DiPronio, Riccardo Alberto -- s. 26(3)
IN THE MATTER OF
THE REGISTRATION OF
RICCARDO ALBERTO DIPRONIO
OPPORTUNITY TO BE HEARD BY THE DIRECTOR
Subsection 26(3) of the Securities Act, R.S.O. 1990, c. S.5
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Date of decision:
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March 2, 2011
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Director:
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Marrianne Bridge
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Deputy Director, Compliance
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Ontario Securities Commission
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Written Submissions by:
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Mark Skuce, Legal Counsel
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For staff of the Ontario Securities Commission
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and
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Paul Saguil,
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Counsel for Mr. DiPronio
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Introduction
By letter dated January 19, 2011, staff (Staff) of the Ontario Securities Commission (the OSC) advised Riccardo Alberto DiPronio that it was recommending to the Director that his registration as a dealing representative in the category of mutual fund dealer with Sun Life Financial Investment Services (Canada) Inc. (Sun Life) be suspended. The basis for Staff's recommendation was its allegation that Mr. DiPronio forged a client's signature to two documents, and that he later denied those forgeries during an interview with Sun Life under circumstances in which he knew or ought to have known that the information provided to Sun Life would in turn be provided to the Mutual Fund Dealers Association of Canada (the MFDA) and/or the OSC.
By letter dated January 27, 2011, Paul Le Vay of Stockwoods LLP, counsel for Mr. DiPronio, requested an in-person opportunity to be heard (OTBH) in relation to Staff's recommendation that Mr. DiPronio's registration be suspended.
Staff and Mr. DiPronio (through his counsel) have agreed to resolve this OTBH through a joint recommendation that: (i) Mr. DiPronio's registration shall be suspended, and that he shall not be permitted to apply for reinstatement for a period of nine months from the date of the Director's decision, and (ii) before Mr. DiPronio may apply for reinstatement, he shall successfully complete the Conduct and Practices Handbook Course, and shall furnish Staff with evidence of such completion.
Agreed Statement of Facts
Staff and Mr. DiPronio agree as to the following facts:
Mr. DiPronio's Registration History
1. Mr. DiPronio has been registered under the Securities Act (Ontario) as a salesperson, and subsequently as a dealing representative, in the category of mutual fund dealer with Sun Life since March 14, 2003. From July 20, 2006 to November 6, 2009, Mr. DiPronio was also registered as a salesperson, and subsequently as a dealing representative, in the categories of limited market dealer and exempt market dealer with Sun Life.
2. Prior to the events involving Mr. DiPronio's client "DS" described herein, Mr. DiPronio had no history of disciplinary action involving either Sun Life, the MFDA, or the OSC.
Forgery of Trade Forms
3. In 2007, DS was contacted by Mr. DiPronio, who requested a meeting with her to discuss a strategy to minimize taxes associated with income earned by her two insurance policies that she held through Sun Life (the Insurance Policies). Mr. DiPronio informed DS that she could use income received from the Insurance Policies to purchase a new insurance policy with no tax implications. DS agreed to this strategy.
4. In 2008, DS discovered that Mr. DiPronio's tax minimization strategy had not been implemented properly, and telephoned Mr. DiPronio to inquire as to the problem. Mr. DiPronio informed DS that a member of his staff had not followed his orders regarding the implementation of the strategy, and that he would correct the problem.
5. In the spring of 2009, DS discovered that she would again be taxed on income earned by the Insurance Policies during the previous year. She also discovered that in 2008, Mr. DiPronio had opened a mutual fund account for her, and that he used $13,000 of the income received by the Insurance Policies to purchase three mutual funds for her (the Mutual Funds).
6. On May 5, 2009, DS wrote to Sun Life to complain about the purchase of the Mutual Funds. In particular, DS informed Sun Life that she did not knowingly authorize the purchase of the Mutual Funds, that she wanted the $13,000 returned to the Insurance Policies, and that she no longer wanted to deal with Mr. DiPronio.
7. On June 19, 2009, Sun Life provided DS with copies of two documents dated March 18, 2008 which she had purportedly signed to authorize the purchase of the Mutual Funds. One document was entitled, "SLFIS Limited Trade Authorization Form" and the other was entitled "Signature Form for Electronic Application" (the Trade Forms).
8. On July 6, 2009, DS wrote to Sun Life advising that Mr. DiPronio "never discussed purchasing mutual funds with me", that she had never seen either of the Trade Forms before, and that she had not signed either of those documents.
9. On July 28, 2009, DS swore two declarations, one in respect of each Trade Form, in which she stated that the signature on the Trade Form was not hers, that she did not apply for the account referred to in the Trade Form, that she did not authorize or consent to the making of the signature on the Trade Form, and that the signature on the Trade Form was a forgery.
10. On August 25, 2009, Sun Life informed DS that it would reverse the purchase of the Mutual Funds and return the proceeds to one of the Insurance Policies, which it subsequently did.
11. On September 10, 2009, Pat Girouard, a forensic document examiner certified by the Association of Forensic Document Examiners and the Board of Forensic Document Examiners provided a written report to Sun Life in which she stated that it was "highly probable" that the signatures that appeared on the Trade Forms were not written by the writer of the DS signatures on control documents known to have been signed by DS.
False Statements During Sun Life Interview
12. On January 12, 2010, Sun Life interviewed Mr. DiPronio regarding DS's complaint that her signature had been forged (the Interview).
13. The Sun Life representative conducting the Interview specifically advised Mr. DiPronio that DS's complaint had been reported to "the regulators", and that Sun Life would provide "the regulators" with further information or documentation concerning the Sun Life investigation. Mr. DiPronio knew, or ought to have known, that the information given by him during the Interview would by relied on by the MFDA and/or the OSC in determining whether to take regulatory action against him regarding DS's complaint.
14. During the Interview, Mr. DiPronio specifically denied forging the Trade Forms. However, he also represented that he was unable to specifically recall witnessing DS sign the Trade Forms.
15. Based on its findings during its investigation into DS's complaint (which included the information provided by Mr. DiPronio during the Interview), Sun Life concluded that there was conflicting information regarding whether DS had actually signed the Trade Forms. As a result, on February 25, 2010, Sun Life placed Mr. DiPronio on an internal program involving heightened supervision by the firm. This internal program did not involve any reporting to the MFDA or the OSC.
Admission of Wrongdoing
16. Mr. DiPronio admits that he did in fact forge the signature and initials of DS on the Trade Forms.
17. Mr. DiPronio also admits that he made a false statement in the Interview when he denied forging the Trade Forms, and that he did so under circumstances in which he knew or ought to have known that the information given by him during the Interview would by relied on by the MFDA and/or the OSC in determining whether to take regulatory action against him regarding DS's complaint.
18. Mr. DiPronio acknowledges that in forging the Trade Forms he violated Ontario securities law, in particular s. 2.1(2) of OSC Rule 31-505 Conditions of Registration, which requires a representative of a registered dealer to act fairly, honestly, and in good faith with his or her clients. In addition, Mr. DiPronio acknowledges that by making a false statement to his employer during the Interview, he engaged in conduct unbecoming a registrant.
19. Mr. DiPronio acknowledges the seriousness of his wrongdoing in this matter, and accepts full responsibility for his actions.
Joint Recommendation
Staff and Mr. DiPronio jointly recommend that in light of the facts agreed to above, an appropriate sanction to address Mr. DiPronio's misconduct in this case is that: (i) Mr. DiPronio's registration shall be suspended, and that he shall not be permitted to apply for reinstatement for a period of nine months from the date of the Director's decision, and (ii) before Mr. DiPronio may apply for reinstatement, he shall successfully complete the Conduct and Practices Handbook Course, and shall furnish Staff with evidence of such completion{1}. Staff and Mr. DiPronio submit that their joint recommendation is reasonable in light of the sanctioning considerations identified by the Commission in decisions such as Re Al-tar Energy Corp. (2011), 34 O.S.C.B. 447.
Acknowledgements
1. Mr. DiPronio acknowledges that if the Director accepts this joint recommendation:
a. He agrees to waive all rights to a full hearing, judicial review, or appeal of this matter; and
b. A copy of the Director's decision accepting this joint recommendation, which may include reference to all or part of the agreed statement of facts, may be published on the OSC website and in the OSC Bulletin;
2. Staff and Mr. DiPronio acknowledge that if the Director does not accept this joint recommendation:
a. This joint recommendation and all discussions and negotiations between Staff and counsel for Mr. DiPronio in relation to this matter shall be without prejudice to Staff or Mr. DiPronio; and
b. Mr. DiPronio will be entitled to all available proceedings in relation to Staff's recommendation contained in its letter of January 19, 2011 that his registration be suspended.
Date: March 1, 2011
Date: March 1, 2011
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Having reviewed and considered the agreed statement of facts, representations, and submissions contained in this memorandum, I, Marrianne Bridge, in my capacity as Director under the Securities Act (Ontario):
√ Accept the joint recommendation of the parties, and hereby order that (i) the registration of Riccardo Alberto DiPronio as a dealing representative in the category of mutual fund dealer shall be, and is hereby, suspended, and that Riccardo DiPronio shall not be permitted to apply for reinstatement for a period of nine months from the date of this decision, and (ii) before Riccardo Alberto DiPronio may apply for reinstatement of his registration, he shall successfully complete the Conduct and Practices Handbook Course, and shall furnish staff of the Ontario Securities Commission with evidence of such completion.
Do not accept the joint recommendation of the parties.
"Marrianne Bridge", FCA
Deputy Director, Compliance
Ontario Securities Commission
Dated: March 1, 2011
{1} Mr. DiPronio has registered for the Conduct and Practices Handbook Course.