In 2005, the Ontario Securities Commission (OSC) agreed to a 15-year trading ban for a man that engaged in unregistered advising. Now, the Ontario Capital Markets Tribunal has fined and permanently banned him for breaching that original ban.
Following a hearing, the tribunal found that Ron Carter Hew violated a trading ban that was imposed on him under a settlement with the regulator more than 20 years ago.
In that settlement, Hew admitted that he engaged in unregistered advising for 17 investors, who suffered between $600,000 and $800,000 in losses. As a result, he was banned from trading for 15 years, but with a carve out allowing him to trade in his own RRSP.
More than 20 years later, the OSC alleged that he violated that ban by opening several non-RRSP accounts at discount broker, Questrade Inc. — including a pair of margin accounts (one opened in 2012, and one in 2020) and a TFSA (also opened in 2020) — and trading in those accounts.
In its decision, the tribunal rejected the regulator’s contention that simply opening the non-RRSP accounts represented a breach of the trading ban, saying, “the mere opening of the account cannot reasonably be considered an act in furtherance of a trade.”
However, it did find that he actively traded in those accounts — making hundreds of trades while the ban was in effect, between September 2017 (the first date when trading data is available from Questrade) and July 2020 (the end of the ban) — which did breach the 2005 order.
“Hew’s misconduct is serious,” the panel said. “Failing to comply with Tribunal orders demonstrates a disregard for the rule of law and the Tribunal’s processes and undermines the public’s confidence in the capital markets.”
In its decision, the tribunal noted that the panel that approved the 15-year trading ban in the 2005 settlement “expressed skepticism that the agreed sanctions would be sufficient to deter further wrongdoing…”
Now, the tribunal has found that “Hew intentionally breached the 2005 order, demonstrating that the skepticism was warranted.”
As a result, the tribunal said that, “it is important to make the sanctions in this proceeding more severe than the 2005 order to achieve both specific and general deterrence.”
To that end, it permanently banned him from trading, with no carve out allowing him to trade his RRSP.
It also permanently banned him from participating in the capital markets as a director or officer of an issuer, or a registrant — and it ordered monetary sanctions against him, including a fine of $100,000 and a $38,283 order for costs.
Hew didn’t participate in the OSC’s latest enforcement proceeding against him.
According to the tribunal’s decision, the OSC “went to great lengths to serve Hew, both electronically and in person, and … It became clear that Hew was attempting to evade personal service.” The tribunal therefore decided to go ahead with the enforcement proceeding without his participation.