On January 25th, 2012, a hearing panel of the Investment Industry Regulatory Organization of Canada (IIROC) accepted a settlement agreement between IIROC staff and Konstantine Dariotis and Alfonso Fiumidinisi.

Dariotis and Fiumidinisi admitted that they engaged in outside business activities without proper disclosure and authorization from their employer.

Specifically, Dariotis and Fiumidinisi admitted to the following violation:

(a) During the approximate period between 1991 and 2005, Dariotis and Fiumidinisi engaged in outside business activities without proper disclosure and authorization from their dealer member employer by:
a) referring individuals including clients of its dealer member employer to offshore banks;
b) obtaining and acting upon trading authority over most of these offshore accounts; and
c) facilitating these individuals to invest in offshore funds for which Dariotis and Fiumidinisi had an interest to earn fees and commissions.
all of which is business conduct that is unbecoming or detrimental to the public interest, contrary to IDA By-law 29.1 (now Dealer Member Rule 29.1).

Pursuant to the settlement agreement, Dariotis and Fiumidinisi agreed to the following penalties:

(a) To pay to IIROC a total fine in the amount of $350,000; and
(b) To each be suspended from any registered capacity with IIROC for a period of 2 months, to be served consecutively;

Dariotis and Fiumidinisi also agreed to pay costs to IIROC in the amount of $50,000.

The settlement agreement and the panel’s decision dated January 25th, 2012, are available here. Documents related to ongoing IIROC enforcement proceedings – including reasons and decisions of hearing panels – are posted on the IIROC website as they become available.

IIROC formally initiated the investigation into Dariotis and Fiumidinisi’s conduct in November 2006. The conduct occurred when Dariotis and Fiumidinisi were Registered Representative with the Montréal branch of RBC Dominion Securities Inc., an IIROC-regulated firm. Dariotis and Fiumidinisi are now employed with CIBC World Markets Inc. an IIROC-regulated firm.