Sabeh, Chawky - Opportunity to be Heard
In the Matter of the Registration of
Chawky Sabeh
Opportunity to be Heard by the Director
Subsection 26(3) of the Securities Act,
R.S.O. 1990, c. S.5
Chawky Sabeh
Opportunity to be Heard by the Director
Subsection 26(3) of the Securities Act,
R.S.O. 1990, c. S.5
| Date of decision: | July 28, 2009 |
| Director: | Erez Blumberger Manager, Registrant Regulation Ontario Securities Commission |
| Written Submissions by: | Rebecca Stefanec, Registration Officer Michael Denyszyn, Legal Counsel For staff of the Ontario Securities Commission Chawky Sabeh For the Registrant |
Background
[1] Chawky Sabeh (the Registrant) has been registered under the Securities Act, R.S.O. 1990, c. S.5 (the Act) since June 9, 2003. Since October 17, 2008, he has been registered as a mutual fund salesperson for PFSL Investments Canada Ltd. (PFSL).
[2] On April 7, 2009, PFSL submitted a financial disclosure change notice to the Ontario Securities Commission (OSC) indicating that on March 23, 2009, a notice of garnishment had been issued by the Ontario Superior Court of Justice (via the Small Claims Court in Hamilton) against the Registrant in relation to an outstanding credit card balance.
[3] On April 17, 2009, OSC staff sent a letter to the Registrant and to PFSL proposing terms and conditions for monthly close supervision reporting be imposed on the registration of the Registrant.
[4] Pursuant to section 26 of the Act, the Director may restrict the registration of the Registrant by imposing terms and conditions. In this regard, the Registrant has an opportunity to be heard by the Director.
[5] The Registrant requested an opportunity to be heard through written submissions.
Submissions
Summary of the Registrant’s submissions
[6] The Registrant asked that his registration be continued without any terms and conditions. He noted that despite having personal financial issues, he would never try to jeopardize his relationship with his clients nor engage his clients with any risk.
[7] The Registrant explained that “[he] was paying MJR Capital Inc. a fixed monthly payment which was the agreement between them and [him] since two and [a] half year[s] ago, but they broke the agreement suddenly without notifying [him] first and they garnished [him]”. He noted that he intends to pay his debt within the next two years.
Summary of staff’s submissions
[8] OSC staff recommended to the Director that the registration of the Registrant be subject to close supervision, as the notice of garnishment has a bearing on the Registrant’s financial solvency and there is a heightened risk that the Registrant may engage in self-interested activities at the expense of his clients.
Analysis
Suitability for registration
[9] The fit and proper standard for registration is both an initial and an ongoing requirement for registrants. The fit and proper standard is based on three well established criteria that have been identified by the OSC:
The [Registrant Regulation] section administers a registration system which is intended to ensure that all Applicants under the Securities Act and the Commodity Futures Act meet appropriate standards of integrity, competence and financial soundness … (Ontario Securities Commission, Annual Report 1991, Page 16)
[10] When analyzing these criteria staff consider:
- integrity – honesty and good faith, particularly in dealings with clients, and compliance with Ontario securities law;
- competence – prescribed proficiency and knowledge of the requirements of Ontario securities law; and
- financial soundness – an indicator of a firm’s capacity to fulfill its obligations and can be an indicator of the risk that an individual will engage in self-interested activities at the expense of clients.
[12] It is OSC staff practice to impose terms and conditions for monthly close supervision reporting on an individual’s registration when, among other things, a person files for bankruptcy, receives a notice of garnishment, receives a requirement to pay overdue taxes, or files for a consumer proposal. The terms and conditions are removed when the financial obligations resulting from the event have been satisfied. This practice is consistent with the investor protection mandate of the OSC.
Decision
[13] I find that the notice of garnishment does have a negative impact on the Registrant’s financial soundness. Based on the submissions filed and the reasons set out above, it is my decision to impose the terms and conditions as set out in Exhibit A on the registration of Chawky Sabeh.
July 28, 2009
“ Erez Blumberger”
Manager, Registrant Regulation
Ontario Securities Commission
EXHIBIT “A”
Proposed Conditions For Registration
of
Chawky Sabeh
of
Chawky Sabeh
Monthly Close Supervision Reports are to be completed on the registrant’s sales activities and dealings with clients. The supervision reports are to be retained with the sponsoring firm and must be made available for review upon request.
These terms and conditions are to continue until the obligation has been satisfied and acceptable evidence has been provided to the OSC. These terms and conditions will be removed unless the Director has reason to believe that the registrant is not suitable for unconditional renewal of registration at that time.
|
___________________________
Approved Officer for PFSL Investments Canada Ltd. |
___________________________
Chawky Sabeh |
|
___________________________
Print Name of Signatory Above |
|
___________________________
Date |
___________________________
Date |
EXHIBIT “A” (cont.)
Standard Monthly Close Supervision Report*
Chawky Sabeh
Chawky Sabeh
I hereby certify that supervision has been conducted for the month ending ____________ of the trading activities of Chawky Sabeh, by the undersigned. I further certify the following:
- All orders from the salesperson were reviewed and approved by a compliance officer or branch manager of PFSL Investments Canada Ltd.
- There were no client complaints received during the preceding month. If there were complaints, a description of the complaint and follow-up action initiated by the company is attached.
- All payments for the purchase of the investments were made payable to the dealer. There were no cash payments accepted.
- The transactions of the salesperson were reviewed during the preceding month to ensure compliance with the policies and procedures of the dealer, including the suitability of investments for clients. If there were any violations, a description of the violation and follow-up action is attached.
__________________
Signature
Compliance Officer/Branch Manager of PFSL Investments Canada Ltd.
__________________
Print Name of Signatory Above
__________________
Date
* In the case of violations or client complaints, the regulator must be notified within five business days.