The Investment Industry Regulatory Organization of Canada (IIROC) announced Dec. 7 that it is cancelling a scheduled disciplinary hearing and withdrawing additional allegations against Edward Peter Bodnarchuk.
Bodnarchuk has already been sanctioned and fined $100,000 in a related case against him. He is no longer a registrant with any IIROC-regulated firm.
Although IIROC originally sought to include the dismissed allegations of personal financial dealings with a client in its original Statement of Allegations, the motion was denied and a separate hearing was scheduled. In making its decision, the panel said including the allegations would not give Bodnarchuk sufficient time to prepare and respond, particularly due to the fact that Union Securities, one of his employers at the time, has ceased doing business – thus making it difficult for him to obtain the necessary financial records.
In the related proceedings, Bodnarchuk was found guilty of six counts when he made discretionary trades to move life savings for two of clients into junior mining company shares. The two clients – dubbed G.S. and T.B. in the hearing documents – reportedly did not appreciate that their investments could be wiped out by the high-risk investments. When the clients were concerned about losses, Bodnarchuk reportedly counseled his clients not to sell or diversify their investments, but to wait for the market to recover. G.S. lost approximately $30,000 and T.B lost $212,000. 80 per cent and 90 per cent of their respective portfolios were concentrated in the high-risk securities.
Bodnarchuk was found guilty of a further infraction after soliciting his clients to vote with their share proxies to replace the directors in two of the mining companies they were invested in. All told, Bodnarchuk was fined $100,000 and suspended for 12-18 months.
The personal financial dealings allegations that were withdrawn are related to Bodnarchuk’s dealings with T.B.’s son, known as C.B. in IIROC documents. The documents allege that Bodnarchuk paid C.B. $5,000 to make up for losses in C.B.’s investment accounts – he was similarly invested in high-risk securities and lost over $24,000 – without knowledge or approval from his firm.
As a condition of the payment, a cheque cut from Bodnarchuk’s personal bank account, he required the money be reinvested with him at his new firm, PI Financial. “To avoid detection of the payment by PI Financial, the Respondent directed C.B. to first deposit the cheque in his personal bank account, then transfer funds to a PI Financial account.” In addition to providing C.B. with compensation, the payment was also reportedly an incentive for T.B. to also move his accounts to Bodnarchuk’s new firm. (The advisor changed firms six times over the course of his 14-year career.) Both C.B. and T.B. signed PI Financial’s new client forms the same day the personal cheque was issued.