On Sept. 20, CFA Society Toronto co-sponsored the screening of the continuing education documentary Collared in association with Osgoode Hall Law School, CPA Ontario, HazloLaw Business Lawyers, and the Association of Certified Fraud Examiners. The screening took place at Hot Docs’ Ted Rogers Cinema, and an expert panel discussion on insider-trading prevention and risk-mitigation measures followed.

The documentary Collared brings to life the story behind Canada’s only criminal conviction for insider trading. The case involves two legal professionals and best friends, and a cross-border, insider-trading scheme involving millions of dollars over a span of 15 years. The story is told through interviews with convicted Canadian white-collar criminal Joseph Grmovsek, his friends, defence counsel, and scholars and experts in the fields of law, financial regulation, business, psychology, and ethics. Grmovsek pled guilty and was sentenced to a 39-month prison term in Canada. Co-accused Gil Cornblum committed suicide in 2009 in Toronto while scheduled to enter a guilty plea.

The film is relevant to all professionals with a fiduciary responsibility to clients. With its uniquely Canadian perspective, however, this documentary is a must-see for Canadian investment professionals and CFA Society Toronto members. It points out that Bay Street is particularly susceptible to the risks of white-collar crime relating to insider information because of the community’s small size and the intermeshed personal and professional relationships that exist here.

In a fascinating discussion, we learn not only what happened and how, but also why—or at least explore potential reasons—successful professionals might be prone to this kind of white-collar crime. What drives an otherwise ethical, successful, and law-abiding individual to participate in such actions? What combination of circumstances leads to this kind of criminality? What rationalizations does this individual use? The film explores the psychology of the white-collar criminal and explains the challenges in controlling for this behaviour in a competitive business environment that rewards many of the same personality traits. It also touches on challenging aspects of human psychology that make it possible for financial professionals to participate in misconduct and still see themselves as fundamentally good and moral people.

Key to the psyche of the white-collar criminal is the incorrect perception that insider trading is a “victimless crime”, perpetrated by individuals who enjoy taking risks and don’t see the harm to their victims. The crime is, of course, the misappropriation or theft of information for personal gain, which leads to a loss of confidence in our profession and has an impact on the integrity of markets overall.

The documentary also explores the differences between the Canadian and U.S. legal and regulatory frameworks and the challenges of enforcement. It suggests that, in Canada, cases involving economic harm are treated less seriously than those involving physical harm. Debate continues about whether Canada is doing enough about this and why the regulatory path is most often chosen for enforcement in this country.

Collared serves as a cautionary tale, showing viewers how not to become victims or unwitting participants in an insider-trading scheme. It also provides an education on the importance of protecting information, maintaining client confidentiality, and preventing white-collar crime in professional organizations.