The Investment Industry Regulatory Organization of Canada (IIROC) has fined a former Montreal broker $110,000 for know your client and suitability failings and excessive trading (churning).

On October 31, an IIROC hearing panel accepted a settlement agreement, with sanctions, between IIROC staff and Ronald Lann.

According to the settlement document, Lann admitted he failed to learn the essential facts of three related clients and to ensure that the acceptance of orders was suitable for them. Moreover, he admitted to discretionary trading and improper sales practices by excessively trading in the client accounts.

The violations occurred from July 2005 to May 2008, when Lann was with the Montreal branch Scotia Capital Inc.

The first client opened an account with Lann using $500,000 from an inheritance from her father. The client also opened accounts for her two children using the $50,000 each child received as an inheritance. The client’s investment knowledge was limited and she was designated a risk tolerance level of medium. Lann never met or spoke with either of the client’s children. Instead, he filled out the New Client Application forms for the children based on information provided by their mother.

Between May 2006 and May 2008, Lann made excessive trades in all three accounts without proper consent. As well, the trades were not suitable for the clients given their investment knowledge and risk tolerance. As a result of the excessive trading and large commissions made by Lann, the client accounts fell by 23%, 22% and 26% respectively.

As part of the settlement, Lann agreed to pay a global fine of $110,000 that includes an $80,000 disgorgement of profit.

He also agreed to a suspension from registering with IIROC for three years, to successfully re-write of the Conduct and Practices Handbook exam as a step towards re-registration, and strict supervision for 18 months should he return to the industry.

Lann also agreed to pay $5,000 in costs.

IIROC began its investigation into Lann’s conduct in May 2011. He is no longer a registrant with an IIROC- regulated firm.