IN THE MATTER OF
THE SECURITIES ACT
R.S.O. 1990, C. S.5, AS AMENDED
IN THE MATTER OF YORKTON SECURITIES INC., GORDON SCOTT PATERSON, PIERGIORGIO DONNINI, ROGER ARNOLD DENT, NELSON CHARLES SMITH AND ALKARIM JIVRAJ
|Hearing:||December 19, 2001|
|Panel:||Howard I. Wetston, Q.C.||-||Vice-Chair|
|M. Theresa McLeod||-||Commissioner|
|Counsel:||Johanna Superina||-||For Staff of the Ontario Securities Commission|
Robert W. Staley
|-||For Yorkton Securities Inc.|
|Colin Stevenson||-||For P. Donnini|
|Jeffrey Leon||-||For G.S. Paterson|
|Paul LeVay||-||For N.C. Smith|
|Lawrence Ritchie||-||For R.A. Dent|
R. Paul Steep
|-||For A. Jivraj|
REASONS FOR DECISION
These are the Reasons for Decision of the Commission delivered orally on Wednesday December 19, 2001 with respect to settlement agreements between the staff of the OSC and Yorkton Securities Inc., Gordon Scott Paterson, Roger Arnold Dent, Nelson Charles Smith and Alkarim Jivraj.
The panel has unanimously approved the settlement agreements reached by staff and the respondents.
Since the facts on which the settlement agreements are based have been agreed upon, we see no need to review them for the purposes of the orders that we have made. We do, however, have some other comments with respect to the orders that have been issued.
We have before us agreements between the staff of the OSC and the respondents regarding what we characterize as the inappropriate conduct of Yorkton, Mr. Paterson and, as the orders will reflect, to a lesser extent the other respondents in this proceeding. We are of the opinion that the sanctions are sufficient to satisfy the public interest in the confidence and integrity of our capital markets. In our view, the orders serve as a strong deterrent to improper conduct on the part of registrants in the capital markets.
The settlement agreements involve a number of areas, which I will outline briefly for the public record.
They require Yorkton and Mr. Paterson to make substantial monetary payments in recognition of the seriousness of their conduct. They also call for smaller payments by Mr. Dent, Mr. Smith and Mr. Jivraj, proportionate to the nature of the conduct admitted to by each of them.
The settlement agreements recognise that under the new leadership of Mr. Sim and Mr. Schwartz, Yorkton has taken a number of positive steps in the area of regulatory compliance since February of 2001. The agreements also acknowledge that Mr. Paterson initiated the move to adopt best practices in the area of regulatory compliance and specifically provided for an independent review of Yorkton's plan in this regard.
As a term of registration, the agreement with Yorkton requires each officer and employee to execute undertakings in the forms attached as Schedule 2. In addition, it obliges Yorkton to report to staff of the Commission if any officer or employee has breached this undertaking.
The order with respect to Mr. Paterson ensures that he is removed for a period of two years from a position of authority and trust as a registrant and as an officer and director of a registrant. The order prohibits any ownership interest by Mr. Paterson as a registrant for a period of two years. The only exception to this is his current interest in Yorkton, which he has agreed to take all reasonable steps to sell. The order also imposes a six-month cease trade order on Mr. Paterson, subject to the above-mentioned exception.
Compensation has been provided by all of the respondents, in the form of costs, to the Commission for the expenses incurred in investigating this matter.
The orders have been issued on the understanding that Yorkton and the respondents have co-operated with staff to arrive at a resolution of this matter in the form of the settlements reached. The respondents have agreed to accept sanctions that satisfy the public interest in the integrity of the capital markets, without the need to resolve disputes regarding the relevant facts.
These orders must be seen to restrain future behaviour that may be contrary to the public interest. In this case, the respondents have shown a pattern of conduct that consistently placed their personal interests or their firm's interests ahead of those of their clients and the investing public. Behaviour such as that of the respondents is a paramount regulatory concern as it undermines confidence in the integrity of the capital markets. We are of the opinion that the remedies will deter registrants and all other participants in our capital markets from engaging in conduct which places senior officers and employees of a registrant in positions of conflict with their clients.
Policies relating to compliance and appropriate supervision should not be seen as regulatory burdens, but rather should be considered in light of their contribution to investor protection, fair and efficient markets and the public interest. Clear internal guidelines must exist with respect to receiving and making use of non-public information. We believe that these regulatory concerns have been addressed by way of the orders issued in this matter.
In summary, we have approved the five settlement agreements and made the orders requested. We have done so because the sanctions are sufficient to satisfy the public interest in the confidence and integrity of Ontario's capital markets.
"Howard I. Wetston"
"M. Theresa McLeod"