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by Mike Caswell

The Canadian Investment Regulatory Organization has begun proceedings against former BMO Nesbitt Burns Inc. employee Milan Sharma, claiming that he failed to question clients who were unloading tens of millions of shares in over-the-counter securities. In some instances, his clients were undisclosed insiders or had other connections to the underlying issuers, CIRO says. In one instance a client sold 111.4 million shares in a nine-month period and withdrew $1.77-million (U.S.) from his account, according to CIRO.

The allegations are contained in a notice of hearing that CIRO released on Friday, April 17. The sole respondent is Mr. Sharma, who had worked in the industry since September, 2019. He was with BMO Nesbitt Burns at a Montreal branch until July, 2023, and is no longer registered with any firm.

The case arises from a group of 19 clients that opened accounts with Mr. Sharma starting in 2021 and used those accounts primarily to deposit and sell shares of OTC securities. CIRO notes that such securities "are generally illiquid and volatile and are frequent targets of alleged market manipulation and fraud." Despite his lack of knowledge of OTC securities, Mr. Sharma did not question the trading patterns of his clients, which involved liquidating large numbers of shares and then withdrawing the proceeds, CIRO says.

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