By Mike Pearson, News staff
The Ontario Securities Commission has increased a fine against a former Ancaster financial planner who misappropriated $1.4 million from an elderly widow between 2004 and 2006.
Mark Allen Dennis, who was president of the Dennam Group of Companies, was a financial planner with offices in Ancaster and Hamilton. Dennam has since filed for bankruptcy. An OSC order has increased his fine by $400,000 to $1.45 million, plus a $25,000 fine for Dennis’ failure to provide information to the Investment Industry Regulatory Organization of Canada and costs in the amount of $7,500.
Dennis did not attend the OSC hearing nor did he participate in proceedings before the OSC.
An OSC order released on Aug. 31 supercedes a decision made by a hearing panel of the Investment Industry Regulatory Organization of Canada which leveled a fine of $1 million.
The ruling also includes “a permanent bar” which bans the former Hamilton Tiger-Cat linebacker from being reapproved by IIROC at any investment dealer in Canada.
“A permanent bar means Mr. Dennis can’t work in his former capacity at any of the firms we regulate,” said David Thomas, IIROC director of public affairs.
The OSC released its decision on July 31. In its ruling, the OSC found that the IIROC hearing panel proceeded on an incorrect principle and made an error of law in imposing a fine against Dennis which did not achieve full disgorgement (relinquishing all profits) of the amount Dennis was found to have misappropriated from his client.
In addition, the hearing panel improperly considered the fact that Dennis’ employer had provided full restitution to Dennis’ former client. Dennis was a registered representative with a Hamilton branch of TD Waterhouse Canada Inc., according to IIROC documents.
“The fact (Dennis’) former client has been made whole by his former employee is an irrelevant factor in considering the appropriate regulatory penalty against Dennis for his misconduct,” the OSC decision states.
While Dennis now faces a larger financial penalty representing the full amount of the fraud, officials have historically lacked the legal clout required to collect penalties against individuals.
Paul Riccardi, IIROC’s senior vice president, enforcement, member policy and registration said that while the organization has enjoyed a fine recovery rate of close to 100 per cent for firms, IIROC and other regulators lack the statutory powers to compel payment in most parts of the country.
“It’s important to note that even where there may be challenges in collecting penalties from certain former registrants, there is still a strong deterrent effect in setting regulatory enforcement penalties,” Riccardi stated in an email. “It sends a message and contributes to our efforts toward instilling a culture of industry compliance. This factor applies in the case of fines as well as for suspensions and permanent bans from working as a registrant at any of the 205 investment dealers regulated by IIROC.
The recovery rate for fines against individuals has been between 10 and 18 per cent over the past few years. These rates only reflect what was collected during that year, whereas fines are published in the year they are assessed. We have found the recovery rates improve when measured over a longer period because there can be a lag between assessing a penalty and collecting it. We don’t track these rates normally but one internal review showed the recovery rate for individuals rose to about 45 per cent when measured over five years.”
Dennis played for the Central Michigan Chippewas of the NCAA from 1986 to 1989 and landed a spot as an outside linebacker for the Hamilton Tiger-Cats in the ear