William J. Furlong

The applicant sought a review of a Canadian Investment Regulatory Organization (CIRO) decision finding that he engaged in unapproved outside business activities and securities-related business by recommending and facilitating the sale of syndicated mortgage investments.

The Capital Markets Tribunal dismissed the application, finding no error in the CIRO Panel's conclusions that the applicant's conduct constituted trading and an unapproved outside business activity.

The Tribunal also upheld the sanctions imposed, which included a permanent prohibition from conducting securities-related business, a $300,000 fine, and $30,000 in costs.

In an enforcement proceeding, the moving parties (Cormark and Kennedy) sought a summons directing a non-party (Canopy) to produce documents listed in privilege logs previously provided to Staff.

The Capital Markets Tribunal found that the documents appeared relevant to the moving parties' ability to make full answer and defence, particularly regarding Canopy's state of mind.

The Tribunal issued the summons and ordered that the documents be produced to a third-party referee to conduct a privilege review, as the logs raised questions about the validity of the solicitor-client privilege claims.

During the merits hearing, after Staff closed its case and the parties filed an agreed statement of facts, the respondents requested additional time to gather and present evidence regarding the amount of money repaid to investors.

The respondents had previously stated they would not introduce evidence.

The Capital Markets Tribunal denied the request, finding it was brought too late, the respondents could not assure the evidence was accessible or helpful, and granting it would cause significant unfairness to Staff.

Following a merits decision finding that the respondents engaged in illegal distribution of securities, unregistered trading, securities fraud, and improper revenue recognition, the Capital Markets Tribunal determined the appropriate sanctions and costs.

The Tribunal ordered disgorgement totaling $4.91 million, administrative penalties totaling $3.175 million, and significant market restrictions, including permanent bans for the GBR parties and multi-year bans for the First Global parties.

The Tribunal also ordered the respondents to pay costs totaling $1,080,285, apportioned based on their respective roles and the time spent investigating and litigating the various contraventions.

Following a merits decision finding that the respondent mutual fund sales representative acted unfairly, dishonestly, and in bad faith towards a vulnerable client by failing to manage conflicts of interest, the Capital Markets Tribunal held a sanctions and costs hearing.

The respondent had accepted appointments as attorney for property and alternate executor, and was named sole beneficiary of the client's estate, without immediately reporting these conflicts to his employer.

The Tribunal ordered permanent market bans, including a director and officer ban, and an administrative penalty of $500,000.

The Tribunal declined to order disgorgement of the estate's value, finding no causal connection between the breach and the testamentary gift.

Costs of $85,000 were awarded to Staff.

Following a merits decision finding that the respondents engaged in fraudulent conduct by diverting $234,864.04 from a solar energy fund contrary to its offering memorandum, the Capital Markets Tribunal held a hearing to determine sanctions and costs.

The Tribunal ordered disgorgement of the diverted funds, imposed administrative penalties totaling $476,000, and ordered the respondents to pay $112,500 in costs.

The Tribunal also imposed permanent market bans on the respondents, subject to limited carve-outs for personal trading and acting as directors of specific private family companies.

Staff of the Ontario Securities Commission alleged that Polo Digital Assets, Ltd. operated a crypto asset trading platform accessible to Ontario residents without complying with registration and prospectus requirements.

The Capital Markets Tribunal found that the Crypto Contracts and Crypto Futures Contracts offered on the platform were 'investment contracts' and therefore securities.

The Tribunal concluded that Polo Digital engaged in unregistered trading and illegal distribution of securities, contrary to ss. 25(1) and 53(1) of the Securities Act.

The Tribunal ordered permanent market participation bans, an administrative penalty of $1.5 million, disgorgement of USD 1,825,417.89, and costs of $138,371.50.

Staff of the Ontario Securities Commission alleged that Cronos Group Inc. improperly recognized revenue and overstated its U.S. goodwill and intangible assets, and that its former Chief Financial Officer failed to take appropriate steps to address revenue recognition issues.

The respondents admitted to the misconduct and entered into settlement agreements with Staff.

The Capital Markets Tribunal approved the settlements, finding that the agreed sanctions, including administrative penalties, costs, and an independent review of internal controls, were in the public interest and achieved specific and general deterrence.

Staff of the Ontario Securities Commission sought approval of a settlement agreement with eToro (Europe) Limited, a Cyprus-based brokerage firm. eToro admitted to breaching Ontario securities law by operating an online trading platform that allowed Ontario residents to trade contracts for differences (CFDs) without being registered or filing a prospectus.

Despite previous assurances to Staff that it did not accept trades from Ontario residents, eToro opened nearly 2,500 accounts for Ontario investors.

The Commission approved the settlement, finding it in the public interest, and ordered an administrative penalty of $550,000, disgorgement of $1,791,163, and costs of $25,000, noting eToro's cooperation and implementation of enhanced compliance procedures.

The Ontario Securities Commission approved a settlement agreement with Royal Mutual Funds Inc. (RMFI) regarding breaches of mutual fund sales practices.

RMFI paid its representatives enhanced compensation for selling proprietary funds over third-party funds, contravening NI 81-105, and failed to maintain adequate compliance systems under NI 31-103.

The Commission approved the settlement, which included a reprimand, a $1,100,000 administrative penalty, and $20,000 in costs, finding it reasonable and in the public interest given RMFI's cooperation and remedial steps.

The Ontario Securities Commission approved a settlement agreement with Mackenzie Financial Corporation regarding its failure to comply with mutual fund sales practices under National Instrument 81-105.

Between 2014 and 2017, Mackenzie provided excessive non-monetary benefits to dealing representatives, including expensive golf events, sports tickets, and iPads, and failed to maintain adequate systems of control and supervision.

Mackenzie admitted to the breaches, cooperated with the investigation, and agreed to a reprimand, an independent consultant review, a $900,000 administrative penalty, and $150,000 in costs.

The applicants sought a review of a decision by a Director of the Ontario Securities Commission refusing to amend the individual applicant's registration to designate her as the ultimate designated person (UDP) for the applicant firms.

The Director had found the proposed amendment 'otherwise objectionable' under s. 27(1) of the Securities Act.

The Commission found that the individual applicant's father, who had been permanently suspended as UDP and prohibited from acting as an officer or director of any registrant due to prior non-compliance, continued to act as an officer of the firms by directing sales and recruiting.

The Commission held that the individual applicant, as chair of the boards, failed to take meaningful steps to ensure compliance with the prior order restricting her father's involvement.

Given the firms' history of non-compliance and the critical role of a UDP in promoting a culture of compliance, the Commission concluded that the proposed registration was objectionable and dismissed the application.

Staff of the Ontario Securities Commission alleged that the Manulife Dealers failed to establish adequate controls and supervision, resulting in clients paying excess fees on certain investment products and mutual funds.

The Manulife Dealers self-reported the inadequacies, cooperated with Staff, and entered into a no-contest settlement agreement.

The Commission approved the settlement, finding it in the public interest given the dealers' prompt self-reporting, extensive cooperation, voluntary payments of $495,000 and $25,000 for costs, and an $11.7 million compensation plan for affected clients.

The Ontario Securities Commission held a hearing to consider a settlement agreement between Staff and the respondents regarding unregistered trading, illegal distribution, and fraud.

The respondents raised approximately $5.4 million from investors through promissory notes without being registered or filing a prospectus.

They also engaged in deceitful conduct by paying distributions from new investors' funds and misrepresenting the funds' performance.

The panel approved the settlement agreement, noting the respondents' admission of breaching Ontario securities law, their commitment to repay harmed investors, and the inclusion of oversight mechanisms.

Staff of the Ontario Securities Commission sought an inter-jurisdictional enforcement order against the respondent following his criminal convictions for fraud and forgery.

Staff requested permanent bans on trading, acquiring securities, and acting as a director, officer, or promoter.

The respondent agreed that sanctions were warranted but sought carve-outs to allow him to continue working as a creative producer and to facilitate tax and estate planning.

The Commission rejected the proposed carve-outs for the director, officer, and promoter bans, finding they were not protective of the public and could create loopholes.

However, the Commission accepted the respondent's proposed carve-outs for the acquisition and trading bans, allowing him to trade in personal tax-advantaged accounts, as his misconduct was not related to trading through brokerage accounts.

Waverley Corporate Financial Services Ltd. and its Chief Compliance Officer, Donald McDonald, applied for a hearing and review of a Director's decision imposing terms and conditions on their registrations.

Staff alleged that Waverley's business model, which involved sponsoring dealing representatives who were closely connected to independent issuers, breached Ontario securities law.

The Commission found that while the representatives did not act exclusively for the issuers, Waverley failed to adequately identify, manage, and disclose material conflicts of interest.

Furthermore, Waverley's systems of control and supervision were inadequate, and McDonald lacked the necessary proficiency to act as CCO.

The Commission imposed strict terms and conditions on their registrations to address these deficiencies.

Staff of the Ontario Securities Commission alleged that the respondents failed to establish and maintain appropriate controls and procedures regarding supervision, resulting in certain clients paying excess fees.

The respondents self-reported the inadequacies, cooperated with Staff, and entered into a no-contest settlement agreement.

Under the agreement, the respondents committed to paying nearly $50 million in compensation to affected clients, making a voluntary payment of $2.1 million to the Commission, and reimbursing $90,000 in costs.

The Commission approved the settlement agreement, finding it to be in the public interest given the respondents' prompt self-reporting, cooperation, and lack of dishonest conduct.

Staff of the Ontario Securities Commission alleged that the Scotia Dealers failed to establish, maintain, and apply appropriate controls and procedures with respect to supervision, resulting in certain clients paying excess fees.

The Scotia Dealers self-reported the inadequacies, cooperated with Staff, and entered into a no-contest settlement agreement.

The Commission approved the settlement agreement, noting the Scotia Dealers' commitment to pay compensation to affected clients, enhance policies and procedures, and make voluntary payments of $800,000 for investor education and $50,000 for costs.

The Commission found the settlement to be in the public interest.

The applicant, a mutual fund dealing representative, applied for a hearing and review of a Director's decision suspending his registration for six months.

Over a ten-year period, the applicant had forged client signatures, obtained pre-signed forms, and provided incorrect answers on compliance questionnaires.

The Commission found that the applicant's conduct was fundamentally dishonest, rendering him unsuitable for registration and in breach of Ontario securities law.

The Commission ordered that the applicant's registration be suspended for six months.