSC accepted the settlement agreement between its staff and the respondents in this case.
Bochner’s agreed to pay an administrative penalty of $50,000, repay the $75,824 still owing to investors from the original $220,000, pay $10,000 in costs to the OSC and avoid any trading of securities in the province of Ontario which includes the management of investment funds.
The facts of the case are straightforward.
Bochner pretended to be an advisor convincing nine clients to provide $220,000 to Gatekeepers of Wealth which would be used to purchase securities on their behalf, held in trust for them, and completely redeemable and safe.
In addition to the funds raised, the respondents also collected $160,000 in advisory fees over the seven-year period from a number of clients. In one example the OSC found that an investor paid $10,000 in a single year for the investment advice provided by Bochner on their portfolios.
In the case of the $220,000, none of it was used to purchase securities but rather for groceries, rent, credit card payments and other day-to-day expenses. This is clearly fraudulent conduct and should be punished regardless of the age of the respondent.
However, the second part revolving around advisory fees does bear some consideration.
Although Bochner provided advice on client portfolios, it doesn’t appear as though Gatekeepers ever had custody or safekeeping of those investments. In addition, the OSC staff do acknowledge that the respondent emailed advice to some of the individual investors. It’s possible that you could interpret this advice as suggestive rather than specific in nature.
The fact that these investors acted upon Bochner’s recommendations and then paid him for those recommendations, it’s possible that the respondent was running a newsletter service and clients were merely paying him because they acted on the recommendations.
“Bochner provided his clients a newsletter akin to a clipping service,” the OSC’s settlement agreement notes. “Some of the amounts described as advisory fees may have been attributable to this service.”