COURT FILE NO.: CV-12-9555-00CL
DATE: 20151119
ONTARIO
SUPERIOR COURT OF JUSTICE COMMERCIAL LIST
BETWEEN:
THE WISH GROUP INC. and FRANK CIANCIULLI
Plaintiffs
– and –
ROBERT DE VRIJ and INTERACTIVE BROKERS CANADA INC.
Defendants
David A. Hausman and Lane Krainyk, for the Plaintiffs
Nicholas Kluge and Niklas Holmberg, for the Defendant Interactive Brokers Canada Inc.
HEARD: October 6, 7, 8, November 13, 2015
REASONS FOR JUDGMENT
Conway J.
[1] Frank Cianciulli (“Cianciulli”) authorized Robert de Vrij (“de Vrij”) to open a corporate account for The Wish Group Inc. (“Wish Group”), Cianciulli’s personal holding company, at Interactive Brokers Canada Inc. (“Interactive”). Cianciulli signed a corporate resolution appointing de Vrij as an officer of Wish Group and granted de Vrij sole trading authority over the account. Cianciulli transferred $2 million into the corporate account. De Vrij invested those funds in commodity futures and lost over $1.8 million in a three month period.
[2] The plaintiffs, Cianciulli and Wish Group, brought this action against de Vrij and Interactive. They have since discontinued the action against de Vrij.
[3] The plaintiffs claim against Interactive in negligence. They allege that Interactive breached its “know your client” and “gatekeeper” obligations by failing to make the necessary inquiries of Cianciulli before opening the Wish Group account under de Vrij’s trading authority. The plaintiffs seek to hold Interactive responsible for the investment losses they sustained as a result of de Vrij’s mismanagement of their funds.
[4] For the reasons that follow, the action is dismissed.
Factual Background
[5] The relevant facts are largely not in dispute.[^1]
Initial Meetings and Discussions
[6] Cianciulli met de Vrij in the summer of 2010. Cianciulli, a successful entrepreneur, was looking to retain an investment advisor. De Vrij approached him about providing investment advice. De Vrij told Cianciulli that he had 20 years’ experience in the financial industry as a trader, particularly with commodities futures contracts. Cianciulli decided to have de Vrij invest his funds and agreed that de Vrij would receive 20% of the profits he generated.
[7] In the fall of 2010, de Vrij made a proposal to Cianciulli. De Vrij proposed that he would create a “family office” – Wish Capital Inc. (“Wish Capital”) – through which he would invest Cianciulli’s family money, establish a successful investment track record, and use that track record to solicit other high net worth individuals to invest with Wish Capital. According to the proposal, Cianciulli and de Vrij would own 65% and 35%, respectively, of the equity of Wish Capital. As discussed below, those plans never came to fruition.
[8] In September 2010, de Vrij contacted Mark Bennett (“Bennett”), Vice-President of Sales of Interactive. Interactive is a discount broker. It provides order execution services only. Interactive is a registrant with the Ontario Securities Commission (“OSC”) and a registered dealer with the Investment Industry Regulatory Organization of Canada (“IIROC”). Interactive is known as a “suitability exempt dealer” under IIROC rules, as it does not provide investment advice to clients.[^2]
[9] Bennett had known de Vrij for many years. De Vrij had been the principal of a registered portfolio management company which had been a client of Interactive. By the time de Vrij contacted Bennett in September 2010, that account had been inactive for well over a year. On their initial phone call, de Vrij told Bennett that he had an opportunity to open some managed accounts.
[10] Nothing more transpired between de Vrij and Bennett for several months. On January 17, 2011, de Vrij sent Bennett an email showing de Vrij’s new coordinates as “President and Chief Investment Officer of Wish Capital Inc.” Over the next few weeks, de Vrij and Bennett had several telephone calls and emails, in which they discussed how the account was to be opened, what documents and information were required, and how the account would be funded.[^3]
[11] De Vrij told Bennett about the future plans to establish Wish Capital as a portfolio management company. De Vrij told Bennett that he would be obtaining the necessary registrations for Wish Capital in the future when he planned to solicit money from other investors. Those plans never materialized, no account was ever opened in the name of Wish Capital,[^4] and no funds were ever invested through Wish Capital.[^5]
The Wish Group Account is Opened
[12] De Vrij (after consulting with Cianciulli) instructed Bennett to open a corporate account in the name of Wish Group.[^6] Wish Group is 100% owned by Cianciulli. Bennett told de Vrij what documents he needed in order to open the account. De Vrij arranged for them to be signed and returned to Bennett. The documents included the Interactive Brokers Customer Agreement (completed by de Vrij online) and the Interactive Financial Information Disclosure document (signed by Cianciulli as sole beneficial owner of Wish Group).
[13] Cianciulli signed a corporate resolution (the “Corporate Resolution”) appointing de Vrij as Wish Group’s trading officer with the title “Chief Investment Officer”. Interactive obtained various corporate documents for Wish Group (certificate of incorporation, certificate of status), as well as banking information to confirm the individual identities of Cianciulli as beneficial owner of Wish Group and de Vrij as the person with trading authority.
[14] On March 15, 2011, the trading account was opened. On March 16, 2011, Cianciulli transferred $2 million from his personal account into the Wish Group’s account at Royal Bank of Canada (“RBC”) and then to the Wish Group account at Interactive. De Vrij started trading in the Wish Group account, mostly in commodity futures contracts.
Events from April to June 2011
[15] On April 20, 2011, Cianciulli became aware, through his review of information provided by de Vrij, that Wish Group had sustained a loss of $568,198. Cianciulli was livid. He emailed de Vrij and demanded that the money in the account be returned to RBC. Cianciulli told Wish Group’s Chief Financial Officer Roy Booth (“Booth”) to work with de Vrij to ensure that the remaining money was sent back to RBC immediately.
[16] Booth’s evidence is that he called Interactive and told the representative on the phone that de Vrij was a rogue trader and he wanted to revoke his trading authority. Booth says he was told that he could not do that because his name was not associated with the account and that only de Vrij could revoke his own authority. Interactive has no record of any such telephone call.
[17] Cianciulli subsequently spoke to de Vrij who told him that the losses were not abnormal and that he could recoup them. Cianciulli decided to give de Vrij a second chance but instructed Booth to get daily statements from de Vrij.
[18] Between April 22 and May 24, 2011, de Vrij provided four Excel spreadsheets showing that the balance in the account was stable, at approximately $1.5 million. These reports were false. Despite Booth’s requests, de Vrij did not provide any of the supporting documentation for these spreadsheets nor the passwords for the Wish Group account.[^7]
[19] On June 17, 2011, Cianciulli and Booth received an email from de Vrij indicating that the balance in the Wish Group account as of June 15, 2011 was $1,547,581 (this was false) and that a full update would be forthcoming. They never received an update.
[20] On June 20, 2011, Cianciulli and Booth contacted Interactive to obtain information about the account. They were directed to Bennett as the account manager. He sent them a statement showing that the balance in the account was only $127,775. Cianciulli changed the trading authority on the account to himself and had the remaining funds transferred to the Wish Group's account at RBC.
Know Your Client and Gatekeeper Obligations
[21] The standard of care that an investment dealer owes to a client as a matter of contract or tort is informed by regulatory requirements and obligations imposed by IIROC and the relevant securities commission: Young Estate v. RBC Dominion Securities, [2008] O.J. No. 5418, at para. 182; Stradiotto v. BMO Nesbitt Burns Inc., 2014 ONSC 3477, at paras. 119-120.
[22] The central obligation on which the plaintiffs rely in this case is the “know your client” obligation (“KYC obligation”). This is known as the cardinal rule of the brokerage business: Varcoe v. Sterling, (1992), 1992 CanLII 7478 (ON SC), 7 O.R. (3d) 204 (Gen. Div), at p. 213.
[23] IIROC Rule 1300.1(a) imposes an obligation on a dealer to “use due diligence to learn and remain informed of the essential facts relative to every customer and to every order or account accepted.”
[24] The information required to be collected to satisfy the KYC obligation depends on the nature of the services provided by the dealer. If the dealer is providing investment advice, it must ensure that investments are “suitable” for the client and must therefore obtain information about the client’s financial situation, investment knowledge, investment objectives and risk tolerance. While a “suitability exempt dealer” is not required to obtain this information, the dealer is nonetheless subject to the general KYC obligation, although it is correspondingly relaxed.[^8]
[25] There is no dispute in this case about the information and documentation that a suitability exempt dealer requires in order to open a corporate account. The dealer is required to identify all 10% (or more) beneficial owners of the corporation; verify the identity of the beneficial owners; obtain the names and occupations of directors; and obtain a certificate of corporate status. The dealer is also required to obtain a corporate resolution to ascertain who is authorized to trade in the account on behalf of the corporation. The identity of that individual must also be verified.[^9]
[26] The plaintiffs further rely on the “gatekeeper” role played by investment dealers. The gatekeeper role requires the dealer to exercise diligence when faced with situations that raise a potential of illegal activity.[^10] While the content of this obligation will vary with the circumstances, the level of inquiry demanded will depend upon the information available to the dealer. Cases have held, however, that the dealer must respond to “red flags”; that is, information known to the registrant that raises an issue respecting compliance with securities laws.[^11]
Parties’ Positions and Expert Evidence
[27] The plaintiffs’ position is that Bennett should have contacted Cianciulli before opening the Wish Group account. They argue that even though de Vrij was given trading authority over the Wish Group account pursuant to the Corporate Resolution, there were “red flags” that should have caused Bennett to question whether de Vrij was acting as an unregistered investment advisor to Cianciulli. They say that Bennett should have called Cianciulli and inquired about his relationship with de Vrij and how de Vrij was being compensated before opening the Wish Group account. They argue that in not doing so, Interactive failed to meet its KYC and gatekeeper obligations.
[28] The plaintiffs rely on the expert evidence of Larry Boyce to support their position.[^12] Mr. Boyce has extensive experience in the field of securities regulation.[^13] He says that Interactive was required to make further inquiries of Cianciulli in light of the following “red flags”:
• The information provided to Bennett in the account opening documents was that Wish Group was a holding company for Cianciulli’s personal assets, had a net worth of $5 million and holdings in human resources, communications and technology companies. Mr. Boyce says Bennett should have questioned why a company like Wish Group would have required a full time Chief Investment Officer;
• In his emails to Bennett, de Vrij had styled himself as President and Chief Investment Officer of Wish Capital. Mr. Boyce says Bennett should have sought to better understand the relationship among Wish Capital, Wish Group and de Vrij;
• Bennett knew that de Vrij had acted as a professional investment advisor in the past. Mr. Boyce says Bennett should have made further inquiries to determine whether de Vrij was truly a corporate officer or was in fact acting as Cianciulli’s investment advisor under the guise of being a corporate officer.[^14]
[29] Interactive’s position is that it fully complied with its KYC and gatekeeper obligations in opening the Wish Group account. It argues that it properly opened the account in accordance with IIROC regulations and Interactive’s own internal procedures and was not required to make any further inquiries of Cianciulli before opening the account.
[30] Interactive relies on the expert evidence of Lorne Levy to support its position. Mr. Levy has extensive experience in the investment industry and has been responsible for opening numerous corporate accounts.[^15] He says that accounts for corporate clients are routinely opened at broker dealers and the corporation must designate an officer or employee who is authorized to enter orders and issue instructions to the dealer on behalf of the corporation.[^16]
[31] Mr. Levy says that the dealer is entitled to rely on a corporate resolution granting the person authority to trade on behalf of the corporation. He states that “it has long been industry practice that member dealers may rely upon an appropriately executed corporate resolution. This practice in my opinion is fully consistent with the rules and regulations of the industry.” Mr. Levy disagrees that there were any red flags warranting further investigation by Bennett. In his view, Interactive fully complied with its KYC and gatekeeper obligations.
Analysis
[32] The issue in this case is whether Interactive fell below the standard of care, as informed by the KYC and gatekeeper obligations, when it failed to make further inquiries of Cianciulli before opening the Wish Group account under de Vrij’s trading authority.[^17] In my view, it did not.
[33] First, Bennett received specific instructions from de Vrij (who had received instructions from Cianciulli) to open a corporate account in the name of Wish Group. Whatever discussions de Vrij and Bennett may have had about future plans for Wish Capital, it is clear that Bennett was instructed to open the account in the name of Wish Group. He complied with those instructions.
[34] Second, there is no dispute that once de Vrij instructed Bennett to open the corporate account, Bennett obtained the necessary corporate documentation and information about Wish Group, its beneficial owner and authorized trading authority, all as required by IIROC rules and Interactive's internal policies and procedures.[^18]
[35] Third, Bennett obtained the Corporate Resolution setting out who had trading authority for the Wish Group account. The Corporate Resolution was signed by Cianciulli as the sole director and beneficial owner of Wish Group. There was nothing irregular about that document. There is no suggestion that it was not properly executed or that it was obtained improperly from Cianciulli. Indeed, Cianciulli funded the Wish Group account after he signed the Corporate Resolution.
[36] Fourth, the plaintiffs cannot point to any IIROC rule or authority that requires the broker to contact the beneficial owner of a corporation and inquire about his relationship with the person being granted trading authority or to inquire into that person’s compensation arrangements.[^19] In my view, the plaintiffs are seeking to impose a higher level of inquiry on Interactive than is required by the regulatory authorities.
[37] I have considered the alleged “red flags” that Mr. Boyce says should have prompted further inquiry on the part of Interactive, as well as the explanations provided by Mr. Levy.
[38] The plaintiffs submit that Bennett should have questioned why a small company like Wish Group would have had a Chief Investment Officer. Mr. Levy’s evidence is that he has seen different titles given to people in small companies and that the title alone would not be a cause for concern.
[39] The plaintiffs submit that because de Vrij had styled himself as President of Wish Capital in his emails, Bennett should have further explored the relationship between Wish Capital, Wish Group and de Vrij. Mr. Levy’s evidence is that people in small companies often wear different hats and act as officers of several companies.[^20] He says this would not be a cause for concern. What is important is for the broker to ensure that the name of the corporation in whose name the account is being opened coincides with the corporate documents provided to the broker. Again, I note that Interactive was given specific instructions to open the account in the name of Wish Group and all corporate documents provided were those of Wish Group.
[40] The plaintiffs submit that Bennett should have made inquiries because he knew de Vrij had been a professional money manager in the past. Mr. Levy’s evidence is that “the hiring of someone that had been previously employed and licensed in the Industry would not be a concern, as movement of experienced people from the “sell-side” of the Industry to the “buy-side” of the Industry is a common occurrence.”
[41] I accept Mr. Levy’s evidence. I find that under the circumstances, there were no “red flags” that warranted further action. Interactive was entitled to rely on the specific instructions to open an account in the name of Wish Group and to rely on the Corporate Resolution that authorized de Vrij to trade as an officer of Wish Group.
[42] The plaintiffs rely on cases in which a dealer was found to have breached its KYC obligation. All of those cases involve “suitability” dealers that failed to obtain the necessary information in the context of providing investment advice to their client. They have no application to the case at bar.
[43] The plaintiffs also rely on the case of RBC Dominion Securities Inc. (Re), 2012 IIROC 44 in support of their argument that Interactive breached its gatekeeper obligation. In that case, the RBC investment advisors handled the accounts of 39 unrelated clients, all of whom had granted trading authority to the same individual, Earl Jones, who was not registered as an investment advisor. He was later found to be a fraudster. Disciplinary proceedings were commenced against the RBC advisors. A settlement agreement was reached in which it was agreed that the advisors had failed to perform their roles as gatekeepers by allowing Earl Jones to hold multiple trading authorizations from unrelated clients.
[44] RBC is also distinguishable from this case. In RBC, the key “red flag” was the fact that Earl Jones had opened up multiple unrelated accounts over which he had sole trading authority. That is entirely different from the facts of this case, in which de Vrij was granted trading authority over a single corporate account, as an officer of the company pursuant to a signed resolution.
[45] Unfortunately for Cianciulli, his decision to grant de Vrij sole trading authority over the Wish Group account turned out to be a bad one. However, it is not a decision for which Interactive can be held responsible. Interactive did not breach any of its duties or fall below the standard of care. Interactive has no liability for the plaintiffs’ investment losses.
Damages
[46] While I have found no liability, if I had concluded that Interactive was responsible for the plaintiffs’ losses, I would have found that the plaintiffs failed to mitigate their damages after April 20, 2011.
[47] A plaintiff will not be able to recover for those losses that could have been avoided by taking reasonable steps. The burden is on the defendant to prove that the plaintiff failed to make reasonable efforts to mitigate and that mitigation was possible: Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, [2012] 2 S.C.R. 675, at para. 23-24.
[48] Cianciulli knew on April 20, 2011 that de Vrij had lost $570,000. Cianciulli knew he had made a mistake in having de Vrij invest Wish Group’s money.[^21] Cianciulli was resolute – he told Booth to get the rest of the money transferred back to RBC immediately.
[49] I am not prepared to find that Booth made the call to Interactive on April 20, 2011.[^22] However, even if he did, I find that Cianciulli failed to make reasonable efforts to mitigate his damages after that call. Cianciulli took no further steps to escalate the matter with Interactive. He took no further action to transfer the money back to RBC. Rather, he made a decision to allow de Vrij to continue investing Wish Group’s funds.
[50] Further, mitigation was possible. In June 2011 when Cianciulli and Booth called Interactive, they were transferred to Bennett quickly. Cianciulli was able to gain access to the Wish Group account and have the money transferred back to RBC. He could have done so on April 20, 2011. While Cianciulli was entitled to give de Vrij a second chance after April 20, 2011, that was his decision. Interactive cannot be held responsible for any losses the plaintiffs sustained after that date.
[51] With respect to the quantum of damages, both experts provided a calculation on an opportunity cost basis. I prefer the evidence of Mr. Levy, who has extensive investment experience. His calculation is based on the investment objectives set out by de Vrij in the Wish Group account documents at the time the account was opened.[^23] Cianciulli’s evidence is that he trusted de Vrij and did not ask for any details as to what de Vrij was going to be doing with the account at Interactive.[^24] If I had found liability, I would have accepted Mr. Levy’s calculation of damages, as set out in his September 11, 2015 report.
Decision
[52] The plaintiffs’ claim is dismissed.
[53] If the parties are unable to agree on costs, I will receive brief submissions (no longer than 3 pages double spaced, exclusive of bill of costs). Interactive’s submissions shall be received within 15 days and the plaintiffs’ within 15 days thereafter.
Conway J.
Released: November 19, 2015
COURT FILE NO.: CV-12-9555-00CL
DATE: 20151119
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
BETWEEN:
THE WISH GROUP INC. and FRANK CIANCIULLI
Plaintiffs
– and –
ROBERT DE VRIJ and INTERACTIVE BROKERS CANADA INC.
Defendants
REASONS FOR JUDGMENT
Conway J.
Released: November 19, 2015
[^1]: Given that the facts were largely not in dispute, D. Brown J. (as he then was) ordered the trial to proceed as a hybrid trial. The fact witness evidence was tendered through affidavits and cross-examination transcripts. The only viva voce evidence was from the expert witnesses.
[^2]: IIROC Rule 1300.1(r) and (t) and Rule 3200(A).
[^3]: All of the telephone calls were recorded and transcripts included in the record. All of the email exchanges were also included in the record.
[^4]: The plaintiffs argue that if the account had been opened in the name of Wish Capital as a portfolio management company, a subaccount would have been opened for each client of Wish Capital and reports would have been sent directly to the client. In this case, as noted below, Interactive was specifically instructed to open a corporate account in the name of Wish Group and the only funds invested through Interactive were those of Wish Group.
[^5]: The shares of Wish Capital were never issued. While there is evidence that Wish Capital had a bank account, there is no evidence that it carried on business as a portfolio manager.
[^6]: On February 4, 2011, de Vrij and Bennett discussed whether it was to be a personal or corporate account. Bennett said that it made no difference to him but that a corporate account would probably be better on the tax side. De Vrij indicated he needed to get instructions from Cianciulli. On February 9th, after consulting with Cianciulli, de Vrij told Bennett to open a corporate account.
[^7]: Bennett’s evidence is that while he was not obliged to do so, he reviewed the status of the account from time to time and noticed there were losses. On June 7, 2011, Bennett called de Vrij but did not offer investment or trading advice because he was barred from doing so as a discount broker. De Vrij told Bennett that his “guys” were “ok right now” and “they know we’re down”. De Vrij said he was going to try to “pull this thing back up” and “try and just play it very, very cautiously with what’s left in that account at the moment.”
[^8]: Labricciosa v. TD Waterhouse, 2004 CanLII 27606, at para. 51 (Ont. S.C.); aff’d 2005 O.J. 677 (C.A.).
[^9]: See IIROC Rule 1300.1(b); IIROC Rule 2500, II (Opening New Accounts). See also IIROC’s “Opening Your Retail Account” brochure, at para. 9.
[^10]: Re Zosiak, 2012 IIROC 59, at para. 53; Re Georgakopoulos, 2009 IIROC 25, at para. 19.
[^11]: Re Georgakopoulos, 2009 IIROC 25, at paras. 12, 16. Re Collias, 2009 IIROC 27, at para. 11.
[^12]: Mr. Boyce bases his conclusion that de Vrij was acting as an investment advisor on the application of the “business trigger test” (using the factors set out in Companion Policy to National Instrument 31-103CP).
[^13]: Mr. Boyce has held senior positions in investigation and compliance at the Toronto Stock Exchange, the Investment Dealers Association of Canada, IIROC and with his own consulting firm.
[^14]: Mr. Boyce had referred to another red flag - that Interactive’s client records showed that someone at Wish Group had control over other accounts at Interactive. Mr. Boyce was not aware that those other accounts had been inactive for well over a year. He admitted on cross-examination that if he had known that, he would not have considered this to be a red flag.
[^15]: Mr. Levy has been a senior officer at Yorkton Securities Inc., Midland Doherty Ltd., Merit Investment Corporation and Taurus Capital Markets Ltd.
[^16]: Mr. Levy’s evidence is that there is no industry requirement that an officer/employee entering orders for a corporate account be registered. In his report, Mr. Boyce says that he does not disagree in any material way with Mr. Levy on this point but that this applies only to persons who are “actual officers or employees of the corporation”. Mr. Boyce says that Interactive should have acted on “red flags” to ascertain that de Vrij was acting as an investment advisor and was not an actual officer of Wish Group.
[^17]: The issue in this case is not whether or not de Vrij had to be registered as an investment advisor. The issue is whether Interactive should have taken additional action in light of the information available to it (and the alleged “red flags”) and whether or not it fell below the standard of care in its dealings with de Vrij and the Wish Group account.
[^18]: In IIROC’s March 26, 2012 Guidance letter on Know Your Client and Suitability obligations, IIROC recognizes that in the case of a corporate account, the client is the corporation. It states “the shareholders (beneficial owners) of a corporation are separate and distinct from the corporate legal entity. The contractual relationship arising out of the creation of the account is between the Dealer Member and the corporation.” Interactive obtained the required information about its client, Wish Group.
The plaintiffs further argue that Interactive breached its duty under IIROC Rule 200.1 by sending statements on the account to de Vrij and not to Cianciulli. Rule 200.1 requires that statements be sent to “the customer” (in this case, Wish Group). The account opening documents authorized sending electronic reporting to de Vrij’s email address (de Vrij used the email address Robert@wishgroup.ca in his dealings with Bennett). I accept Mr. Levy’s evidence that the statements for Wish Group were properly sent to de Vrij as the authorized trading authority of the corporation. In a phone call on March 18, 2011, Bennett and de Vrij had a discussion about the possibility of providing Cianciulli report management privileges. This never was put into place. There is no evidence that de Vrij or Cianciulli ever followed up about it. Cianciulli received reporting on the account through de Vrij, as was Cianciulli’s expectation. I reject the plaintiffs’ argument that there was any breach of duty by Interactive in not following up on providing report management to Cianciulli.
[^19]: Mr. Levy’s evidence is that there was no such obligation on opening a corporate account. Again, I have already noted above that IIROC considers the corporation, not its beneficial owner(s), to be the client.
[^20]: This is reinforced in this case by the fact that the email address that de Vrij used in his communications with Bennett was Robert@wishgroup.ca. I also note that for a period of time de Vrij’s remuneration was paid by another Wish company, i.e. Wish Mobile.
[^21]: Cianciulli told de Vrij “my gut was telling me that transferring $2 million to IB [Interactive Brokers] was a mistake and my hunch as usual was right”. He told Booth “that mf has been feeding me bullshit for a month, cashed up my ass, he’s either a scammer or a retarded trader, but clearly an incompetent liar so I’m done with him.”
[^22]: Booth’s evidence is that he made one call to Interactive. He did not make a note of the call or the representative’s name. Interactive’s evidence is that it records all of its calls and there was no record of this call. Further, call centre employees are required to escalate any call that raises an issue of improper trading (Booth said he told the representative on the phone that de Vrij was a rogue trader) and neither the customer service or compliance personnel were informed of a call alleging improper trading in April or May of 2011. I also note that on June 20, 2011 when Cianciulli and Booth called to complain, the matter was escalated and they were quickly put through to Bennett.
[^23]: Those were: growth, trading profits, speculation and hedging.
[^24]: Mr. Boyce admitted that it would be difficult to assess damages if Cianciulli had not provided instructions to de Vrij.