The Ontario Securities Commission.Peter Power/The Globe and Mail
The Ontario Securities Commission is seeking to ban an Ontario man from working as a registrant in the securities industry after Connecticut banking regulators found him guilty of defrauding his clients.
While the OSC often seeks to match sanctions imposed by other provincial securities regulators, it is rare for the regulator to seek to reciprocate an order from a U.S. state entity. An OSC spokeswoman said staff do not believe they have ever sought to reciprocate an order of the Banking Commissioner of the Connecticut Department of Banking (CDB), which is the department overseeing the operation of banks and securities firms in the state.
The CDB ruled in October that Duncan Cleworth of Markham, Ont., and his companies Powerwater Systems Inc. and Powerwater USA Inc. sold unregistered securities between 2004 and 2013 and committed fraud.
At a hearing in October, which Mr. Cleworth did not attend, staff alleged that he sold securities of Powerwater Systems Inc. to investors in the state, and withdrew some investors' funds from a Powerwater USA bank account "for his personal use." The regulator alleged that he failed to disclose material information to investors, including financial information about the companies, the registration status of the securities, and that Mr. Cleworth would use investor funds himself.
The Connecticut regulator permanently banned Mr. Cleworth and his companies from selling securities, and imposed fines totalling $650,000 (U.S.).
The OSC said it will seek an order at a hearing on June 26 that would reciprocate some of the Connecticut penalties.
OSC staff want to permanently ban Mr. Cleworth from working as a registrant in the investment industry or from serving as a director or officer of a registered securities company, an investment fund management firm, or any public company.
Janet McFarland