News Release

Vancouver – The British Columbia Securities Commission (BCSC) has formally reprimanded the Bank of Montreal (BMO) after it admitted in a settlement agreement that it inadequately supervised an employee who facilitated the illegitimate transfer of securities.

The employee, based at BMO Vancouver Main Branch in its Public Companies Group, was authorized to use an imprint stamping device, known as a Medallion, that guarantees the signature on securities transfer forms. Guaranteeing the signature signals to a securities transfer agent that a share transfer is authentic.

From 2013 to 2017, the employee used the Medallion to guarantee signatures on approximately 100 security transfer forms for shares of six venture companies. Directors of those companies asked the BMO employee to guarantee signatures on share certificates.

The BMO employee provided the guarantees while failing to:

• Verify the registered owners’ identity by meeting them in person, comparing their identification and requiring them to sign in his presence
• Record the names of people whose signature he guaranteed, the dates he did so, or the name of the certificates’ issuer
• Record or retain copies of documents he examined to demonstrate the validity of the guarantee.

The employee also accepted assurances from the company directors that the signatures on the forms were authentic. The employee’s conduct left the securities transfer system vulnerable to abuse by the company directors, who had issued the shares to nominees and wanted to transfer the shares back to themselves or others whenever it was convenient to do so.

By not adequately supervising the employee, BMO permitted him to engage in conduct that was abusive to the capital markets and contrary to the public interest.

The employee, who had worked at BMO for over 50 years, has since retired. Since 2017, BMO has improved its supervisory practices and policies with respect to Medallions, and its Public Companies Group no longer provides that service. BMO also fully cooperated with the BCSC during the investigation.

“The BCSC will take action against anyone who acts contrary to the public interest while engaging in trading-related activities,” said Peter Brady, Executive Director of the BCSC. “Even if the abusive activity doesn’t violate specific provisions of the Securities Act and we can’t impose financial penalties, we will use the breadth of our power to deter future misconduct.”

About the British Columbia Securities Commission (www.bcsc.bc.ca)

The British Columbia Securities Commission is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the Securities Act. Our mission is to protect and promote the public interest by fostering:

• A securities market that is fair and warrants public confidence
• A dynamic and competitive securities industry that provides investment opportunities and access to capital

Media Contact:
Brian Kladko
604-899-6713

Public inquiries:
604-899-6854 or 1-800-373-6393 (toll free)
inquiries@bcsc.bc.ca

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