Securities Law & Instruments

IN THE MATTER OF

THE REGISTRATION OF

ROY GAMINI DESILVA

OPPORTUNITY TO BE HEARD BY THE DIRECTOR

SECTION 26(3) OF THE SECURITIES ACT

Date:
June 1, 2005
 
Director:
David M. Gilkes
Manager, Registrant Regulation
Capital Markets Branch
 
Submissions:
Dianna Daley
For the staff of the Commission
Roy DeSilva
For the Registrant

Background

 

1. Mr. DeSilva (the Registrant) has been registered with the Ontario Securities Commission (OSC) as a mutual fund salesperson for PFSL Investments Canada Ltd. (PFSL) since January 1997. On February 9, 2005 PFSL submitted a financial disclosure change notice to the OSC that indicated the Registrant had received a Requirement to Pay from Canada Customs and Revenue Agency.

2. On February 14, 2005, OSC staff sent a letter to the Registrant and PFSL proposing terms and conditions for standard quarterly supervision reporting to the OSC, be imposed on the registration of Roy DeSilva. The Director may impose terms and conditions under subsection 26(2) of the Securities Act (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.

3. The Registrant 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.

4. The Registrant requested to be heard through a written submission, which was received on March 8, 2005.

Submissions

 

5. The Registrant asked that his registration be allowed to continue without terms and conditions. Mr. DeSilva noted that the tax debt had been incurred with a business he had prior to becoming a mutual fund salesperson in 1997. The Registrant had been making monthly payments to CCRA to eliminate the tax debt and was surprised that a Requirement to Pay had been issued.

6. Mr. DeSilva also noted that PFSL has high standards of supervision and the terms and conditions would be redundant. He also noted the proposed terms and conditions on his registration would lead to the suspension of his representative license based on his contract PFSL. This would not be in the best interests of his clients.

7. Staff of the OSC recommended that terms and conditions for standard quarterly supervision reporting to the OSC be imposed on Roy DeSilva's registration. The Requirement to Pay Notice gave Staff concerns regarding the Registrant's continued suitability for registration.

8. OSC staff's analysis of whether an individual meets or continues to meet the fit and proper standards for registration focuses on three key elements: proficiency (education and experience), integrity, and financial solvency. The Requirement to Pay Notice clearly has a bearing upon the last component.

9. It is OSC staff's practice to impose terms and conditions for standard quarterly supervision reporting on an individual's registration should that person file for bankruptcy, receive a garnishment or receive a Requirement to Pay. The terms and conditions are removed when the financial obligations resulting from the event are satisfied. The fact that the Registrant had been paying down the debt owed was not a factor in Staff's recommendation to impose terms and conditions.

Decision

 

10. OSC staff have a practice of imposing terms and conditions for standard quarterly supervision reporting on the registration of an individual who files for bankruptcy, receives a garnishment or receives a Requirement to Pay Notice. All of these events have a bearing on the financial solvency and hence the suitability of a registrant.

11. The position of staff is consistent with the OSC mandate of investor protection and for this reason, I find that terms and conditions as set out in Exhibit "A" should be imposed on the registration of Roy DeSilva.

June 1, 2005

"David M. Gilkes"

Exhibit A

STANDARD QUARTERLY SUPERVISION REPORT

I hereby certify that standard supervision was conducted for the quarter ending June 30, 2005, of the trading activities of Roy De Silva, by the undersigned. I further certify the following:

 

1. All orders from the salesperson were reviewed and approved by an officer or branch manager of PFSL Investments Canada Ltd.

2. There were no client complaints received during the preceding quarter. If there were complaints, a description of the complaint and follow-up action initiated by the company is attached.

3. All payments for the purchase of the investments were made payable to the dealer. There were no cash payments accepted.

4. The transactions of the salesperson were reviewed during the preceding quarter to ensure compliance with the policies and procedures of the dealer, including the suitability of investments for clients. If there were any violations, a description of the violation and follow-up action is attached.

[Signature]
Officer/Branch Manager of PFSL Investments Canada Ltd.
 
Printed name of signatory above:
 
[Date]