CDNX:
Former Approved Person Disciplined - Miller
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CALGARY, AB — Following an
Exchange Hearing conducted on August 29, 2000 as a settlement conference under Exchange
Rule E.2.10, an Exchange Hearing Panel made a conditional decision which was accepted by
counsel for the Exchange and counsel for the respondent David Randall Miller
("Miller") thereby imposing on Miller, for breaches of a Vancouver Stock
Exchange ("VSE") By-law and Rule, the penalties set out in a Settlement
Agreement signed August 28, 2000 on behalf of the Exchange and by Miller.
By-Law and Rule Violated
Miller admitted violating VSE By-Law 5.02(4)(a) and
VSE Rule F.1.01.2(a) which provide in part:
VSE By-Law 5.02(4)(a): "…purchasing…securities
where the person knows or ought to know that the effect of such a purchase…would be
to unduly disturb the normal position of the market or to create an abnormal market
condition in which market prices do not fairly reflect current market values.
VSE Rule F.1.01.2(a): "No Member or
approved person shall accept an order from a client or make a recommendation to a client
without…learning the essential facts relative to that
client…"
Penalties Assessed
The following penalties were imposed on Miller:
- a fine in the amount of $20,000;
- withdrawal of Exchange Approval for the period of three (3) years,
effective January 1, 1999; and
- an assessment of investigative costs in the amount of $10,000.
Summary of Facts
Rule F.1.01.2(a)
1. During the period of
May 20, 1993 to January 27, 1994, (the "Relevant Period") Miller was
employed as an Investment Advisor with the Member Firms, Yorkton Securities Inc.
("Yorkton"), Pacific International Securities Inc.
("Pacific"), and Canaccord Capital Corp. ("Canaccord").
2. On January 8, 1993,
Miller opened an account for a client (the "Client") who was a Lebanese national
living in Beirut, Lebanon.
3. Miller completed the Client's New Client
Application Form ("NCAF") and listed a temporary address at a Canadian Postal
Station in Vancouver. The Client’s resident address was noted as an apartment in
Beirut, Lebanon that was later determined to be owned by a principal of VSE listed
International Hi-Tech Industries Inc. ("Hi-Tech"). Certain other information on
the NCAF was also determined later to be incorrect.
4. Given the circumstances regarding the
operation of the Client's account, there was a failure by Miller to take the necessary
steps in order to learn the essential facts regarding the Client.
Miller thereby violated Exchange Rule F.1.01.2(a).
By-Law 5.02(4)(a)
5. During the Relevant Period, Miller executed
client buy orders for his client accounts in the shares of Hi-Tech at prices higher than
the previous trade or order at which a board lot traded and there were no subsequent
trades or orders that affected the market price of Hi-Tech. Any such trade is considered
to be a high close trade.
6. Miller, during the Relevant Period on 71 trade
days, executed high close trades after 1:00 p.m. (the "High Close Trades"). The High Close Trades accounted for 83% of the high
close trades for the shares of Hi-Tech. Of the 71 High Close Trades 45 or 53% established
the day high price for the shares of Hi-Tech. The Client account was responsible for 61 or
85% of the High Close Trades and 42 established the day high price.
7. High Close Trading activity has the effect of
creating an abnormal market condition in which market prices do not fairly reflect current
market values.
Miller thereby violated Exchange
By-Law 5.02(4)(a).
The conduct of Yorkton was addressed in Notice to
Members #00/19.
No fault was attributed to Pacific or Canaccord.
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For more information, contact:
Donna Pincott, Director
Corporate Communications
(Toll-free) 1-877-884-2369
(Office) 403-974-7436
E-mail: dpincott@cdnx.com
For more information, please visit the Exchange’s website
at www.cdnx.com.
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