IN THE MATTER OF THE SECURITIES ACT, R.S.O. 1990, AS AMENDED AND IN THE MATTER OF KASHMIR SINGH MAROK
DECISION OF THE DIRECTOR
Having reviewed and considered the agreed statement of facts, the admissions by Kashmir Singh Marok ("Marok"), and the joint recommendation to the Director by Marok and by staff of the Ontario Securities Commission ("Staff") contained in the settlement agreement signed by Marok June 29, 2017 and by Staff on July 4, 2017 (the "Settlement Agreement"), a copy of which is attached as Schedule A to this Decision, and on the basis of those agreed facts and those admissions, I, Marrianne Bridge, in my capacity as Director under the Securities Act (Ontario) (the "Act"), accept the joint recommendation of the parties, and make the following decision:
1. Marok's registration shall be suspended pursuant to section 28 of the Act for a period of eight weeks effective as of the date of this Decision, after which he may apply to reactivate his registration and Staff will not recommend to the Director that his application be refused unless Staff becomes aware after the date of this Settlement Agreement of conduct impugning Marok's suitability for registration or rendering his registration objectionable, and provided he meets all applicable criteria for registration at the time;
2. In the event Marok's registration is reactivated, his registration shall be subject to the following terms and conditions:
(a) close supervision for a period of not less than nine months;
(b) while Marok is subject to close supervision, his marketing activities must be pre-approved by his sponsor firm; and
(c) Marok will successfully complete the Conduct and Practices Handbook Course within twelve weeks of his registration being reactivated.
July 5, 2017
IN THE MATTER OF THE SECURITIES ACT, R.S.O. 1990, AS AMENDED AND IN THE MATTER OF KASHMIR SINGH MAROK
1. This settlement agreement (the "Settlement Agreement") relates to the registration status of Kashmir Singh Marok ("Marok") as a mutual fund dealing representative under the Securities Act (Ontario) (the "Act").
2. As more particularly described in this Settlement Agreement, Marok has engaged in conduct for which he and staff ("Staff") of the Ontario Securities Commission (the "OSC") agree that it is appropriate that his registration be temporarily suspended, and the parties have agreed to make a joint recommendation to the Director regarding the suspension of Marok's registration.
II. AGREED STATEMENT OF FACTS
3. The parties agree to the facts as stated below.
4. Since October 23, 2015, Marok has been registered under the Act with PFSL Investments Canada Ltd. ("PFSL") as a mutual fund dealing representative. Marok was never registered under the Act prior to October 23, 2015.
5. Staff is not aware of any prior securities regulatory proceedings or sanctions against Marok.
6. Marok works out of a branch office located in Etobicoke. His branch manager is MS.
7. GM is Marok's wife. At all material times, GM was an elementary school teacher at the School, which is under the jurisdiction of the Board.
8. On or around March 30, 2016, Marok initiated contact with the Board regarding a proposal by him to distribute securities marketing material to certain parents of children who attended schools within the Board. In particular, Marok wanted to provide the Board with packages (the "Packages") of materials regarding Registered Disability Savings Programs ("RDSPs") and certain mutual fund investments offered by a particular investment fund company, and then have the Board distribute the Packages to students with special learning needs who might be eligible for RDSPs.
9. Marok consulted with the Board about his proposal from approximately March 30, 2016 to April 22, 2016. During this time, the following occurred:
(a) Marok exchanged emails and/or spoke on the telephone with four representatives of the Board, including two superintendents;
(b) Marok forwarded a portion of the materials he proposed to distribute to at least one of the superintendents;
(c) Marok was informed by the Board representatives that the Board would not comply with his request to distribute the Packages, but that if he wished he could seek approval from principals of particular schools to have the Packages distributed at their school, which would be a site-by-site decision for each principal to make;
(d) On at least two occasions, Marok was informed by the superintendents that he was in contact with that they had a specific concern that the materials Marok intended to include in the Packages were commercially branded, which could appear as though the Board was endorsing one company over others;
(e) In response to the specific concern raised by the Board's representatives about his materials being commercially branded, Marok prepared an alternative informational document about RDSPs that was not commercially branded (the "Alternative Document"). Marok provided the Alternative Document to one of the superintendents and asked whether it was satisfactory to the Board. In response, the superintendent advised Marok that he did not believe the Alternative Document was necessary because similar information was already available to parents through the schools, but that in any event if he wished to pursue the Alternative Document further, there was a particular approval process for him to follow. Marok did not pursue the issue of the Alternative Document after this or include it in the Packages.
10. Following his consultation with the Board, Marok informed the principal of the School, AG, that he had received approval from the Board to distribute the Packages. In response, AG authorized the distribution of the Packages to students at his school.
11. Marok did not inform AG that the Board had declined to distribute the Packages, that it had only told him he could approach individual principals for approval to distribute the Packages their school, or that representatives of the Board had raised a specific concern that the Packages contained commercially-branded material. AG has informed Staff that had he been made aware of these facts, he would not have authorized Marok to distribute the Packages at the School.
12. Following his consultation with the Board and with AG, Marok also informed MS that he had approval from AG, and MS told him that if he had such approval he should proceed with his plan to distribute the Packages. Marok did not inform MS that the Board had raised a specific concern that the Packages contained commercially-branded material.
13. Marok states that he misunderstood the information given to him by the Board's representatives, and that it was not his intention to mislead AG, MS, or to act inappropriately in any way.
14. Marok assembled approximately 30 Packages into sealed envelopes. Each Package contained information about RDSPs produced by a specific investment fund company, securities marketing materials, documents about other products and services offered by Marok, and his business card, all of which Marok obtained from PFSL. However, each Package also contained a letter written by Marok, which had not been approved for use by PFSL, contrary to its policies and procedures.
15. On or about May 16, 2016, GM placed the Packages in the mailboxes of teachers at the School who had children in their class with an Individual Education Plan ("IEP"). An IEP can be used to accommodate the unique learning requirements of special needs children. GM had previously obtained a list of students at the School with IEPs through the School's Special Education Department. Marok never received the list from GM, who used it to determine which students should receive a Package.
16. When GM placed the Packages in the mailboxes of teachers at the School, she included a note that asked them to give the Package to the identified student to take home, and that the Board and AG had granted their approval, which she understood from Marok.
17. Beginning on or about May 17, 2016, the School and the Board received complaints from parents who had received the Packages. These parents were concerned that their child's personal information had been accessed and used to distribute the Packages.
18. Following an internal investigation by the Board, AG was removed from the School as a result of her actions.
19. Nobody who had received a Package ever contacted Marok or bought securities from him. Marok never contacted any of the students or parents aside from the instance set out in this Settlement Agreement, and never followed up with any of them after sending the Package.
III. ADMISSIONS AND REPRESENTATIONS BY MAROK
20. Marok admits that contrary to section 28 of the Act, he did not act with the integrity required of a registrant in that he did not demonstrate honest and responsible conduct by:
(a) Failing to take reasonable care to ensure that he had the informed consent of AG and MS to his plan to distribute the Packages to children with IEPs, particularly in light of the concerns communicated to him by representatives of the Board and the nature of the personal information relating to the students; and
(b) Engaging GM, who is not registered under the Act, to carry on the business of trading in securities by identifying potential clients and distributing securities marketing materials (i.e., the Packages) to those potential clients, contrary to section 25 of the Act.
21. Marok represents as follows:
(a) In pursuing the distribution of the Packages, his intent was to assist families with special needs children who might not be aware of RDSPs, and not to deceive PFSL, the School, or the Board;
(b) He honestly believed his actions were authorized; and
(c) His family has suffered as a result of this matter. In particular, GM lost her job at the School, and the couple felt compelled to move their child, who had been a student at the School, to another school.
IV. JOINT RECOMMENDATION
22. The parties jointly make the following recommendation to the Director regarding Marok's registration status:
(a) Marok's registration shall be suspended pursuant to section 28 of the Act for a period of eight weeks, after which he may apply to reactivate his registration and Staff will not recommend to the Director that his application be refused unless Staff becomes aware after the date of this Settlement Agreement of conduct impugning Marok's suitability for registration or rendering his registration objectionable, and provided he meets all applicable criteria for registration at the time;
(b) In the event Marok's registration is reactivated, his registration shall be subject to the following terms and conditions:
(i) close supervision for a period of not less than nine months;
(ii) while Marok is subject to close supervision, his marketing activities must be pre-approved by his sponsor firm; and
(iii) Marok will successfully complete the Conduct and Practices Handbook Course within twelve weeks of his registration being reactivated.
23. The parties submit that their recommendation is appropriate for the following reasons:
(a) Marok did not intend to deceive or harm anyone through his conduct;
(b) Marok has no disciplinary history in the securities industry;
(c) Marok recognizes and appreciates that he did not act with reasonable care in this matter;
(d) This matter has had serious personal consequences for Marok and his family; and
(e) By agreeing to this Settlement Agreement, Marok has saved Staff and the Director the time and resources that would have been required for an opportunity to be heard (an "OTBH") under section 31 of the Act.
24. Marok acknowledges that if the Director accepts this joint recommendation:
(a) he waives his right to request an OTBH regarding the joint recommendation, or to seek any review or appeal of the Director's decision to accept the joint recommendation; and
(b) this Settlement Agreement, and any decision of the Director approving it, will be published on the OSC's website and in the OSC Bulletin.
25. The parties acknowledge that if the Director does not accept this joint recommendation:
(a) this Settlement Agreement and all related negotiations between the parties shall be without prejudice;
(b) Marok will be entitled to an OTBH in accordance with section 31 in respect of any recommendation that may be made by Staff regarding the suspension of his registration and/or the imposition of terms and conditions on his registration.
June 29, 2017
July 4, 2017