The Capital Markets Tribunal of the Ontario Securities Commission has issued its reasons and decision banning Alberta resident, Kenton Roy Rustulka from trading in any securities or derivatives in Ontario.
First sanctioned by the Alberta Securities Commission (ASC) in 2021, Rustulka had been registered as an exempt market dealer in Alberta, British Columbia and Saskatchewan at the time sanctions were levied, but has never been a registrant in Ontario.
The ASC sanctioned Rustulka for breaching know your client (KYC) and suitability obligations owed to clients and for making material misrepresentations regarding the general and specific risks associated with exempt market securities.
While employed with WealthTerra Capital Management Inc. as an exempt market dealing representative, he sold approximately $6.5-million in exempt market securities, earning approximately $463,000 in commissions. “He was found to have reported false and misleading information on KYC forms and to have failed to properly identify his clients’ investment needs, objectives, financial circumstances and risk tolerances,” the ASC states. Rustulka reportedly also misrepresented the purpose of risk management forms that clients signed. He was ordered to pay $100,000, disgorge $99,242.37 in commission and pay $55,000 toward hearing and investigation costs. The panel also ordered permanent market access bans.
In the interjurisdictional order imposing similar non-monetary sanctions, the tribunal’s adjudicator stated in his reasons that there is no reason to depart from the general practice of making a mirroring order that will effectively bar Rustulka from future participation in capital markets.
“In reaching this conclusion, I have considered and adopt the sanctioning factors articulated in the ASC sanctions decision; namely, the seriousness of Rustulka’s misconduct given his obligations as a registrant, the harm caused to investors and the capital markets more generally by Rustulka’s misconduct, the deliberate nature of the misrepresentations made by Rustulka to what the ASC found to be unsophisticated investors, the extended duration of Rustulka’s misconduct which spanned a three and a half year period, the benefits in the form of commissions received by Rustulka as a result of his misconduct, the lack of any mitigating circumstances and the presence of aggravating circumstances,” the decision states. Aggravating circumstances included the fact that Rustulka exploited his background as a police officer and a pastor when making the sales.
In addition to the ban on trading securities and derivatives in the province, Rustulka may not acquire any securities in the province, exemptions contained in Ontario securities laws no longer apply to the former representative and he must immediately resign and is prohibited from holding any director or officer positions in the future.
