SRO must hand out sanctions before appeal

A mutual fund rep who’s facing disciplinary sanctions for violations of self-regulatory organization rules must wait to find out what those sanctions are before pursuing an appeal, the Manitoba Securities Commission (MSC) has ruled.

The regulator was asked to review a decision on the merits of an enforcement action brought by the Canadian Investment Regulatory Organization (CIRO) against Andrew Kazina, a rep with Investors Group Financial Services Inc. in Winnipeg.

On November 15, 2023, a CIRO hearing panel ruled Kazina violated several rules in connection with undisclosed outside business activity and scheduled a hearing on sanctions for Feb. 26.

In the meantime, Kazina sought to appeal the decision that he’d violated SRO rules.

According to the MSC, he argued that it doesn’t make sense to go ahead with the sanctions hearing before his appeal of the merits decision is heard.

“He argues that if he is successful in the appeal to this panel any further work by the CIRO hearing panel would be unnecessary,” the MSC noted.

However, the regulator sided with the SRO, which argued the sanctions hearing should be completed before any appeal is heard.

In its decision, the MSC noted that the generally accepted approach is to allow the SRO process to play out before entertaining an appeal, unless there are exceptional circumstances that would warrant an early intervention.

“The appellant did not argue that any exceptional circumstances existed. He argued that if he is successful in his appeal any further work by the CIRO hearing panel would not be necessary. This is not a persuasive argument,” the regulator ruled.

“It is most efficient that the CIRO hearing panel complete its work at this time to ensure that the same panel members are available and that this decision is made close in proximity to the time in which the CIRO hearing panel rendered its merits decision,” the MSC said.

After that, an appeal would be possible, the regulator said.