A former rep that breached the rules of the Canadian Investment Regulatory Organization (CIRO) by engaging in assorted unprofessional conduct has been hit with a 10-year ban and $125,000 in monetary sanctions.
Last July, a CIRO hearing panel ruled that Matthew Philip Ewing, a former rep with RBC Dominion Securities Inc. and National Bank Financial Inc., violated the self-regulatory organization’s rules by engaging in conduct that, the regulator alleged, fell short of professional standards. That conduct, CIRO said, included having personal financial dealings with clients, co-mingling clients’ money with his own money, using his private email for business with clients and failing to supervise members of his team.
However, the panel dismissed a couple of other major allegations against him — finding that the SRO’s enforcement staff failed to prove that he engaged in any unauthorized discretionary trading, or that he falsified portfolio overview documents.
The panel noted that suspected unauthorized trading was the red flag that led to the regulator’s investigation in the first place, even though that allegation ended up not being proven.
According to the panel’s decision, in April 2022, Ewing had an “inordinately high volume of trades” that initially caught the regulator’s attention, raising concerns that it was “unlikely” that he had obtained prior client consent for making those trades.
However, Ewing denied that allegation, and the panel found that CIRO staff failed to prove the allegation on a “balance of probabilities.”
Instead, it found that various other conduct that was uncovered in the course of that investigation did violate CIRO’s rules, even if it wasn’t proven that investors suffered any direct harm.
At the sanctions hearing, CIRO sought a permanent ban on Ewing, along with $280,000 in disgorgement, a $100,000 fine and $50,000 in costs. Ewing’s counsel argued for a one-year suspension, a $35,000 fine and no disgorgement or costs ordered against him.
The panel’s decision on sanctions fell somewhere in the middle. It ruled that Ewing must pay a $75,000 fine and $50,000 in costs, along with a 10-year registration suspension, which would be followed by one year of supervision, if he returns to the industry.
In reaching its decision on sanctions, the panel noted that Ewing engaged in conduct that was “reckless and harmful.”
Among other things, it found that he had various “inappropriate financial interactions” with clients, including “loans and private, secret reimbursements, investments in cars and wines, in addition to securities, all outside the regulatory system.”
“As a professional, the respondent knew or ought to have known that co-mingling client money in an account of which he was a joint owner, is indefensible,” it said.
While there was no proven harm to particular clients, the panel said that the unprofessional conduct, “left clients and others without the protection of those requirements and standards” and that this undermined confidence in the markets.
“The harm was the breach of the public’s trust in the integrity and reputation of the financial markets,” it said.
However, without evidence of specific harm to clients, or that Ewing personally profited from his misconduct, the panel declined to order disgorgement against him, saying that “CIRO enforcement staff failed to meet its burden to present a convincing argument for disgorgement.”
It also imposed a shorter suspension and a smaller fine than CIRO staff sought.
On costs, the panel sided with the SRO’s staff, noting the CIRO’s total costs were over $300,000 and that it argued that Ewing should contribute $50,000 to that bill. The panel concluded that CIRO’s costs were reasonable, and that a $50,000 contribution from Ewing “is appropriate in the circumstances of this case.”