Personal bankruptcy justifies imposition of terms and conditions on a rep’s registration, says the Ontario Securities Commission.

The OSC ordered conditions imposed in April after CIBC reported that one of the bank’s salespeople, Lenore Deonarine, filed a personal bankruptcy form. The terms and conditions called for close supervision and quarterly supervision reports from the bank.

Deonarine requested the opportunity to appeal this decision, asking that her registration be allowed to continue without terms and conditions. Deonarine argued that she is a competent mutual fund salesperson. She also said that her supervisor’s busy schedule would make it difficult to meet the supervisory conditions.

In response OSC enforcement staff recommended that terms and conditions for quarterly reporting be imposed, arguing personal bankruptcy raise concerns about continued suitability for registration. Furthermore, it is standard practice that terms and conditions are imposed upon an individual after that person files for bankruptcy.

“The registrant submitted that the terms and conditions would be an inconvenience for both her and even more so for CIBC. However, CIBC currently submits reports for a number of registrants and immediately recognized that it may have to submit quarterly supervision reports for Deonarine. Staff have consistently imposed terms and conditions on the registration of an individual filing for bankruptcy, as it affects the financial soundness and suitability of a registrant,” said the OSC in its decision. “The position of staff is consistent with the OSC mandate of investor protection.”