Regulatory hearing addresses conflict of interest and imposes sanctions to uphold ethical standard
On November 8, a Canadian Investment Regulatory Organization (CIRO) hearing panel accepted a settlement agreement with Karen Elisabeth Puzara, following a hearing held under the Mutual Fund Dealer Rules.
The settlement includes sanctions related to borrowing monies from a client, which created a conflict of interest that was not disclosed or appropriately managed.
Between October 2016 and July 2022, Karen Puzara borrowed $60,000 from a client identified as DG.
This loan gave rise to a conflict or potential conflict of interest, which Puzara failed to disclose to the Dealer Member or address with responsible business judgement in the client’s best interest.
At the time, the Dealer Member’s policies prohibited borrowing from clients.
Puzara used the funds to address personal debts and repaid portions periodically until January 2022. By July 2022, DG's family raised concerns with the Dealer Member, leading to a formal investigation.
During the inquiry, it was revealed that Puzara had not reported the loan in compliance forms and had misled the Dealer Member in an annual review questionnaire by denying any personal financial dealings with clients.
A subsequent directive led Puzara to repay the remaining balance of $11,000 to the client in April 2023.
As part of the settlement agreement, Puzara admitted her contravention of Mutual Fund Dealer Rule 2.1.4.
The penalties include a $25,000 fine, a three-month suspension from conducting securities-related business with any CIRO Dealer Member, and an additional $5,000 in costs.
