The OSC issued allegations on Tuesday against former advisor Mark Steven Rotstein and his firm, Equilibrium Partners Inc. (EQ), that they violated securities laws by trading without registration. The allegations have not been proven and the OSC has scheduled a hearing in the case for March 24.
According to the OSC’s allegations, Rotstein was registered as an advisor from 1997 until 2012, first with RBC Dominion Securities Inc. and later at Scotia Capital Inc. The OSC states that after facing two disciplinary proceedings brought by the Investment Industry Regulatory Organization of Canada (IIROC), both of which were settled, Rotstein was prohibited from registering with IIROC for 18 months under a settlement agreement that was approved in 2014.
“As a result, Rotstein was not eligible for registration until January 3, 2016 at the earliest,” the OSC’s allegations state. “However … by the time the second IIROC settlement was accepted, Rotstein had incorporated EQ, and they had been engaging in unlawful trading and advising for a year.”
The OSC now alleges that between July 2, 2013 and Oct. 4, 2014, “Rotstein and EQ carried out more than 500 transactions for and with clients” worth about $14.45 million. Most of these trades were carried out electronically, and some happened over the phone, the OSC alleges. The regulator alleges that this amounts to trading and advising without registration.
“Rotstein and EQ obtained personal and corporate information from clients, including their passwords. Rotstein then communicated with market participants in order to execute buy and sell orders for clients, and to convey or obtain information about clients. During most of these communications, Rotstein impersonated his clients. In so doing, he repeatedly misled market participants and their employees, in order to conduct activity for which he and EQ should have been, but were not, registered,” the OSC alleges.