An Investment Industry Regulatory Organization of Canada (IIROC) has suspended two brokers who were still working for a firm in Quebec after an Ontario Securities Commission (OSC) panel ordered them banned for 10 years for illegal insider trading and tipping offences.
Following an expedited hearing, the IIROC hearing panel ruled that Paul Azeff and Korin Bobrow should have their registrations suspended and that they must cease dealing with the public immediately.
Last year, the OSC ruled that the pair had violated securities laws between 2004 and 2007 by trading on inside information and tipping others when they were brokers with CIBC Wood Gundy. Azeff and Bobrow are appealing the OSC’s decision in that case.
See: OSC levies $2.7 million in sanctions in tipping and insider trading case
CIBC Wood Gundy terminated the brokers when the OSC’s allegations were originally brought in 2010. However, while that case played out, they joined Euro Pacific Canada Inc. in Quebec after IIROC approved their re-registration, subject to strict supervisory conditions, and that their re-registration would be reviewed once the OSC rendered its decision.
The OSC’s ruling is currently under appeal before the Ontario Divisional Court. However, the court declined to stay the OSC’s sanctions against the brokers pending the outcome of the appeal; that decision not to stay the sanctions is also being appealed.
In the meantime, the IIROC hearing panel has decided to suspend Azeff’s and Bobrow’s registrations, noting that insider trading and tipping “are among the most serious offenses in the securities industry.” The decision also notes that IIROC’s “gatekeeper role” is its “principal duty and reason for being.”
The IIROC hearing panel found that strict supervision is not enough to “completely ensure the protection” of investors. “Suspension is the only appropriate measure here,” it ruled. As a result, it ordered them suspended immediately.
Subsequently, Azeff andBorrowhave announced that they are appealing the IIROC hearing panel’s decision to the Bureau de décision et de révision. They have filed a motion seeking a stay of the panel’s order suspending them and a review of the panel’s decision.
The Bureau will hear the application for a stay order at a hearing in Montreal on March 10 and the application for a review of the hearing panel’s decision is slated for April 11.