The Investment Industry Regulatory Organization of Canada (IIROC) announced it has accepted a settlement agreement between IIROC staff and Mackie Research Capital Corp. representative, Gordon Albert Malic.
In the agreement, Malic admits he failed to report and address a material conflict of interest with clients, failed to inform his dealer about his outside business activities and actively misled the firm about those activities over the course of several years.
Property development business
Malic’s outside business activity was a property development business which planned to subdivide and sell residential lots in a plot of land in Alberta. Ultimately the project was never completed and the project company involved eventually defaulted on its $2.4-million mortgage. The land for the project was subject to foreclosure proceedings, but not before two of Malic’s clients invested in the project, losing all or a significant portion of their investments.
One client, a client of Malic’s since 2003, through his holding company, invested approximately $1.9-million in the two companies involved in the property development business (one business was Malic’s while the other was owned by two of his business partners), and pledged another $1-million to support the project. The client’s holding company additionally lent one of the companies $1.1-million. The client did not receive any repayment of the loan or any share certificates.
A second client, with Malic for more than 18 years, also invested $800,000 without ever receiving any share certificates. This client also lost the entirety of their investment.
Incomplete and misleading statements
When questioned by his firm about the business, Malic told Mackie Research there was no cross over between the companies and Mackie clients. “The respondent continued to make incomplete and misleading statements to his firm regarding his activities in these companies, both in July 2015 and in January 2017. At no time did the respondent ever inform Mackie Research about his clients’ investments in the companies. Mackie Research did not become aware of any client involvement until being notified by HW’s lawyer in August 2017,” IIROC writes in its settlement agreement with Malic.
In addition to a fine of $75,000 and costs in the amount of $5,000, Malic is also suspended from registered activity for six months, will be placed under close supervision for six months and must successfully complete IIROC’s Conduct and Practices Handbook exam.
