Item 14.1 of Form 33-109F4 Registration of Individuals and Review of Permitted Individuals (Form 33-109F4) requires individual applicants to indicate whether there are any outstanding or stayed charges against them alleging that a criminal offense was committed. Once an individual is registered or approved, subsection 4.1(1) of National Instrument 33-109 Registration Information (NI 33-109) requires them to disclose to the regulator within ten days any change in the information previously submitted in respect of Item 14 – Criminal Disclosure on their Form 33-109F4.
Even though Form 33-109F4 makes it clear that criminal charges must be disclosed, some people might be embarrassed or otherwise reluctant to disclose such facts in the hope that no one will notice, especially if they think there is a good chance that the charge ultimately will be dismissed. There is no shortage of case law, however, indicating that this “stick your head in the sand” approach is very risky.
For example, in the recent Director’s decision Re Tams published by the Ontario Securities Commission (OSC), the Director agreed with staff’s recommendation not to re-activate an individual’s registration as a mutual fund dealing representative due to concerns about his integrity. As part of OSC staff’s routine criminal records check, they learned that while the applicant was registered with another firm, he had failed to disclose to the OSC that he had been charged with an impaired driving offense under the Criminal Code. Later, he quadrupled down on that non-disclosure by failing to disclose the outstanding charge to the OSC or his sponsoring firm when he applied for registration as a mutual fund dealing representative at that other firm, failing to respond to OSC staff’s inquiries about the non-disclosure, and making false statements to staff during a voluntary interview to consider his registration.
Even though the applicant was ultimately acquitted for the criminal charge, OSC staff and the Director viewed his pattern of withholding information as problematic. In the decision, the Director refers to CSA Staff Notice 33-320 The Requirement for True and Complete Applications for Registration (SN 33-320), which stresses the importance of applicants for registration being willing and able to complete the application form for registration with candour.
AUM Law has extensive experience assisting individuals and their sponsoring firms with applications for registration, preparing updates to Form 33-109F4, training staff on their obligations to update this form when circumstances change, and engaging with regulators to address any concerns that might arise regarding an individual’s fitness for registration. Please do not hesitate to contact us if you have questions about the application or update process.
July 31, 2020