The Ontario Securities Commission (OSC) has revoked the registration of an exempt market dealer that sold securities to clients while its registration was suspended, among other regulatory violations.
The OSC reports that it has settled with an exempt market dealer firm, FCPF Corp. (formerly known as Redev Corp.) and its former chief compliance officer and ultimate designated person (UDP), Richard Crenian, concerning improper trades that took place while the firm’s registration was suspended. As a result, the firm’s registration is revoked, and Crenian agrees not to apply for registration as a UDP for eight years.
According to the settlement, FCPF became registered as an exempt market dealer in September 2009. At the time, Crenian was serving as its UDP and chief compliance officer. Initially, he didn’t meet the proficiency criteria for those positions, and was given one year to achieve the necessary qualifications. He did not, and in December 2010, OSC staff recommended that the firm’s registration be suspended.
In February 2011, FCPF’s registration was suspended until it appointed a properly qualified chief compliance officer. And, in July 2011, its registration was reinstated when a chief compliance officer was appointed.
However, in the fall of 2012, a compliance review discovered that the firm traded in securities while its registration was suspended. It also found that no KYC information was collected for certain trades, and that trades were made in reliance on the accredited investor exemption to individuals who did not qualify as accredited investors.
While the OSC’s review did not find any evidence that clients suffered any monetary loss as a result of these various breaches of securities law. The regulator’s staff recommended that their registrations be suspended. And, in February 2013, it consented to the imposition of terms and conditions on its registration which prohibited it from trading, pending negotiations with staff to settle the case.
In the settlement, FCPF admits that it did not establish proper controls to ensure regulatory compliance; and, Crenian admits that he failed to properly discharge all of his obligations under securities law too. It’s also noted that investors haven’t suffered any losses; that they have not been the subject of any regulatory action before; they accepted full responsibility for their misconduct and have expressed remorse; and, that they saved the commission the time and cost of going through a hearing.