Securities Law & Instruments

[Update: The terms and conditions imposed by the Director in this decision were removed as at May 23, 2003.]

IN THE MATTER OF

THE SECURITIES ACT

R.S.O. 1990 C.S.5, AS AMENDED

AND

IN THE MATTER OF

THE REGISTRATIONS OF

DONALD KENNETH COATSWORTH AND

JANE MATHESON COATSWORTH

 

Opportunity to be Heard by the Director

Pursuant To Subsection 26(3) of the Securities Act

Date:

March 12, 2003

 

Director:

David M. Gilkes

 

Manager

 

Registrant Regulation

 

Submissions:

Jessica Di Renzo

 

Registration Officer

 

 

Donald Coatsworth

 

Jane Coatsworth

 

Registrants

DECISION AND REASONS FOR DECISION

The decision of the Director is to impose terms and conditions upon the registrations of Donald Coatsworth and Jane Coatsworth (the Registrants) as salespersons. These are the reasons for the decision.

Background

On August 5, 1997, Mr. Coatsworth was registered as a salesperson by the Ontario Securities Commission (OSC) while Ms. Coatsworth was registered as a salesperson by the OSC on August 1, 1994. On December 18, 2002, the OSC was informed by the Registrants' employer, Cartier Partners Financial Services (Cartier), that the Registrants had each received a Requirement to Pay Notice from Canada Customs and Revenue Agency.

On January, 24, 2003, Staff sent a letter to the Registrants and Cartier proposing terms and conditions requiring quarterly reporting to the OSC, be imposed on the registrations of Donald Coatsworth and Jane Coatsworth. The Registrants did not accept the proposal and requested the opportunity to be heard by the Director pursuant to subsection 26(3) of the Act which states:

(3) Refusal - The Director shall not refuse to grant, renew, reinstate or amend registration or impose terms and conditions thereon without giving the applicant an opportunity to be heard.

The other provision relevant to this decision is subsection 26(2) of the Act which states:

(2) Terms and conditions - The Director may in his or her discretion restrict a registration by imposing terms and conditions thereon and, without limiting the generality of the foregoing, may restrict the duration of registration and may restrict the registration to trades in certain securities or a certain class of securities.

The Registrants requested to be heard through a written submission, which was dated February 13, 2003 and received by the OSC on February 17, 2003.

Summary of The Registrants' Submission

The Registrants asked that their registrations be allowed to continue without terms and conditions. Mr. Coatsworth noted that after retiring from teaching in 1996, he attempted to build a financial planning career that was not successful financially. Mr. Coatsworth changed firms and was joined by Ms. Coatsworth in 1999. The Registrants have tried to find a solution to their monetary difficulties for two years but have not been successful. In closing the Registrants wrote:

"Jane and I are not prepared to tarnish our reputations in our community by giving the wrong advice to our clients. Our integrity is very very important to us. The conditions you are proposing are not necessary because they have been initiated as a result of ongoing personal issues that have never had an effect on our business...".

Summary of Staff's Submission

Staff of the OSC recommended that standard terms and conditions for quarterly reporting to the OSC be imposed on the registrations of Donald and Jane Coatsworth. The Requirement to Pay Notice gave Staff concerns regarding the Registrants continued suitability for registration.

Suitability for registration has three components: proficiency (education and experience), integrity, and financial soundness. The Requirement to Pay Notice has a bearing upon the last component. It is Staff's standard practice to impose terms and conditions for quarterly reporting on an individual's registration should that person file for bankruptcy, have a garnishment or receive a Requirement to Pay Notice. The reputation of the Registrants and quality of advice given by them, was not a factor in Staff's recommendation to impose terms and conditions.

Director's Findings

I find that terms and conditions as set out in Exhibit "A" and Exhibit "B", should be imposed upon the registrations of Donald Coatsworth and Jane Coatsworth, respectively.

Staff have consistently imposed terms and conditions on the registration of an individual who files for bankruptcy, has a garnishment or receives a Requirement to Pay Notice, as it affects the financial soundness and the suitability of a registrant.

The position of Staff is consistent with the OSC mandate of investor protection and for these reasons, I find that terms and conditions should be imposed on the registrations of Donald Coatsworth and Jane Coatsworth.

March 12, 2003.

"David M. Gilkes"

Exhibit "A"

Proposed Conditions for Registration

of

Donald Coatsworth

1. For the sale of Mutual Funds only.

2. Written quarterly supervision reports (copy attached) are to be submitted to the Ontario Securities Commission (Attention: Manager, Registrant Regulation) reporting on the details of Donald Coatsworth's sales activities and his dealings with clients. The first quarterly report covering the period from the date of this letter up to March 31, 2003 is due by April 15, 2002. Subsequent reports are due 15 calendar days after the end of each relevant quarterly reporting.

3. All handling of clients' funds will be strictly supervised by Donald Coatsworth's supervising officer.

4. This condition is to continue until Donald Coatsworth has fully satisfied his obligation and presents to the Manager, Registrant Regulation, acceptable evidence that same has been complied with.

_________________________

_________________________

Approved Officer for

Donald Coatsworth

Cartier Partners Financial Services

Applicant

 

_________________________

 

Print Name of Signatory Above

 

 

_________________________

_________________________

Date

Date

QUARTERLY SUPERVISION REPORT

I hereby certify that strict supervision has been conducted for the quarter ending __________, 200__, of the trading activities of ________________________, by the undersigned. I further certify the following:

1. All orders, both buy and sell, and sales contracts have been initialled and reviewed by a senior officer before entry.

2. All client accounts have been reviewed for:

  • suitability of investments
  • excess trading or switching, and
  • client addresses and any amendments thereto

3. A review of trading activity on a daily basis has been conducted of the salesperson's client accounts.

4. No transactions have been made in any new account until the full and correct documentation is in place.

5. No client complaints have been received during the period covered. (If there have been, please attach a copy of the complaint documentation and the follow-up action initiated by the company).

6. There has been no handling of clients' funds or securities or issuance of cheques to clients without management approval.

7. Any transfer of funds or securities between clients' accounts has been authorized in writing and reviewed by the supervising officer.

8. Spot audits of the salesperson's client accounts have been conducted during the preceeding month to ensure compliance with these procedures and no violation of these procedures were discovered.

____________________

____________________

Date

Supervising Officer

Exhibit "B"

Proposed Conditions for Registration

of

Jane Coatsworth

1. For the sale of Mutual Funds only.

2. Written quarterly supervision reports (copy attached) are to be submitted to the Ontario Securities Commission (Attention: Manager, Registrant Regulation) reporting on the details of Jane Coatsworth's sales activities and her dealings with clients. The first quarterly report covering the period from the date of this letter up to March 31, 2003 is due by April 15, 2002. Subsequent reports are due 15 calendar days after the end of each relevant quarterly reporting.

3. All handling of clients' funds will be strictly supervised by Jane Coatsworth's supervising officer.

4. This condition is to continue until Jane Coatsworth has fully satisfied her obligation and presents to the Manager, Registrant Regulation, acceptable evidence that same has been complied with.

_________________________

_________________________

Approved Officer for

Jane Coatsworth

Cartier Partners Financial Services

Applicant

 

_________________________

 

Print Name of Signatory Above

 

 

_________________________

_________________________

Date

Date

QUARTERLY SUPERVISION REPORT

I hereby certify that strict supervision has been conducted for the quarter ending __________, 200__, of the trading activities of _________________________, by the undersigned. I further certify the following:

1. All orders, both buy and sell, and sales contracts have been initialled and reviewed by a senior officer before entry.

2. All client accounts have been reviewed for:

  • suitability of investments
  • excess trading or switching, and
  • client addresses and any amendments thereto

3. A review of trading activity on a daily basis has been conducted of the salesperson's client accounts.

4. No transactions have been made in any new account until the full and correct documentation is in place.

5. No client complaints have been received during the period covered. (If there have been, please attach a copy of the complaint documentation and the follow-up action initiated by the company).

6. There has been no handling of clients' funds or securities or issuance of cheques to clients without management approval.

7. Any transfer of funds or securities between clients' accounts has been authorized in writing and reviewed by the supervising officer.

8. Spot audits of the salesperson's client accounts have been conducted during the preceeding month to ensure compliance with these procedures and no violation of these procedures were discovered.

____________________

____________________

Date

Supervising Officer