1. Michael Ballanger (“Ballanger”) was a Registered Representative at Richardson GMP (“RGMP”) at the material time. In 2013 Ballanger obtained confidential information by virtue of his connections at a high risk illiquid issuer known as Tinka Resources Ltd (“Tinka”).
2. In April 2013, Ballanger failed to comply with RGMP’s policies and procedures when he committed his firm to act for Tinka in a private placement financing without obtaining prior approval.
3. In October 2013, Ballanger failed to comply with RGMP’s policies and procedures by not advising RGMP in a timely manner that he was in possession of confidential or potentially material non public information regarding Tinka.
4. Ballanger was employed as a Registered Representative with RGMP from October 2012 until his employment was terminated in September 2014. Ballanger had been a registrant since 1977 and at one point was licensed as an Assistant Branch Manager. Ballanger has not been an IIROC registrant since leaving RGMP.
5. In a discussion with RGMP’s Chief Compliance Officer (“CCO”) and followed up by a November 15, 2012 email, Ballanger had been informed by the firm’s CCO of RGMP’s procedures regarding the proper handling of potentially material or confidential information. Ballanger’s relationship with Tinka
6. At the relevant time Tinka was a junior resource exploration company which focused on the development of precious metals mines.
7. In 2012 and 2013, Ballanger had a close working relationship with Tinka’s principals and received confidential information from them about the company.
8. Ballanger had recommended Tinka to many of his clients at RGMP. Between November 2012 and July 2013, approximately 10,570,550 shares of Tinka were transferred into RGMP in Ballanger’s book of business. This number represented approximately 13% of the issued and outstanding shares of Tinka at that time. A large portion of the Tinka positions (approximately 5 million shares) were purchased via private placements at RGMP.
9. By March 10, 2014 Ballanger client positions in Tinka represented 18% of the issued and outstanding shares of the company. Ballanger commits RGMP to act for Tinka without prior approval
10. RGMP’s Compliance Policies and Procedures Manual dated June 2011 (the “Policies and Procedures Manual”) provided that the New Product Review Committee review and approve all new third party investment products including private placements for sale within RGMP.
11. On April 24, 2013, Tinka issued a press release announcing a non-brokered private placement financing of up to 2,353,000 units at a price of $0.85 cents per unit for gross proceeds of up to $2,000,050. The press release stated that “Richardson GMP is acting for the Company and will be paid a commission consisting of cash and warrants on a portion of the financing.”
12. Prior to April 24, 2013, Ballanger committed RGMP to act for Tinka in a non brokered private placement without the review or approval of RGMP and contrary to firm policies and procedures. Ballanger did not inform either RGMP’s compliance department or his branch manager of this proposed financing before Tinka issued a press release announcing the private placement, nor did he notify the firm that he was in possession of confidential and potentially material non public information.
13. Subsequently RGMP approved the above private placement after the fact and participated in this financing. Ballanger receives confidential information regarding Tinka
14. On October 8, 2013, Ballanger emailed RGMP’s compliance department about a draft press release for a proposed Tinka financing. Ballanger had not previously notified RGMP about his knowledge or involvement in the proposed transaction or that he was in possession of confidential and potentially material non public information.
15. According to the Policies and Procedures Manual, Ballanger was required to inform
RGMP’s Compliance department if he was in possession of potential inside information. Given the circumstances of this transaction, Ballanger knew or ought to have known that he was required to inform RGMP of the confidential or potentially material non public information regarding Tinka.
16. In an October 8, 2013 email, RGMP’s CCO reminded Ballanger of the firm’s procedures relating to the receipt and containment of confidential information.
17. RGMP added Tinka to its grey list on October 8, 2013 and added it to the restricted list on November 7, 2013 when the private placement financing was announced publicly. On November 8, 2013 RGMP’s compliance department sent Ballanger an email questioning trades in Tinka executed for one of his clients between October 22 and 24, 2013, as these trades were not marked unsolicited.
Close supervision by RGMP
19. RGMP questioned Ballanger further in February 2014 and when his responses were not satisfactory to the firm, Ballanger was placed under close supervision by RGMP in April
2014. At that time the following conditions were imposed:*close supervision for a period of not less than six months;*all new accounts were to be reviewed by branch management;*he was not allowed to enter solicited buys in Tinka;*he was not allowed to reference Tinka in marketing materials;*he could not sell his personal holdings or trade in this security until all client sales were satisfied and,*he was to develop an exit strategy for this security, to be presented to management within 30 days.
20. In early June 2014 Ballanger met with the compliance department and was reminded that he was to do the following:*prepare a written plan for the disposition of Tinka;* not to discuss investment recommendations on social media;* bring receipt of non public information to the attention of the compliance department and,*all marketing materials should be pre approved.
21. Ultimately the Respondent did not present an exit strategy for Tinka to RGMP. Ballanger’s employment was terminated by RGMP in September 2014 before the close supervision period had ended.