A former advisor has been fined $100,000 and is prohibited from being registered as an approved person under the Investment Industry Regulatory Organization of Canada (IIROC) for violations that include making unsuitable investments and engaging in unauthorized discretionary trading on his niece’s account.
Henry Sojka, who was an advisor with now-defunct Union Securities Ltd., also failed to co-operate with an investigation into his actions and has been ordered to pay costs of $20,000, according to an IIROC hearing panel decision released on Friday. The findings were based on testimony provided by Sojka’s niece, who was his client, and affidavit evidence from IIROC staff.
“The transactions were not suitable given the age of his niece, her lack of experience and her vulnerability. The conduct was either intentional or reckless with respect to regulatory requirements,” the IIROC hearing panel decision states. “The failure to attend or respond to IIROC’s requests harms the reputation of the industry. The only mitigating factor was the fact the respondent had no prior disciplinary history.”
The client in question, “SF,” was 19 years old in July 2006 when she opened an account with her uncle for the purpose of investing assets from her mother’s estate. SF testified that Sojka never reviewed client account forms with her that stated her investment objectives and her risk tolerance and that she signed blank forms on two occasions.
SF was unaware that Sojka had altered her client account form in March 2009and dramatically changed her risk tolerance to high from mainly low and her investment objectives to 100% venture speculative from the original level of 5%. SF did not want those changes made, according to her testimony.
Sojka was found to have bought and sold shares of resources companies, many of which were high risk, within SF’s account. This occurred approximately 42 times between March 2009 and May 2011.
The transactions “incurred losses of $6,984 and commission charges of $34,554 for total losses of $41,538 and were unsuitable for SF given her financial situation, investment knowledge, investment objectives and risk tolerance,” the decision states.
Sojka also used his discretion with respect to the type of security, quantity, price and timing of these trades. SF had not given him permission to make the trades nor was the account designated as a discretionary trading account by his firm.
Lastly, Sojka did not co-operate with IIROC’s investigation into his actions. The self-regulatory organization made several attempts to contact him between February 2014 and December 2015 in order to inform him of the investigation and request his presence at an interview. However, Sojka did not appear at two separate interviews that IIROC scheduled, nor did he appear at the hearing into the matter.
Sojka joined the securities industry in 1987 and worked at Union Securities between 2005 and 2012. He has not been an IIROC-approved person since 2012.
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