Kyle Krajewski

September 23, 2020

Decision Director's Decision

In the Matter of Staff’s Recommendation
for the Refusal of the Reactivation
of Registration for Kyle Krajewski

Opportunity to be Heard by the Director under
Section 31 of the Securities Act (Ontario)

Decision

1. For the reasons outlined below, my decision is to reactivate the registration of Kyle Krajewski (Krajewski or theApplicant) as a dealing representative in the category of mutual fund dealer, sponsored by Royal Mutual Funds Inc. (RMFI), with the following term and condition:

Within 4 months of Krajewski's registration being reactivated that he completes and successfully passes the Ethics and Professional Conduct course administered by IFSE.

Overview

2. The Applicant is 24 years old and a recent university graduate. While attending university, he obtained a part-time position with TD Bank (TD) as a teller and progressed to a personal banking advisor. He was employed with TD from April 2018 to September 2019. Between March 20, 2019 to September 13, 2019, the Applicant obtained and was registered as a mutual fund dealing representative with TD Investment Services Inc. (TDIS).

3. Krajewski was terminated for cause by TD and TDIS, effective September 13, 2019, for inappropriately accessing customer profiles out of curiosity and without a valid business purpose which breached TD's Code of Conduct and Ethics policy as it relates to Protecting Confidential Information -- Protecting Customer Information. The customer banking profiles contain extensive portfolio and customer details. Over an approximate four-month period, Krajewski accessed 45 customer profiles and searched 33 names who were not TD customers.

4. As required by National Instrument 33-109 Registration Information, TDIS submitted a Form 33-109F1 Notice of Termination of Registered Individuals and Permitted Individuals for Krajewski. The reason provided for the termination is:

"Dismissed for Cause for breaching the Bank's Code of Conduct and Ethics policy. Misconduct relates to inappropriate access of TD customer information. There was no involvement with mutual funds. This matter will be reported to the Mutual Fund Dealers Association of Canada."

5. Krajewski was then hired by Royal Bank (RBC), effective November 3, 2019 as a banking advisor. During the interview process with RBC, Krajewski disclosed that he had been terminated for cause from TD and TDIS.

6. On March 9, 2020, RMFI submitted an application for reactivation of Krajewski's mutual fund dealing representative registration. The termination for cause disclosure was appropriately disclosed in Item 12- Resignations and Terminations of Form 33-109F4- Registration of Individuals and Review of Permitted Individuals.

7. Due to the Applicant's disclosure in Item 12, the file was assigned to the Registrant Conduct Team (Staff) of the Compliance and Registrant Regulation Branch for further review. During the course of Staff's review, information obtained from TD appears to indicate that Krajewski had not been initially forthcoming with TD about his conduct but later admitted to the conduct.

8. Staff conducted a voluntary interview with Krajewski on May 7, 2020. During the interview, Staff explored the circumstances that resulted Krajewski's termination.

9. At the conclusion of the further review, Staff informed Krajewski by letter dated July 2, 2020, that it is Staff's assessment that the Applicant is not suitable for registration because it appears to Staff that Krajewski was not honest and forthcoming with the TD investigator. Staff recommends to the Director that Krajewski's registration application be refused.

10. The Ontario Securities Commission (the Commission) oversees the registration process for firms registered in the category of mutual fund dealer and individuals registered as mutual fund dealing representatives.

11. Pursuant to section 31 of the Act, the Applicant is entitled to an opportunity to be heard (OTBH) before the Director makes a decision on Staff's recommendation. The OTBH occurred via teleconference on August 17, 2020. Mark Skuce, Senior Legal Counsel, Compliance and Registrant Regulation represented Staff and Krajewski appeared on his own behalf. Ms. Julie Scrocco, Community Manger, RBC attended as a character reference for the Applicant.

Law and Reasons

12. Subsection 27(1) of the Securities Act, RSO 1990, c.S.5, as amended (the Act) provides that the Director shall reinstate the registration of the person unless it appears to the Director that the person is not suitable for registration or that the registration is otherwise objectionable. Subsection 27(2) of the Act states that in considering whether a person is suitable for registration, the Director shall consider the requirements prescribed in the regulations relating to proficiency, solvency and integrity. Subsection 27(3) of the Act provides that the Director has the ability to impose terms and conditions on the registration of any person or company.

Staff's Submissions

13. Staff submits that Krajewski's apparent dishonesty with the TD Bank investigator and the breach of the TD Code of Conduct and Ethics calls into question his integrity and therefore, his suitability for registration, as well as a concern that his actions would make his registration otherwise objectionable.

14. Included in TD's reasons for termination was a finding that Krajewski breached TD Code of Conduct and Ethics as it relates to Protecting Confidential Information -- Protecting Customer Information.

15. Another provision of the TD Code of Conduct and Ethics covers "Cooperating with Audits, Reviews and Investigations", the Code of Conduct instructs employees that they must "fully cooperate" with internal investigations, and continues: "Further, we must not in any way obstruct, hinder or delay any internal investigation. The obligation to cooperate may extend to providing truthful information pursuant to, or in the defense or prosecution of, legal proceedings and investigations involving TD, its customers, or employees." However, the TD Investigative Report did not cite this provision of the Code of Conduct and Ethics as one of the reasons for termination.

16. The investigative report indicates that Krajewski admitted viewing two profiles and initially denied viewing other profiles. After further discussion he admitted to viewing 45 other customer profiles without authorization and searching 33 other non-customer names. He also initially denied knowing a customer but later admitted to knowing the customer, after being presented with the evidence.

17. During the voluntary interview with Staff, when asked about the specific details that lead to his termination and his apparent lack of cooperation with the TD investigation, Krajewski did not appear to be forthright. The responses included statements that he did not know how many customer profiles were improperly accessed and estimated that it was "around 15 to 20", which was less than half of the actual number. Other responses included vague answers to questions such as he did not have a good recollection of the events.

Applicant's submissions

18. During the OTBH, Krajewski explained that he was not trying to be vague or evasive with Staff about the number of client profiles he accessed. He contends that the circumstances that lead to his termination is a difficult mental place to think back to, so he wasn't trying to be evasive.

19. As for the interaction with the TD investigator, Krajewski reiterates that his actions were because of nervousness and not knowing where the conversation was going. His actions were not coming from a position of dishonesty, trying to mislead, or attempt to be evasive.

20. Krajewski did not share any of the personal information with anyone. The searches were conducted out of curiosity.

21. Krajewski provided further context to his personal situation at the time of the TD interview and thereafter. He was working, attending university, taking on a new position and planning a wedding so with all those factors he did not have a good recollection of the events.

22. Throughout the voluntary interview and the OTBH, Krajewski repeatedly stated that he takes full responsibility for his actions.

Findings

23. The outcome of this OTBH turns on two issues. The first is whether Krajewski was intentionally dishonest with the TD Investigator and Staff by being vague and evasive which would impugn his integrity. The second is whether the reactivation of Krajewski's registration would be otherwise objectionable.

24. On the issue of integrity, integrity is not defined under the Act. However, in considering the integrity of an individual to be registered, the Commission has held in prior cases that an assessment of integrity should be guided by the criteria set out in paragraph 2.1(2)(iii) of the Act: "This provision states that an important principle that the Commission shall consider in pursuing the purposes of the Act is 'the maintenance of high standards of fitness and business conduct to ensure honest and responsible conduct by market participants.'"{1}

25. Upon reviewing the information submitted in this matter, it is my opinion that during the voluntary interview with Staff, Krajewski did not appear to be intentionally evasive or attempting to downplay the severity of the breaches of the TD Code of Conduct and Ethics. Staff read statements from the TD Investigative Report to Krajewski and he was reacting to the statements from a report that he was not familiar with, relying on his memory and the general statement provided on the Notice of Termination for context. Krajewski received a copy of the TD Investigative Report as part of Staff's materials for this OTBH. Krajewski's other responses and explanations seemed credible.

26. As for the claim that Krajewski was dishonest during the TD investigation, due to his young age and lack of experience in a professional environment, it is reasonable that an unsolicited call to human resources without understanding the purpose of the meeting could be intimidating and make it difficult to formulate initial responses. In the end, Krajewski did admit to all of the conduct and took full responsibility for his actions.

27. I do not have any evidence that TD considered Krajewski's conduct during the investigation to be a breach of the TD Code of Conduct and Ethics as it relates to Cooperating with Audits, Reviews and Investigations. Staff did not put forth any information that they discussed this claim with TD so without knowing TD's position on this point, I am unable to make a finding.

28. Based on the above, I find that Krajewski's integrity has not been impugned by his conduct.

29. On the issue of whether the reactivation of registration would be otherwise objectionable, the term "otherwise objectionable" is not defined in the Act. However, "the Commission has previously determined that a purposive approach should be taken in considering whether registration is objectionable. The purposes of the Act, as described in section 1.1, are to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in capital markets."{2}

30. Krajewski acted in an improper manner when he accessed 45 customer profiles without a valid business purpose and searched 33 names of non-TD customers which was determined to be a breach of the TD Code of Conduct and Ethics as it relates to Protecting Confidential Information -- Protecting Customer Information. This breach of privacy harmed investors and permitting the reactivation of registration without Krajewski taking appropriate steps to rehabilitate his fitness for registration would erode confidence in Ontario's capital markets. Therefore, I find his reactivation of registration to be otherwise objectionable.

31. During the intervening time since his termination with TD and this OTBH, Krajewski has taken steps to rehabilitate his fitness for registration which I believe affords him a second chance without further delay.

32. In Re Sawh (2016), 39 OSCB 2477, the Director set out six factors that must be considered in making a determination on an applicant's suitability for registration after a finding by the Director or the Commission that the applicant was not suitable for registration. Such determination includes evaluating the evidence supporting each of the factors, prior to making a decision on the subsequent application for registration:

a. the applicant must show by a sufficient course of conduct that he/she can be trusted in performing business duties;

b. the applicant must introduce evidence of other independent, trustworthy persons with whom the applicant has been associated since the prior refusal, suspension or revocation of registration;

c. a sufficient period of time must have elapsed for the purposes of general and specific deterrence;

d. where proficiency is at issue, the applicant must demonstrate how he or she has specifically remediated his or her proficiency;

e. the applicant must demonstrate that the misconduct that led to the prior refusal, suspension or revocation is unlikely to recur in the future by no longer engaging in business with non-compliant business associates; and

f. the applicant must demonstrate remorse and take full responsibility for his or her past conduct.

33. Krajewski, during this OTBH, responded to the factors as follows:

a. Since being terminated from TD, Krajewski has demonstrated a sufficient course of conduct that demonstrates that he can be trusted to perform business duties. At his initial and subsequent interviews with his current employer, he proactively informed the hiring managers that he was terminated for cause and the conduct that led to his termination. Also, when applying for a reactivation of his registration he disclosed the termination on the registration forms.

b. Julie Scrocco, Community Manger, RBC attended the OTBH and provided a character statement and discussed her interactions with Krajewski. Scrocco stated that "during his tenure, Krajewski has represented himself with pure honesty and integrity". Also, "his ethical behaviour is extremely reflective in client experience surveys, feedback from his team, feedback from his partners, as well as reflective in his holistic advice that he's actually providing".

c. Krajewski registration was terminated in September 2019. He started working at RBC in November 2019 and applied for reactivation of his registration on March 9, 2020. But for the termination disclosure, it is likely that Krajewski's reactivation of his registration would have been granted because Staff did not raise any other ground to refuse his registration. Allotting for a 5-day service standard, Krajewski could have been registered on or about March 13, 2020. Therefore, I will consider the more than 6-month period between applying for registration and the date of this decision to be sufficient time to have elapsed for specific and general deterrence.

d. Proficiency is not at issue in this matter.

e. Scrocco stated that there has been no unauthorized access to client information and having knowledge of the prior conduct, RBC has not put any tailored supervisory procedures in place restricting access. Further, Krajewski has sought opportunities to educate himself in both ethics and integrity by thoroughly studying and reviewing course materials for the Personal Financial Planner exam along with other books on this topic.

f. Finally, Krajewski expressed remorse and fully understands that client privacy is a very serious matter and sincerely takes full responsibility for his actions. Further he has also expressed this remorse to Scrocco and has reassured her that that conduct will not happen again.

34. While Krajewski did complete some self-study in the area of ethics, I believe he would benefit from a course in ethics. Therefore, it is my decision to impose a term and condition on his registration that limits the duration of Krajewski's registration to four months unless he completes and successfully passes the Ethics and Professional Conduct course administered by IFSE before his registration expires.

35. My rationale for proceeding in this manner, is that the Applicant is in the very early stages of his career with limited professional experience and seemed credible during this OTBH. He took responsibility for his actions, took steps to learn from his mistake, had a relevant and credible character witness from his current employer and he disclosed the reasons for his termination to his new employer and the regulator. Despite his conduct while employed at TD and TDIS, Krajewski has appeared to make efforts to rehabilitate himself and learn from his mistakes. My decision may have been different if there was a failure to disclose detrimental information to a current employer or the regulator, or there was a more experienced or mature applicant.

"Debra Foubert", J.D.

Director

Compliance and Registrant Regulation Branch

Ontario Securities Commission