Hand-out
A long-time BMO Nesbitt Burns Inc. financial adviser has been permanently banned from working in the securities industry after Canada's brokerage regulator concluded he had assisted in suspicious trading for a client involved in illegal insider trading.
Sandy Bortolin, who joined Nesbitt in 1992 and left when he was fired in 2009, has also been ordered to pay a $500,000 fine as well as $100,000 in costs in a decision released Friday by the Investment Industry Regulatory Organization of Canada.
"The respondent's conduct was egregious," an IIROC hearing panel said in its decision. "It was conducted over a number of years. It was not a one-time error in judgment."
The hearing panel also issued a warning to others in the investment industry, saying participation in insider trading and money laundering will typically warrant especially large penalties.
The panel ruled in March that Mr. Bortolin acted improperly in dealings with client Stan Grmovsek, a lawyer who pleaded guilty in 2010 to criminal charges of fraud, insider trading and laundering proceeds of crime and received a record 39-month jail sentence. Mr. Grmovsek admitted he traded on tips about pending takeover deals that he received from law school classmate Gil Cornblum, who worked at another law firm and committed suicide the day before they were to both plead guilty in Ontario court.
IIROC alleged Mr. Bortolin helped Mr. Grmovsek trade securities using bank accounts he helped him set up in the Bahamas. While IIROC did not allege Mr. Bortolin knew Mr. Grmovsek was involved in illegal insider trading, the regulator said he should have been suspicious about the trading and should have reported the activity to his employer.
IIROC also alleged Mr. Bortolin helped launder money through complex arrangements that saw Mr. Bortolin pass envelopes of cash to Mr. Grmovsek while transferring the same sums of money out of the lawyer's Bahamas bank account that held the proceeds of his trading activity.
The OSC said he transferred 13 payments to Mr. Grmovsek totalling $599,000. In return, Mr. Bortolin received large payments from Mr. Grmovsek's accounts.
"The only rational inference that one can draw from all this evidence is that [Mr. Bortolin]was involved in deliberate money laundering," the IIROC panel concluded in its ruling.
Mr. Bortolin was also accused of conducting business activities outside the knowledge of his employer, engaging in personal financial dealings with a client and making deliberately misleading statements to IIROC investigators.
While IIROC staff asked for a fine and "disgorgement" of $392,000 to be imposed in the case, the hearing panel said Mr. Bortolin should pay $500,000. IIROC said participation in insider trading and money laundering typically warrants larger penalties.
"When money is stolen, someone usually complains. But with insider trading and money laundering, no one is there to blow the whistle," the hearing panel concluded.
"It is therefore incumbent on securities dealers and other gatekeepers to be vigilant not to facilitate those activities. And that is why when a case of insider trading is proven, the penalty tends to be substantial as a deterrent to others."
Janet McFarland