An insurance agent will have his license suspended for nine months by insurance regulators after a securities regulator found that he forged a letter to a client, which involved an insurance product.
The Financial Services Commission of Ontario (FSCO) has ordered a nine-month suspension for agent, Paul Vorstadt, after the Investment Industry Regulatory Organization of Canada (IIROC) found that he fabricated a letter that misrepresented the guarantee features of a product he recommended to a client. Back in 2012, IIROC announced a settlement with Vortsadt, which saw him agree to a $40,000 fine and a seven-month suspension.
FSCO has now also ordered a nine-month suspension in the case, starting March 1, noting that an advisory board found that “Paul Vorstadt was guilty of a fraudulent act and demonstrated untrustworthiness in the transaction that was the subject matter of this proceeding”.
However, FSCO’s order notes that the advisory board found that an allegation that Vorstadt was unsuitable to transact business as a life insurance agent was not established. So, it recommended that Vorstadt’s insurance licence be suspended for four months and that he be required to complete an ethics course.
According to FSCO’s order, the advisory board noted that a nine-month suspension would be appropriate for the offence, but that there were some mitigating circumstances, including that it was an isolated event, that he’d expressed remorse, and that he’d already been punished by IIROC. As a result, it said the suspension should be reduced to four months.
The superintendent of financial services ruled instead that a nine-month suspension should be imposed and that credit should be given on a day for day basis for each day of suspension served in the penalty imposed by IIROC.
The decision notes that it’s common to have licences for more than one financial service, and that discipline imposed by one regulator may be considered by another regulator. Additionally, it notes that dual licensing can impair the effectiveness of discipline if an individual is sanctioned in one area and can simply continue their business in the other area.
“For further clarity, I also emphasize that a decision by one regulator regarding the suitability of a person to hold a licence can be relevant to disciplinary actions by other regulators regarding other financial services licences. Accordingly a revocation of a financial services licence by one regulator is not an alternative to a decision to revoke another financial services licence by another regulator,” it notes.
The superintendent also decided that it was not necessary to require an ethics course, noting, “…considering the remorse expressed by Mr. Vorstadt and his co-operation, I believe that he already understands what is acceptable behaviour.”