Court Information
Ontario Court of Justice
Parties
Between:
Her Majesty the Queen
— And —
Shaida Bandali
Before the Court
Justice K. Caldwell
Reasons for Judgment released on: November 23, 2015
Counsel
Mr. Cameron Watson — counsel for the Crown
Mr. John Sheard — counsel for the accused Ms. Shaida Bandali
Judgment
K. Caldwell J.:
1Ms. Bandali has pleaded guilty to engaging in securities trading without being registered to do so pursuant to the Ontario Securities Act ("the Act").
Overview
2Ms. Bandali, a Rouge Valley Hospital employee, provided names of new mothers who had given birth in the hospital to Ms. Paula Edry of Knowledge First Financial ("Knowledge First"). Ms. Edry then used these names as potential investor contacts. In return, Ms. Bandali received $1 per name and gained approximately $12,000 by providing thousands of names over the course of four years.
The Facts
3Ms. Bandali worked as a file clerk at the Rouge Valley Hospital and thus had access to the hospital's confidential database. She obtained the names of mothers who had given birth at the hospital and provided these, along with addresses, phone numbers and, on occasion, baby names and ages to Ms. Edry.
4Ms. Edry was the branch manager of a Thornhill, Ontario location of Knowledge First. Knowledge First sells Registered Education Savings Plans ("RESPs") and manages the funds held by such plans. Nineteen people worked at this location. Representatives at this branch would then contact these mothers shortly after they returned home in an attempt to sell the mothers RESPs for their children. Some of the mothers described high-pressure sales tactics such as repeated phone calls. Some or all of these representatives and others, including two nurses, are charged in a separate proceeding that is still before the courts.
5Often in these types of cases the companies involved are not registered in accordance with the Act and the companies are shams, resulting in losses to the victims of vast sums of money. There is no suggestion in this case of fraudulent activity or monetary loss to the victims as a result of any illegal activity. Knowledge First is registered to engage in the legitimate business of selling and managing RESPs. At issue in this case and the associated proceeding are the sales tactics at the particular branch. Knowledge First has terminated Ms. Edry's employment as a result of these events.
Ms. Bandali's Securities Violation
6Under the Act, no one shall engage in the business of trading in securities unless registered to do so in accordance with Ontario's securities laws.[1] Ms. Bandali is not registered.
7Any act or conduct done in furtherance of a securities trade is captured by the definition of "trade" in section 1 of the Act.[2]
8Ms. Bandali was engaged in the business of trading in securities by supplying for profit the names of potential investors to Ms. Edry as the provision of the names was an act or conduct that was done in furtherance of a securities trade. Some, though not all, of the individuals contacted as a result purchased RESPs from Knowledge First.
Sentencing Positions of the Parties
9Mr. Watson for the Crown contends that a 90-day intermittent jail sentence is necessary.
10Mr. Sheard for Ms. Bandali submits that a $20,000 fine is appropriate.
Decision on Sentence
11I find that jail is too harsh but, on the other hand, the $20,000 fine is too lenient. A much higher fine, in the amount of $36,000, reflects the appropriate balancing of all sentencing principles. Ms. Bandali will owe $45,000 given the 25% surcharge that will be added administratively. Further, there will be a two-year probationary period with a 300-hour community service component.
Purposes of the Securities Act
12The Act is designed to protect investors from unfair, improper or fraudulent practices. Additionally, it exists to encourage fair and efficient capital markets and inspire confidence in those markets.[3]
Sentencing Principles and Caselaw
13Counsel provided me with a number of decisions. They are useful regarding first principles but none are on point factually. They involve violations on the part of those directly involved in the companies in question. Some also involve fraud and sham companies. None were on point with the scenario in this case of an individual removed from the operation of the company but still guilty of "trading" given the wide net cast by sub-(e) of the definition of "trade" in the Act.
14The cases make it clear that both general and specific deterrence are the primary sentencing principles in these cases.[4] In R v. Von-Anhalt, Justice Moore emphasizes the high potential for abuse in the investment industry and notes that it is for that reason that sentences for violations of the Act must as their primary objective dissuade other individuals from committing such offences.[5]
The Aggravating Factors and the Victim Impact Statements
15Breach of trust. A breach of trust aggravates the seriousness of the offence. The breach in this case, however, is not the usual type that one sees in Securities Act cases. Usually, as in the R v. Castaneda case,[6] the breach relates specifically to the trust investors place in those they choose and rely on to deal with their money. The trusts that were breached in this case were of a far different sort, namely, a breach of the trust an employer must have in its employees and, secondly, a breach of the trust that patients must have in the employees of their health care facilities.
16The victim impact statements make it clear that this was the greatest concern of the women who provided the statements. One woman stated, "I don't feel safe anymore", adding "how can a hospital not protect my data?". Another said, "it [is] unfortunate that the people that we trust with our information are sometimes the people who take the greatest advantage of us".
17A third woman was very concerned because her medical file was "extremely thick", she had spent the better part of a year in and out of hospital, and she was concerned about the extent of the data that had been released. She stated, "you believe the staff working in the hospital [are] people you can trust, you end up there not because you choose to most of the time, but because your life depends on it". She then asked, "what else in my file has been seen or sold? What is in my file? And where was my file kept?".
18Another new mom said she had lost thousands of dollars – not because of poor investments on the part of the RESP company, but because she no longer trusted the company given what occurred and thus had chosen to cancel her connection with the company, losing her enrolment fees.
19Vulnerability of the victims. All of the victims had recently given birth and were thus by definition at a very stressful and vulnerable, albeit joyous, time in their lives. Two of the women stressed this particular aspect, one stating that "having a baby was a happy time for me (times 3) and after each delivery I was bombarded with phone calls and voicemails about buying RESPs when I should have been enjoying my time as a new mother". Another commented that she became "stressed out" by the phone calls as she was not yet ready to sign up for an RESP and "as a new mom, I had enough to worry about and did not need to be hassled".
Mitigating Factors
20No prior history. Ms. Bandali has neither a history of this type of behaviour nor any criminal record.
21Remorse. By definition, a guilty plea is viewed as a demonstration of remorse. Further, Ms. Bandali deserves credit for saving the many days of court resources and stress on the victims that would have resulted if this matter had proceeded to trial.
22Ms. Bandali also stated in court that she was sorry for what had occurred and I believe her. As is always the case in court, she was facing me throughout the proceedings and I was aware of her reactions as the proceedings unfolded. My impression was that she genuinely greatly regretted what occurred and was overwhelmed by the seriousness and very public nature of the proceedings against her.
23Rehabilitative steps taken. Ms. Bandali provided letters from the Muslim Welfare Centre. She has done over 200 hours of volunteer work since her arrest on this matter.
24Personal antecedents. Ms. Bandali is a 62-year-old woman who has been working for the hospital for almost 18 years. She was approaching retirement when she was arrested and was looking forward to spending more time with her husband and two adult daughters. Obviously her employment has been terminated. This offence was completely out of character.
Reasons for the $36,000 Fine plus Two Years Probation with Community Service
25I do not find that specific deterrence is particularly relevant in this case – I have no doubt that Ms. Bandali will not be a repeat offender.
26On the other hand, general deterrence is of paramount importance. The sentence must send a clear message that Securities Act violations are serious and will not be tolerated. My concern with the $20,000 fine proposed by the defence is that it is a bit too close to a so-called "licensing fee". Another theme that runs through the sentencing case law is that of avoiding fines that are low enough to be seen as simply the "cost of doing business".[7]
27It is agreed that Ms. Bandali profited $12,000. A hefty $36,000 fine, three times the amount of her profit, clearly exceeds any mere "cost of doing business". Further, such a hefty fine reflects the seriousness of the breach of trust component and the vulnerability of the victims.
28Clearly jail also would send a strong general deterrence message. I must, however, consider the mitigating factors and Ms. Bandali's own circumstances and antecedents. She has shown remorse and pleaded guilty. She has attempted to repay society by her extensive volunteer work to date. Finally, she is a woman at the end of her working years who has shown no previous behaviour of this nature. In the criminal context, jail should not be imposed if other sanctions satisfy the principles of sentencing in a given case.[8] This is particularly the case with first offenders.[9]
29I find that a $36,000 fine, combined with probation, sends a strong deterrent message. Jail is not appropriate given Ms. Bandali's previous unblemished history and given the various mitigating factors in this case. Further, a probationary period of two years provides an additional period of supervision and allows for 300 hours of community service. Those hours provide a means for Ms. Bandali to repay society for the damage that her actions have inflicted.
Released: November 23, 2015
Signed: Justice K. Caldwell
Footnotes
1Securities Act, R.S.O. 1990, c. S.5, section 25(1)
2See subsection (e) under definition of "trade" in section 1 of the Securities Act.
3Securities Act, Section 1.1
4See for example Cartaway Resources Corp. (Re), 2004 SCC 26; R v. Castaneda, 2008 ONCJ 69; R v. Von-Anhalt, [2007] O.J. No. 2745
5Supra, at paras. 39-40
6Supra.
7R v. Serfaty, [2006] O.J. No. 2281 at para. 34.
8Section 718.2 of the Criminal Code of Canada, R.S.C. 1985, c. C-46
9R v. Priest, 1996 CanLII 1381, [1996] O.J. 3369 at para. 17
