Broker banned for role in scheme

Dunn was Lett's investment adviser and his "conduct was particularly egregious as he was a registrant and a branch manager," the commission stated. "The branch manager holds a crucial role in compliance in the securities industry."

The Toronto Star
June 19, 2004

Broker banned for role in scheme
Proof-of-funds letters misleading. Also ordered to pay $126, 938
Canadian Press

The Ontario Securities Commission has banned a former branch manager of investment firm BMO Nesbitt Burns Inc. and assessed him $126,938 in costs for his role in arranging improper documentation regarding $21 million in investments.

Witnesses testified that John Craig Dunn persuaded employees at a Mississauga office of BMO Nesbitt Burns (TSX: BMO) and three officers at a BMO branch to sign proof-of-funds letters as part of an investment scheme they didn't understand.

The OSC said today that it has terminated Dunn's broker registration for 10 years and prohibited him permanently from supervisory roles in the brokerage industry, as well as requiring him to pay the commission's costs.

The case arose from the Milehouse Investment Management scheme orchestrated by Patrick Fraser Kenyon Pierrepont Lett, who earlier this month was barred from the industry for 10 years and ordered to pay $150,000 in costs.

The OSC said the 26 proof-of-funds letters were intended to provide a misleading impression of the source and amount of money available to Milehouse and Lett's other vehicle, Pierrepont Trading Inc.

Seven investors deposited $21 million into the Lett accounts in a strategy purported to provide returns of up to 400 per cent.

Dunn was Lett's investment adviser and his "conduct was particularly egregious as he was a registrant and a branch manager," the commission stated.

"The branch manager holds a crucial role in compliance in the securities industry."

In May, the Investment Dealers Association fined Dunn $100,000 and permanently barred him from acting as a supervisor in the industry.


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