Decision in brief: Marrone, Enforcement Proceeding, Sanctions and Costs, February 28, 2023
In an earlier decision, the Tribunal decided that Aurelio Marrone had violated Ontario securities law. Marrone, a mutual fund salesperson, acted unfairly and dishonestly towards his client, who was elderly and dying of cancer. His client gave him full power over her finances by naming him as her Power of Attorney (someone who is legally allowed to make decisions for another person), and as the back-up executor of her estate (the person who makes sure the wishes of the person who has died are completed according to instructions in a will). She died soon after giving him these powers. The client left him all of her money and possessions (worth more than $1.8 million) in her will. His employer and the Mutual Fund Dealers Association of Canada (the organization that makes the rules mutual fund salespersons and their employers must follow) had rules in place for how to deal with conflicts of interest (a situation that occurs when an individual’s own personal interests could improperly influence their judgment, decisions, or actions in the workplace). Marrone didn’t follow those rules.
In this decision, the Tribunal decided what sanctions and costs should be ordered against Marrone because of his conduct.
OSC staff asked that the Tribunal permanently ban Marrone from participating in the capital markets, and that it order him to pay to the Commission an administrative penalty of $500,000 plus the money he would receive under his client’s will.
The Tribunal decided that Marrone should be permanently banned from participating in the capital markets and that he should pay a $500,000 administrative penalty. His misconduct was serious. Marrone was in a position of trust with a vulnerable client, and he put his interests ahead of hers. The obligation to manage conflicts and potential conflicts is at the heart of the client relationship. He had many years of experience in the capital markets as a mutual fund salesperson and knew the rules he was supposed to follow. He also knew about his employer’s rules on conflicts of interest and decided not to follow them.
The Tribunal decided not to order that Marrone disgorge (give up to the Commission) the money he may receive from his client’s will, because he will not get those funds due to his breach of the conflict-of-interest rules.
Finally, the Tribunal required Marrone to pay $85,000 towards the costs of the OSC’s investigation and this proceeding. This amount was less than what OSC staff asked for because part of the hearing time was spent by staff on witnesses that the Tribunal did not find helpful in making its decision.