97/28
September 19, 1997
Released: September 11, 1997 Contact: Barbara Barry
660-4800 or (BC only)
1-800-373-6393 The British Columbia Securities Commission has reduced the penalties imposed on Devinder Randhawa, formerly a registered representative with brokerage firm Canaccord Capital Corporation, after finding that a Vancouver Stock Exchange hearing panel erred in concluding that Randhawa had violated the Exchange’s full time employment rule.
The Commission agreed with the hearing panel’s conclusion that Randhawa had violated an Exchange rule that prohibits a registered representative from making loans to a company listed on the Exchange without notifying his employer.
In November 1995, the Exchange issued a citation alleging that Randhawa had "failed to devote his full time during normal working hours to the securities business of Canaccord" and that he had "engaged in personal financial dealings with a listed company, without the knowledge or approval of Canaccord", in violation of Exchange rules and by-laws. In February 1996, the Exchange hearing panel found against Randhawa on both counts and in March 1996 the hearing panel ordered him to pay a fine of $5,000, rewrite the Conduct and Practices Handbook examination, undergo a fitness hearing before reinstatement as an approved person, if reinstated be placed under strict supervision for one year, and pay the costs of the hearing in the amount of $9,202.
In March 1996, Randhawa applied to have the Commission review the hearing panel’s decision. The Commission held a hearing and review of the decision in July 1997.
The findings of the hearing panel were related to Randhawa’s activities in seeking financing and potential business acquisitions for an Exchange listed company named Achievers Training Group Inc. Without the knowledge of Canaccord, Randhawa expended money on behalf of Achievers and was subsequently reimbursed. The hearing panel found, and the Commission agreed, that this violated an Exchange rule. The hearing panel also found that Randhawa’s activities on behalf of Achievers put him in violation of Exchange rule F.2.21. The Commission set aside that finding.
The Commission said:
The hearing panel concluded that Randhawa’s interests in Achievers gave rise to conflicts of interest with his employer ("where his personal interest in being repaid and in the success of Achievers were such that he would be inclined to spend more time on Achievers’ affairs than his employer might want") and with his clients ("[t]he advice he would be inclined to give them could be coloured by his personal interests"). Those may be real and valid concerns, but they do not relate to the allegation set out in the citation that Randhawa "failed to devote his full time during normal working hours to the securities business of Canaccord".
…
The securities business involves many potential and actual conflicts of interest, and there are a variety of regulatory tools that have been devised to address them. Some types of conflicts are prohibited. Others are regulated through disclosure, a requirement to obtain consent of the client, or review by an independent third party. There is no evidence or finding here as to whether Randhawa advised his clients on investing in Achievers shares during the period of his arrangement with Achievers or, if he did, whether he contravened any regulatory requirements in doing so. In any event, those were not the allegations of which Randhawa was given notice in the citation.
On the basis of this analysis, we conclude that the hearing panel erred in law in finding that Randhawa had breached rule F.2.21. That finding must be set aside.
As a result of this conclusion, the Commission varied the penalty imposed by the Exchange hearing panel and ordered Randhawa to pay a fine of $2,000, rewrite the Conduct and Practices Handbook examination and, if reinstated, be placed under strict supervision for three months. The Commission set aside the orders that Randhawa undergo a fitness hearing before reinstatement as an approved person and pay the costs of the hearing.
The British Columbia Securities Commission is a provincial government agency responsible for regulating trading in securities and exchange contracts. The Commission oversees the activities of the Vancouver Stock Exchange and the Investment Dealers Association of Canada (Pacific District) as self regulatory organizations for registered dealers and their salespersons.
Copies of the Commission decision (16 pages) may be obtained in person at 1100 - 865 Hornby Street, Vancouver, British Columbia.
IN THE MATTER OF the Securities Act, S.B.C. 1985,
c. 83, as amended
AND IN THE MATTER OF Devinder Randhawa
Agreed Statement of Facts and Undertaking
September 8, 1989
| 1. | | Randhawa is presently a registered representative in the corporate finance department at Haywood Securities Inc. ("Haywood"), located at 1100-400 Burrard Street, Vancouver, British Columbia and has been so employed since February, 1987. | |
| 2. | | Randhawa became involved in Achievers Media Corporation ("Achievers") after being introduced to Michael Harrison, James Janz and Joseph Bowes from 1987 to 1988. | |
| 3. | | Achievers submitted a preliminary prospectus to the Superintendent of Brokers and applied for a listing on the Vancouver Stock Exchange and a receipt was issued for the preliminary prospectus on March 1, 1989. | |
| 4. | | As a member of the underwriting team for Achievers, Randhawa was asked to write a series of articles for Achievers Magazine, a publication of Achievers. These articles dealt primarily with investment topics and the due diligence process. These articles were included in the Autumn '88, Winter '88 and Spring '89 issues. | |
| 5. | | In the Spring '89 issue of Achievers Magazine, Randhawa wrote a column which included statements indicating his personal opinion of. Achievers and its principals, as well as indicating the proposed underwriting price. | |
| 6. | | Haywood maintains a policy by which all correspondence bearing the company letterhead is to be submitted to a senior executive for review. The Spring '89 article was not submitted for review. | |
| 7. | | Randhawa acknowledges that the Spring '89 article was outside the provisions of Local Policy 3-39, "Guidelines for Advertising Issues of Securities and for Promotional Activities During the Course of Distribution". | |
| 8. | | Randhawa waives his right to a hearing and review by the British Columbia Securities Commission. | |
| 9. | | Randhawa agrees to make payment of $750.00 for costs of the investigation and to ensure that all future publications with which he is involved receive appropriate approvals and comply with Local Policy 3-39. | |
D. RANDHAW