The Canadian Investment Regulatory Organization (CIRO) has prohibited former mutual fund dealing representative, Adib Khaldi from conducting securities related business with any mutual fund dealer member of CIRO for two years after engaging in securities-related business outside of his firm, without the firm’s knowledge or consent.
The operator of Simple Picks, an online subscription website charging readers $49.99 each month for access, the former Scotia Securities Inc. representative initially claimed that the website was a private journal to record his own investment activities. He also claimed that unmasking him as “Deebo,” the operator of Simple Picks, was a breach of his privacy rights and a breach of the Charter of Rights and Freedoms, a position the hearing panel says was not tenable nor applicable given the contractual nature of Khaldi’s relationship with the regulator.
“The issue to be decided was whether the respondent’s conduct in respect to Simple Picks was securities-related business outside the member,” the reasons for decision states. The investigator’s affidavit in the matter included screenshots promising real-time investment services and boasting 20 per cent profits on certain strategies.
Inclusion of buy and sell advice
“Contrary to Mr. Khalid’s assertion that Simple Picks was a personal journal for entertainment purposes, the panel finds that the inclusion of buy and sell advice, together with stop loss instructions constitutes giving advice to any person who accessed the site,” the reasons document continues, later adding that advertising the site and soliciting subscription fees was also not consistent with the website being a personal journal.
Submissions made in his defense were also viewed with some skepticism, as the witnesses were from different countries and continents, all were friends and associates, the attestations were almost identical in wording and format and all were signed the night before or on the day of the hearing. Under cross examination, some of those submitting attestations on behalf of Khalidi admitted that they did not write them.
In addition, the former mutual fund representative is being sanctioned for processing transactions for 23 clients as redemptions and purchases, rather than as switches, as per Scotia Securities’ policies, to increase the likelihood that he would earn a bonus. Registered between December 2018 and September 2020, Khalid has not been registered in any capacity since.
In addition to a $15,000 fine, costs in the amount of $10,000 and the two-year prohibition from conducting business as a mutual fund representative, Khaldi must also write or rewrite the Conduct and Practices Handbook course prior to being re-registered.
