A Manitoba Securities Commission (MSC) regulatory hearing panel has reduced the penalties that an Investment Industry Regulatory Organization of Canada (IIROC) hearing panel imposed on an advisor after considering new evidence in the case.
Specifically, the MSC hearing panel has ruled that the penalties IIROC handed down against Ravindra Kumar Suppal, a rep with First Financial Securities Inc. (FFS) in Winnipeg, should be reduced, even as it upheld the IIROC hearing panel’s findings that he violated several IIROC rules.
The MSC hearing panel confirmed the IIROC hearing panel’s findings that Suppal breached the self-regulatory organization’s (SRO) rules by making unsuitable recommendations and unauthorized trades and that he failed to meet his KYC obligations.
However, the MSC hearing panel reduced the penalties that the IIROC hearing panel imposed. In particular, the MSC hearing panel cut Suppal’s fine to $50,000 from $150,000; curbed his suspension; and ordered that a three-year period of close supervision is no longer required. The $20,000 in costs order against Suppal was not changed.
Suppal appealed both an IIROC liability decision against him from 2013 and a penalty decision from 2014, arguing that the IIROC hearing panel made errors in both rulings by following incorrect principles, overlooking material evidence and misperceiving the public interest in the penalty decisions.
On appeal, the MSC hearing panel upheld the IIROC panel’s decision on liability in the case. However, in terms of the penalty decision, the MSC concluded that “the IIROC panel erred by failing to base its conclusions as to penalties on the evidence.”
In reaching the decision, the MSC hearing panel noted that it “had the benefit of additional evidence,” particularly additional witness testimony, which was unavailable to the IIROC hearing panel, “in part because of IIROC’s inability to compel witnesses.”
With the benefit of the additional evidence, the MSC found that there was a mitigating factor the IIROC panel did not consider and that several “aggravating factors” were not adequately supported by the evidence in the case.
“In our view, the evidence fails to support a finding of persistent and egregious misconduct throughout the period in question and the amount of commission described does not seem to us to be ‘very considerable’,” the MSC hearing panel found.
As a result, the MSC hearing panel ruled that a $150,000 fine is “disproportionate to the severity of his misconduct,” reducing the sanction to $50,000. It also found that a suspension is not warranted in the case, but that Suppal should rewrite the Conduct and Practices examination.
Alberta recently became the first province to give IIROC the ability to compel witness testimony. The SRO is hoping to secure similar powers in other provinces.
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