CIRO panel accepts permanent ban over client loan despite concerns it was harsh

A CIRO hearing panel approved a permanent prohibition against a British Columbia investment adviser who borrowed $35,000 from a client, even though it thought a temporary suspension followed by strict supervision might have been more appropriate.

In Re Banerjee, 2026 CIRO 16, the Canadian Investment Regulatory Organization’s Pacific District panel accepted a settlement requiring Gaurav (Gavin) Banerjee to pay $40,000, comprising $31,500 in disgorgement and an $8,500 fine, plus $5,000 in costs. The settlement was approved April 30, 2026; written reasons followed May 19.

The decisive question was not whether the panel would have chosen the same sanction after a contested hearing. It was whether the agreed penalty clearly fell outside a reasonable range of appropriateness. Despite its reservations, the panel concluded that the permanent prohibition did not cross that threshold.

A personal loan outside dealer oversight

Banerjee was registered with Scotia Securities Inc. from September 2021 until July 2024 and worked in the Victoria area. He was also employed by an affiliated bank at the same location. The dealer’s policies prohibited personal borrowing or lending arrangements with clients and required disclosure of conflicts of interest.

On July 19, 2024, a client whose accounts he serviced gave him a $35,000 cheque. Banerjee deposited it into his personal account and used the money for personal expenses and debts. He did not disclose the loan to the dealer.

Their written agreement contemplated monthly repayments from August 2024 through July 2025, with the remaining balance due at the end. It did not provide for interest or specify the monthly amount, although Banerjee verbally agreed to pay $1,500 a month.

The arrangement came to light through a cheque-verification request from Banerjee’s bank. Branch staff contacted the client and learned of the loan. The dealer suspended Banerjee on July 25, 2024, and he resigned four days later during its investigation.

The client had not complained to the dealer or CIRO. According to the agreed facts, Banerjee began making repayments around August 2024 and repaid approximately $3,500; the client had not sought further repayment. The absence of a complaint did not prevent discipline for the admitted breach of the rule against borrowing from clients.

Remorse and cooperation did not rewrite the settlement

At the hearing, Banerjee expressed remorse and said he had badly needed money to pay debts. He said the client offered the loan and that he had been unaware of the dealer’s approval requirement. He also emphasized his resignation and cooperation with enforcement staff. The panel recorded these explanations rather than treating them as a defence to the admitted contravention.

Staff argued that the undisclosed arrangement put Banerjee’s interests ahead of the client’s and undermined the dealer’s ability to supervise him. They said the unpaid $31,500 and the benefit of interest-free borrowing justified disgorgement, while the additional fine and prohibition would deter similar conduct.

The agreed record also showed that Banerjee had no previous CIRO or Mutual Fund Dealers Association disciplinary proceedings. His admissions saved the time and expense of a contested hearing. Those considerations were part of the record assessed alongside the seriousness of the borrowing.

An acceptable range, not the panel’s preferred sanction

The panel explained that settlement review serves a different function from choosing a sanction from scratch. It could accept or reject the agreement but could not alter the negotiated sanctions. The reasonable-range test recognizes the public benefit of settlements while still requiring proportionality, consistency and deterrence.

The permanent prohibition gave the panel pause. In light of Banerjee’s acknowledgement and resignation, it considered that a suspension followed by strict supervision on reapplying for registration might have been a more appropriate choice. But a potentially preferable alternative did not establish that the agreed prohibition was clearly unreasonable.

The panel therefore approved the settlement as written. Banerjee is permanently prohibited from conducting securities-related business in any capacity while employed by or associated with any CIRO dealer member. The $40,000 monetary sanction is inclusive of disgorgement, not an $8,500 fine plus a second $40,000 amount.

The amounts were payable on acceptance unless staff and Banerjee agreed otherwise. The settlement preserves CIRO’s ability to proceed if its terms are breached. The decision does not establish that the sanctions have been collected or that the client received a new damages award; it concerns prohibited borrowing, not a finding that the loan was stolen.