Approved Person's misconduct was deemed ‘very serious’ by the regulator
A former Approved Person of a CIRO-regulated Dealer Member has been given a permanent ban and fined more than $1.6 million for conducting business activities outside of his firm.
The regulator held two hearing panels, in December 2023 and January 2024, at which it determined that Mississauga, Ontario based Paul O'Brian Walker contravened MFDA rules through several incidents of misconduct which it deemed “very serious” including that he:
- recommended, sold, or facilitated the sale of shares and debentures offered by a company that he incorporated and operated, thereby engaging in securities related business that was not carried on for the account of the Dealer Member or through its facilities,
- solicited and received money from clients for the purchase of shares offered by a company that he incorporated and operated, which gave rise to a conflict or potential conflict of interest that the Respondent did not disclose to the Dealer Member or otherwise ensure was addressed by the exercise of responsible business judgment influenced only by the best interests of the client,
- engaged in personal financial dealings with client EL by soliciting and accepting a loan from client EL, which gave rise to a conflict or potential conflict of interest that the Respondent did not disclose to the Dealer Member or otherwise ensure was addressed by the exercise of responsible business judgment influenced only by the best interests of the client, and
- engaged in outside business activities that were not disclosed to or approved by the Dealer Member.
Many of the incidents began in 2010 and continued until 2014, or in some cases 2021. In 2010 Walker incorporated IFS Global Technologies Inc. (IFS), a financial technology company intended to develop software for mutual fund advisors. His involvement as a director, chair and president, shareholder, and creditor was disclosed to his employer but he failed to disclose or seek approval to solicit investments or facilitate the sale of securities in IFS.
He incorporated three further companies but did not disclose his involvement to the Dealer Member.
The panel heard that Walker’s clients and investors lost $1,573,772 and have not been repaid.
“The Respondent’s misconduct was very serious because it was dishonest, deliberate and contrary to MFDA Rules, particularly the duty to act fairly, honestly and in good faith and to uphold the high standard of business conduct required of Approved Persons,” the hearing panel's decision stated.
The panel’s decision was to sanction Walker with:
- permanent prohibition of the Respondent's authority to conduct securities related business in any capacity while in the employ of or associated with any Dealer Member of CIRO that is registered as a mutual fund dealer, and
- a fine of $1,673,772.
He is also required to pay $15,000 costs.
