A Canadian Investment Regulatory Organization (CIRO) hearing panel has found that Paul O’Brian Walker recommended and sold shares and debentures offered by a company he incorporated, borrowed money from one client and engaged in a series of outside business activities that he did not disclose to his firm.
According to the regulator’s decision (penalty) and reasons, the unreported outside activities began in 2010 and continued as late as May 2021.
Actions were “deliberate and self-serving”
“The respondent abused his status as an approved person to solicit clients and individuals to invest in his company. He failed to disclose to his clients that a dealer had not approved his outside activities or the securities that he was selling to raise capital to invest in a corporation he controlled and acted as president and CEO,” the decision states. “He put his own interest ahead of clients. The respondent’s actions were deliberate and self-serving.”
In 2010, Walker incorporated IFS Global Technologies Inc., a financial technology company intended to develop software for mutual fund advisors. Between 2010 and 2014 he sold approximately $1,433,772 IFS shares to 25 clients and 25 other individuals and sold $100,000 of IFS debentures to another individual. Although Walker’s firm did give him permission to operate IFS, it did not give him permission to sell shares. At the same time, he incorporated four other companies for various purposes and was engaged in activities in connection with the finance, purchase and development of a property in Jamaica.
The client loaning Walker funds lost 100 per cent of their capital, as did the clients and individuals who invested in the company.
Refused to recognize seriousness of misconduct
“The respondent refused to recognize the seriousness of his misconduct. At the hearing, the respondent admitted his business may have flaunted and violated rules (the decision later quotes Walker’s hearing testimony saying as much), but he tried to recharacterize his actions as altruism. The respondent stated that it was unfortunate that IFS failed because he intended to provide a service to the mutual fund industry.”
In addition to a fine in the amount of $1,673,772 and costs in the amount of $15,000, the regulator threw Walker out of the mutual fund industry permanently, saying he is prohibited from conducting securities related business with any CIRO-registered mutual fund dealer going forward.