The Ontario Securities Commission today approved a settlement agreement with Ron Hew regarding allegations that he traded in the accounts of at least 17 investors between 1992 and 2004 in exchange for a percentage of profits achieved, without being registered to do so.
Hew admitted making the trades by obtaining internet account passwords and trading authorizations for the investors’ accounts.
Hew further admitted that:
- through his trading, he depleted virtually all funds in the investors’ accounts;
- he did not conduct suitability reviews;
- he employed the same high risk trading strategy, primarily in U.S. hi-tech stocks often utilizing margin, for all investors; and
- he did not adequately disclose to new investors the losses he had incurred in the accounts of past investors.
Hew also admitted to having been warned by the OSC in July 2001 that the above activity and the establishment of an investment club require registration. However, Hew continued to trade in the accounts of investors after 2001 and established the investment club, for which he directed all trading, in April 2002.
As part of the approved settlement, the OSC ordered Hew to cease trading in securities for a period of 15 years, with the exception of any RRSP accounts that he establishes in the future and in which he has sole beneficial interest. He was also reprimanded..
In ignoring the OSC’s warning in July 2001 and his continued belief that he could have recouped investors’ losses if further funds had been made available to him, the commission stated that Hew’s behavior was “totally unacceptable.”
The OSC noted that while, as a matter of general deterrence, a monetary sanction might have been appropriate in this case, given Hew’s bankruptcy and present unemployment, the proposed sanctions were in the public interest.