In the Matter of Stéphane Rail - Discipline



    MONTREAL, July 22 /CNW/ - Following a disciplinary hearing held on
January 15, 16 and 18 and March 4, 5 and 6, 2008, in Montréal (Québec), a
Hearing Panel of the Investment Dealers Association of Canada (IDA), by a
majority decision, has found Stéphane Rail (the Respondent) guilty on Count 1
a) as alleged, namely that, in 2000, while employed as a Registered
Representative of TD Securities Inc. (hereinafter, TD), he engaged in conduct
unbecoming or detrimental to the public interest when he engaged in outside
business activities without the consent and without the knowledge of his firm,
by introducing one of his clients, HC, to another of his clients, LV, with the
aim of facilitating the obtaining of a loan for LV, knowing that his firm had
already determined that this loan was too risky and that such behaviour was
not consistent with his responsibilities as a registered representative,
contrary to Association By-law 29.1.
    The Hearing Panel does not uphold Count 1 b) which alleged that Stéphane
Rail engaged in conduct unbecoming or detrimental to the public interest, when
he engaged in outside business activities without the consent and without the
knowledge of his firm, by introducing the owners of P. Inc., PP, DP and RG, to
his current client, LV, in order to propose a financial solution to benefit
LV, for an amount of $1,000,000, without the consent and without the knowledge
of the firm and knowing that such behaviour was not consistent with his
responsibilities as a registered representative.
    The Hearing Panel has found Stéphane Rail guilty on counts 2 and 3 of the
Notice of Hearing, as alleged, which read as follows:

    
    2.  In the year 2000, the Respondent, while employed with TD as a
        registered representative, made inappropriate use of personal and
        confidential information regarding two clients, HC and LV, by
        introducing them to one another in order to facilitate a financing
        project to benefit LV, thereby engaging in conduct unbecoming and
        detrimental to the public interest, contrary to IDA By-law 29.1;
    3.  On or about September 18, 2000, while employed with TD as a
        registered representative, the Respondent failed to use due diligence
        to make sure that the cheque made by P. Inc., dated September 14,
        2000, in the amount of $333,000 and payable to COC, was properly
        invested in the account belonging to COC, thereby engaging in conduct
        unbecoming and detrimental to the public interest, contrary to IDA
        By-law 29.1;

    When the hearing resumed on March 4, 2008, Stéphane Rail entered a guilty
plea on counts 4, 5 and 6, acceptance of which plea has been confirmed by the
decision of the Hearing Panel. These three counts read as follows:

    4.  In June and July 2000, the Respondent, while employed with TD as a
        registered representative, failed to use due diligence and engaged in
        conduct unbecoming and detrimental to the public interest, by
        creating an investors group, to which he belonged, for the purpose of
        investing over $150,000, when he knew or should have known, as a
        registered representative, that this stratagem constituted a means of
        illegally taking advantage of the provisions concerning the
        prospectus exemption stipulated in section 51 of the Québec
        Securities Act, contrary to IDA By-law 29.1;
    5.  On or about June 22, 2000, while employed with TD as a registered
        representative, the Respondent engaged in conduct unbecoming and
        contrary to the public interest, by depositing in a personal capacity
        an amount of $48,112 in the account of his client RS, for the purpose
        of making a private investment, contrary to IDA By-law 29.1;
    6.  On or about July 18, 2000, the Respondent, while employed with TD as
        a registered representative, engaged in conduct unbecoming and
        contrary to the public interest, by depositing in a personal capacity
        an amount of $35,000 in the account of his client RS, contrary to IDA
        By-law 29.1.
    

    As for count 7, the Hearing Panel does not uphold Stéphane Rail's guilt.
This count alleged that Mr. Rail, on or about October 30, 2000 and on or about
March 1, 2001, while employed as a registered representative with TD, engaged
in conduct unbecoming and contrary to the public interest, when he used TD
letterhead without the latter's consent and without its knowledge, allowing P.
Inc. and its shareholders to believe that they were doing business with the
firm, whereas it (P. Inc.) was never a client of the firm, contrary to IDA
By-law 29.1.
    The IDA had formally launched an investigation into the conduct of
Stéphane Rail on June 22, 2005. The misconduct occurred while Stéphane Rail
was employed as a registered representative at the Ste-Foy, Québec branch of
TD Securities Inc. Since 2002, Mr. Rail has worked as a branch manager with
Canaccord Capital Inc., suite 2940, 2600 Laurier Blvd., Ste-Foy, G1V 4M6.
    The parties shall be summoned to a penalty hearing, on a date to be
determined by the National Hearing Coordinator, in order to hear their
representations regarding penalties. The decision and reasons of the Hearing
Panel may be viewed at
http://www.iiroc.ca/English/Enforcement/Notices/Pages/Hearing.aspx.

    IIROC is the national self-regulatory organization which oversees all
investment dealers and trading activity on debt and equity marketplaces in
Canada. Created in 2008 through the consolidation of the Investment Dealers
Association of Canada and Market Regulation Services Inc., IIROC sets high
quality regulatory and investment industry standards, protects investors and
strengthens market integrity while maintaining efficient and competitive
capital markets. IIROC carries out its regulatory responsibilities through
setting and enforcing rules regarding the proficiency, business and financial
conduct of dealer firms and their registered employees and through setting and
enforcing market integrity rules regarding trading activity on Canadian equity
marketplaces.





For further information:

For further information: Carmen Crépin, Vice President, Québec, (514)
878-1625 or ccrepin@iiroc.ca; Jeff Kehoe, Director, Enforcement, (416)
943-6996 or jkehoe@iiroc.ca


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