Securities Law & Instruments

IN THE MATTER OF

AN APPLICATION FOR REGISTRATION OF

ABDULLAH YAMA YAQEEN

OPPORTUNITY TO BE HEARD BY THE DIRECTOR

PURSUANT TO SUBSECTION 26(3) OF THE SECURITIES ACT

Date:
May 26, 2004
 
Director:
David M. Gilkes
Manager, Registrant Regulation
Capital Markets Branch
 
Appearances:
Michael Holder
For Commission Staff
Joyce Harris
For Abdullah Yama Yaqeen

Overview

1. This decision relates to the application of Mr. Yaqeen (the Applicant) to transfer his registration as an Investment Dealer Salesperson to Monarch Delaney Financial Inc. Commission Staff has recommended that the Director deny this application.

Background

2. Mr. Yaqeen was registered as Investment Dealer Salesperson under the Securities Act (Ontario) (the Act).and with the Investment Dealers Association as Registered Representative (Equities and Options) sponsored by CIBC Investor Services Inc (CIBCIS) from December 19, 2001 until we received notice of his termination effective May 20, 2003.

3. Mr. Yaqeen had been an employee of the Canadian Imperial Bank of Commerce (CIBC) since 1990. In 1997 he became an account manager for CIBC. From December 2001 until he was terminated, the Applicant was an Investment Dealer Salesperson sponsored by CIBCIS as well as an account manager for CIBC. The reasons for Mr. Yaqeen's termination were related to his activities as an account manager for CIBC.

4. The notice of termination filed by CIBCIS indicated Yaqeen was terminated for cause. Commission Staff investigate the circumstances surrounding all terminations for cause and did so in this case. In a letter dated January 30, 2004, Staff advised the Applicant that they recommended the Director deny his application based on grounds that he was not suitable for registration as an Investment Dealer Salesperson.

5. After receiving the letter from Staff, Mr. Yaqeen requested the opportunity to be heard by the Director pursuant to subsection 26(3) of the Act that 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.

6. The opportunity to be heard was done in two parts. An appearance in person (the OTBH) was held on February 26, 2004 where Commission Staff indicated further information would be provided by CIBC. A letter from CIBC dated April 30, 2004 (the CIBC letter) and a reply to the CIBC letter from Mr. Yaqeen's counsel date May 7, 2004 (Mr. Yaqeen's reply) were submitted to the Director. I have reviewed all of this information in making my decision.

The Euro Deposits

7. The circumstances that led to the Applicants termination started in April 2003 and had to do with transactions involving Mr. Mohamed Dostmohamed and one of his related companies. Mr. Dostmohamed was also an employee of CIBC and a client of Mr. Yaqeen for eight years. Mr. Dostmohamed had a number of personal bank accounts as well as several business accounts for companies that he controlled or represented.

8. On April 7, 2003 Mr. Yaqeen accepted a cheque made to Mr. Dostmohamed in the amount of €513,801.09 drawn from a bank in Germany. On April 22, 2003 Mr. Yaqeen accepted two more cheques made to Mr. Dostmohamed in the amounts of €750,776.85,and €796,098.03 drawn from the same bank in Germany. The total of the deposits in Canadian dollars was approximately $3,249,480. There was a fourth cheque in the amount of €558,017.36 (about $864,760) made to Thermal Standards, a company related to Mr. Dostmohamed. It was later discovered that these cheques were not valid.

9. According to the CIBC letter and the submission from Commission Staff, CIBC policy requires cheques such as the ones accepted by the Applicant to be sent on a collection basis (i.e. funds were only to be released when the cheques had cleared the German bank).

10. In contravention of this policy, the Applicant placed 21-day holds on the accounts, and then contrary to the hold imposed by Mr. Yaqeen, he released funds according to instructions from Mr. Dostmohamed. The Applicant said he had clearance from CIBC's help line to accept the cheques without restriction, although he decided to impose the 21-day hold. The Applicant then decided to release the funds based on his knowledge of this client. In fact, the Applicant released $100,000 at the time the first cheque was deposited and then put the hold on the remaining funds.

11. Throughout the period when there was to have been a hold on the funds, Mr. Yaqeen authorized the hold to be removed and access granted for funds in the amounts of $15,000, $40,000 and $60,000. In effect, there was no hold on the funds and Mr. Dostmohamed removed funds and transferred funds to other accounts as he wished.

12. The two deposits received on April 22, 2003 were treated in the same manner. Mr. Yaqeen accepted the deposits and placed 21-day holds on the funds, rather than accepting them on a collection basis. Similarly, despite the holds on the funds, Mr. Yaqeen released the funds as needed for Mr. Dostmohamed. This included transfers of funds to accounts and persons in the Caribbean.

13. There was a fourth cheque in the amount of €558,017.36 (about $864,760) made to Thermal Standards, a company related to Mr. Dostmohamed. The CIBC letter and the references in the brief of documents filed by Counsel for the Applicant put the date of this cheque around April 11, 2003. Mr. Yaqeen believed it was deposited around April 22, 2003. Regardless of the date this cheque was deposited, the cheque and the funds were treated in the same manner as those described above.

14. According to the CIBC letter, the Registrant allowed $1,690,000 to be accessed by Mr. Dostmohamed or his related companies through transfers, wires or withdrawals from April 7, 2003 to April 22, 2003. At the OTBH, Commission Staff submitted that CIBC lost approximately $1,250,000 as a result of these actions.

Discovery of the Stolen and Forged Cheques

15. On Friday May 2, 2003 at 10:20 a.m., CIBC Correspondent Services sent an e-mail to Mr. Yaqeen advising that the cheque payable to Thermal Standards was being returned as it had been reported lost. At about 4:00 p.m. Mr. Yaqeen sent a reply e-mail requesting a person to contact at the bank in Germany. In its letter, CIBC asserts that the Applicant did not inform CIBC management of the dishonoured cheques until Wednesday May 7, 2003.

16. At the OTBH Mr. Yaqeen said he received the information about the cheques on the afternoon of May 2, 2003 and he notified his manager, who notified corporate security. There is no indication in the brief of documents that the Applicant contacted his manager. He contacted Mr. Dostmohamed and he contacted the German bank, on May 5 and May 6, 2003, however, there is no reference to CIBC Corporate Security or Mr. Yaqeen's manager until an e-mail dated May 8, 2003.

17. The fact that the cheques were not valid was apparently discovered in late April 2003. Barclays Bank in a telex dated May 7, 2003 refers to the four cheques above and note they were reported stolen and forged.

18. The CIBC letter referred to a letter sent by facsimile and received by Mr. Yaqeen, purportedly on the letterhead of the German bank. This letter confirmed the authenticity of the cheques, however, the facsimile header indicated that the letter had been sent from a Remax office in the (905) calling area. A copy of this document was first given to the CIBC investigator looking into this matter. The photocopy had been made to remove the header. When the investigator saw the original, the location of the facsimile became apparent. In Mr. Yaqeen's reply, he said he had not noticed the header number and that he had not provided a copy to the investigator with the header removed.

Suitability for Registration

19. The standard for suitability is based on three tenets which were presented by Commission Staff at the OTBH and have also been printed in the Ontario Securities Commission Annual Report:

The [registration] section administers a registration system which is intended to ensure that all Applicants under the Securities Act and the Commodity Futures Act meet appropriate standards of integrity, competence and financial soundness, Ontario Securities Commission, Annual Report 1991, Page 16

20. In addition, the Director could find that the application is objectionable. Staff of the Commission noted that this could refer to conduct that while not directly related to the securities industry, affects the investor confidence in the capital markets and its participants.

21. Counsel for the Applicant provided documentation of a number of performance awards that had been presented to Mr. Yaqeen. Counsel asserted that these awards clearly demonstrated that the Applicant had both proficiency and integrity, otherwise he would not have received the awards. Counsel further asserted that the Applicant had made one mistake in an otherwise unblemished career at CIBC.

22. This matter has been reported to The Toronto Police Service. I understand that charges have been laid against Mr. Dostmohamed but there have been no charges laid against Mr. Yaqeen in relation to this matter.

Decision and Reasons

23. As an account manager the Applicant should have known that the deposits in question should have been accepted only on a collection basis. Even if, as he asserts, handling the deposits had been approved by CIBC, he surely knew that a 21-day hold meant that funds were not to be released for 21 days.

24. Mr. Yaqeen had been handling the accounts of Mr. Dostmohamed for eight years and claimed to know him and his businesses well. When asked at the OTBH what business Mr. Dostmohamed was involved in, the Applicant responded that he knew he was an accountant and did some consulting. In reference to the bank accounts, the Applicant said one account was a holding account and one was an operating account. He did not know what business Thermal Standards was engaged in.

25. The Applicant said he had never handled deposits this large for Mr. Dostmohamed. He said this is why he put the hold on the account. He would not have had any questions had the amount of the cheque been $50,000. Despite his concerns, Mr. Yaqeen accepted four cheques for large amounts in Euros and allowed Mr. Dostmohamed access to the money without regard to the 21-day holds.

26. As an account manager, the Applicant ought to have had concerns about the size of these deposits given they did not match the profile of his client. Similarly, transferring significant amounts to other accounts and persons, including those located in the Caribbean, should have raised red flags related to money laundering.

27. It does not appear that the Applicant informed his manager when he was first notified the cheques were dishonoured. It appears that he contacted Mr. Dostmohamed and the German bank before he contacted CIBC management. I note that the e-mail requesting a contact in Germany was sent at 4:00 p.m. on a Friday; with the time difference, the German bank was sure to be closed. However, the first e-mail sent to Mr. Yaqeen was sent at 10:20 a.m. when the German bank may still have been open.

28. The phony letter from the German bank is odd for a number of reasons. First, if Mr. Yaqeen had believed it to be valid, why had it not been raised until his meeting with the CIBC investigator. Second, it supposedly demonstrated that the cheques in question were authentic, not that they had cleared. Third, the letter was dated April 16, 2003, two of the cheques were not deposited until April 22, 2003. And fourth, I find it hard to believe that the Applicant had the letter in his possession for three weeks and had never noticed the telephone number in the facsimile header.

29. I find it hard to equate the actions of the Applicant with high standards of proficiency and of integrity required of a professional in the securities industry. As result, having reviewed the submissions made at the OTBH and the additional written information provided to me, I find the Applicant unsuitable to be granted registration as an Investment Dealer Salesperson.

May 26, 2004.

"David M. Gilkes"