Greg Thompson
IN THE MATTER OF THE SECURITIES ACT, R.S.O. 1990, c. S.5, AS AMENDED AND IN THE MATTER OF THE REGISTRATION OF GREG THOMPSON
1. Greg Thompson ("Thompson") has been registered under the Securities Act (Ontario) (the "Act") as an exempt market dealing representative with Becksley Capital Inc. ("Becksley") since February 7, 2010.
2. Pursuant to terms and conditions on its registration, Becksley performed a retrospective review of a random sample of trades made by the firm during the period November 1, 2011 to July 31, 2014 to assess whether an exemption to the prospectus requirement applied to the trade, and whether the trade was suitable for the client. A report of this review (the "Report") was provided to staff of the Ontario Securities Commission ("Staff").
3. The Report, and subsequent related information provided to Staff by Becksley, included two trades made by Thompson to a particular client (the "Client") that were concerning to Staff, as there was reason to believe that one of the trades may not have qualified for an exemption to the prospectus requirement, and that both trades may not have been suitable for the Client.
4. Staff conducted a review of the circumstances surrounding the trades to the Client.
5. On October 21, 2015, Thompson attended a voluntary interview with Staff during which he was provided an opportunity to respond to Staff's concerns regarding the trades to the Client.
6. On the basis of the Report, Staff's review of the circumstances surrounding the trades to the Client, and statements made by Thompson at his interview, Staff recommended to the Director that the terms and conditions found in Schedule "A" be imposed on his registration (the "Terms and Conditions") pursuant to section 28 of the Act.
7. The basis for Staff's recommendation that the Terms and Conditions be imposed on Thompson's registration was set out in a letter addressed to Thompson dated December 18, 2015, which alleged the following facts:
(a) On November 17, 2011, Thompson obtained from the Client a subscription for $200,000 in bonds of Jaymor Capital Ltd. ("Jaymor") (the "First Investment").
(b) Jaymor was a high risk investment.
(c) According to her know-your-client ("KYC") form completed on November 17, 2011, the Client was 93 years old at the time of the First Investment, her income was between $50,00 and $99,000, her net financial assets and net worth were $400,000, her investment knowledge was good (although during Thompson's interview he had very little knowledge of the Client's investment experience), and her risk tolerance was medium (however at Thompson's interview he could not provide a reasonable explanation as to how he assessed that the Client had a medium risk tolerance).
(d) The First Investment, which was made pursuant to the "$150,000 minimum amount" exemption to the prospectus requirement, accounted for 50% of the Client's net worth.
(e) On January 20, 2012, Thompson obtained a second subscription from the Client for Jaymor bonds, this time in the amount of $50,000 (the "Second Investment").
(f) It did not appear as though any prospectus exemption was available for the Second Investment.
(g) As a result of the Second Investment, 62.5% of the Client's net worth was invested in a single high-risk investment, and she had no ability to access those funds for at least three years (the remaining time to maturity for the bonds).
(h) The First Investment and Second Investment were both unsuitable investments for the Client in light of her KYC information, the features of the investment as identified in its offering memorandum, and her highly concentrated position in the offering. Pursuant to the internal trade review process undertaken by Becksley, the firm's new chief compliance officer concluded that these were in fact unsuitable investments for the Client.
(i) In processing the trades to the Client, Thompson appears to have been inappropriately influenced by the Client's son and the son's own interests.
(j) Thompson appears to have complied with an internal request from a Becksley employee to prepare a written explanation for the trades to the Client which was self-serving on the part of Thompson and inaccurately reflected his dealings with the Client and her son.
8. Staff's letter of December 18, 2015 informed Thompson of his right to request an opportunity to be heard (an "OTBH") before the Director made a decision with respect to Staff's recommendation that the Terms and Conditions be imposed on Thompson's registration, pursuant to section 31 of the Act.
9. Thompson did not request an OTBH, and instead both Thompson and Becksley consented to the imposition of the Terms and Conditions on January 13 and January 15, 2016, respectively.
10. The Terms and Conditions were imposed on Thompson's registration effective January 15, 2016, pursuant to section 28 of the Act.
January 19, 2016
Schedule A
Terms and Conditions for Registration of Greg Kevin Thompson
The registration of Greg Kevin Thompson (the "Registrant") under the Securities Act (Ontario) (the "Act") is subject to the following terms and conditions, which were imposed by the Director pursuant to section 28 of the Act.
Further Education
1. The Registrant must successfully retake the Canadian Securities Course Exam or successfully take the Exempt Market Products Exam within six months of the date of these terms and conditions, and must provide proof of completion to the Ontario Securities Commission (the "OSC"), Attention: Deputy Director, Registrant Conduct Team, Compliance and Registrant Regulation Branch.
No Trading and No New Accounts
2. Until such time as term and condition 1 above is satisfied, the Registrant shall not:
(a) Trade in securities;
(b) Open any new client accounts; or
(c) Accept any assets from any new clients.
Strict Supervision
3. The registration of the Registrant shall be subject to terms and conditions 3(a) and 3(b) for a period of no less than one year, effective as of the date that term and condition 1 above is satisfied:
(a) The registration of the Registrant shall be subject to strict supervision; and
(b) The Registrant's sponsoring firm must submit written monthly supervision reports (in the form specified in Appendix "A") to the OSC, Attention: Deputy Director, Registrant Conduct Team, Compliance and Registrant Regulation Branch. These reports must be submitted within 15 calendar days after the end of each month.
These terms and condition of registration constitute Ontario securities law, and a failure by the Registrant to comply with these terms and conditions may result in further regulatory action against him, including a suspension of his registration.
Appendix "A"
Strict Supervision Report
I hereby certify that supervision has been conducted for the month ending __________, 201_ of the trading activities of Greg Kevin Thompson (the "Registrant") by the undersigned. I further certify the following:
1. All orders, both buy and sell, and sales contracts have been reviewed by a supervising officer Becksley Capital Inc. prior to the trade occurring.
2. All client accounts have been reviewed for leveraging, suitability of investments, overconcentration of investments, and any amendments to know your client information.
3. A review of trading activity on a daily basis has been conducted of the dealing representative's client accounts.
4. No transactions have been made in any client account until the full and correct documentation is in place.
5. The Registrant has not been granted any power of attorney over any client accounts.
6. All payments for the purchase of the investments were made payable to the issuer.
7. No client complaints have been received during the preceding month. If there have been complaints, an outline of the nature of the complaint and follow-up action initiated by the company is attached.{1}
8. There has been no handling of clients' funds or securities or issuance of cheques to clients without management approval.
9. Any transfer of funds or securities between clients' accounts has been authorized in writing and reviewed by the supervising officer.
10. Spot audits relative to the Registrant's client accounts have been conducted during the preceding month to ensure compliance with these procedures and no violations of these procedures were discovered.
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Date
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Signature of Supervising Officer
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Name of Supervising Officer
{1} In the event of client complaints or violations of securities legislation and/or the dealer's internal policies and procedures, the Ontario Securities Commission must be notified immediately.