Securities Law & Instruments

IN THE MATTER OF

THE SECURITIES ACT

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

AND

IN THE MATTER OF

THE REGISTRATIONS OF

ANGELITO CANTILLAS AND NORITA CANTILLAS

OPPORTUNITY TO BE HEARD BY THE DIRECTOR

PURSUANT TO SUBSECTION 26(3) OF THE SECURITIES ACT

Date:
May 29, 2003
 
Director:
David M. Gilkes
Manager, Registrant Regulation
Capital Markets Branch
 
Submissions:
Hang Tai
Registration Officer
 
Angelito Cantillas
Norita Cantillas
Registrants

DECISION AND REASONS FOR DECISION

The decision of the Director is to impose terms and conditions upon the registrations of Angelito Cantillas and Norita Cantillas (the Registrants) as salespersons. These are the reasons for the decision.

Background

On July 18, 2001, the Ontario Securities Commission (OSC) registered Mr. Cantillas as a salesperson with Education Fund Services Inc. (EFS) while Ms. Cantillas was registered as a salesperson with EFS by the OSC on December 2, 1999. On September 25, 2002, EFS submitted notices to the OSC that both Angelito and Norita Cantillas had resigned for cause. On September 20, 2002, Global Education Marketing Corp. (Global) sponsored the applications for transfer of registration of Angelito and Norita Cantillas.

Following established practice, Staff researched the resignations for cause to determine the circumstances surrounding the resignation. On March 28, 2003, Staff sent letters to the Registrants and Global proposing terms and conditions requiring monthly reporting to the OSC, be imposed on the registrations of Angelito Cantillas and Norita Cantillas. 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 provided written submissions dated April 8, 2003 and received by the OSC on April 11, 2003.

Summary of The Registrants' Submission

The Registrants asked that their registrations be allowed to continue without terms and conditions. Mr. Cantillas and Ms. Cantillas were both Divisional Directors at EFS and had salespersons working under their supervision. Mr. Cantillas noted that he and his representatives did not have a high client cancellation rate until a new Director joined his group. According to Mr. Cantillas this new Director and Associate Directors led to the high client cancellation rates.

Summary of Staff's Submission

Staff of the OSC recommended that standard terms and conditions for monthly reporting to the OSC be imposed on the registrations of Angelito Cantillas and Norita Cantillas. The high client cancellation rates of staff supervised by the registrants raises concerns about the continued suitability of Angelito and Norita Cantillas for registration.

Suitability for registration has three components: proficiency (education and experience), integrity, and financial soundness. The results of the salespersons under the supervision provided by the registrants raises questions relating to the proficiency and integrity of Angelito Cantillas and Norita Cantillas in the positions they held at EFS. The monetary dispute between the Cantillas and EFS, 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 Angelito Cantillas and Norita Cantillas, respectively.

The registrants do not appear to have the proficiency necessary to supervise staff. I find that 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 Angelito Cantillas and Norita Cantillas.

May 29, 2003.

"David M. Gilkes"

 

Exhibit A

Conditions for Registration of

Angelito Cantillas (the Applicant)

1. Written monthly supervision reports (copy attached) are to be submitted to the Ontario Securities Commission (Attention: Manager, Registrant Regulation) reporting on the details of the Applicant's sales activities and his dealings with clients. The first monthly report covering the period from March 28, 2003 to April 28, 2003 is due by May 13, 2003. Subsequent reports are due 15 calendar days after the end of each relevant monthly reporting. These conditions are to continue for a period of 2 years.

2. The Applicant shall not be registered as an officer of Global Educational Marketing Corp., or supervise its registered salespersons.

____________
____________
Approved Officer for
Applicant
Global Educational Marketing Corp.
 
____________
Print Name of Signatory Above
 
____________
Date

MONTHLY SUPERVISION REPORT

I hereby certify that strict supervision has been conducted for the month ending ________________ of the trading activities of ____________ by the undersigned. I further certify the following:

1. All orders from the sales representative have been reviewed and approved by his/her enrolment director.

2. An audit of the files maintained by the sales representative for the clients who purchased scholarship plans during the preceding month has been conducted and reviewed for suitability of investment.

3. No client complaints have been received during the preceding month. (If there have been, please outline the nature of the complaint and follow-up action initiated by the company.)

4. All payments to the company for the purchase of scholarship plans must be made payable to the scholarship plan dealer. Payments are not accepted in cash.

5. Spot audits relative to the salesperson's client accounts have been conducted during the preceding month to ensure compliance with these procedures and no violations of these procedures were discovered.

____________Approved Officer of Registered Firm ____________Print name of signatory above ____________Date

 

Exhibit B

Conditions for Registration of

Norita Cantillas (the Applicant)

1. Written monthly supervision reports (copy attached) are to be submitted to the Ontario Securities Commission (Attention: Manager, Registrant Regulation) reporting on the details of the Applicant's sales activities and his dealings with clients. The first monthly report covering the period from March 28, 2003 to April 28, 2003 is due by May 13, 2003. Subsequent reports are due 15 calendar days after the end of each relevant monthly reporting. These conditions are to continue for a period of 2 years.

2. The Applicant shall not be registered as an officer of Global Educational Marketing Corp., or supervise its registered salespersons.

____________
____________
Approved Officer for
Applicant
Global Educational Marketing Corp.
 
____________
Print Name of Signatory Above
 
____________
Date

MONTHLY SUPERVISION REPORT

I hereby certify that strict supervision has been conducted for the month ending ________________ of the trading activities of ____________ by the undersigned. I further certify the following:

1. All orders from the sales representative have been reviewed and approved by his/her enrolment director.

2. An audit of the files maintained by the sales representative for the clients who purchased scholarship plans during the preceding month has been conducted and reviewed for suitability of investment.

3. No client complaints have been received during the preceding month. (If there have been, please outline the nature of the complaint and follow-up action initiated by the company.)

4. All payments to the company for the purchase of scholarship plans must be made payable to the scholarship plan dealer. Payments are not accepted in cash.

5. Spot audits relative to the salesperson's client accounts have been conducted during the preceding month to ensure compliance with these procedures and no violations of these procedures were discovered.

____________Approved Officer of Registered Firm ____________Print name of signatory above ____________Date