A hearing panel of the Investment Industry Regulatory Organization of Canada has found that a former advisor in Calgary failed to ensure his investment recommendations were unsuitable for clients and that he engaged in churning and discretionary trading.
In September 2014, an IIROC hearing panel heard charges against Grant Matthews relating to four clients. According to IIROC, between 2009 and 2012, Matthews did not conduct proper due diligence regarding the financial circumstances and knowledge of four retired clients over the age of 50. At the time Matthews was a financial advisor with Leede Financial Markets Inc.
The IIROC investigation revealed that information in the New Client Account Forms (NCAF) was often inaccurate and that some clients did not fully understand what they were signing.
IIROC documents also note that Matthew engaged in discretionary trading for three clients in 2008, in the case of one individual, and again between 2010 and 2012, in relation to two other clients. Furthermore, IIROC says Matthews engaged in excessive trading – churning – in the case of three clients between 2009 and March 2011.
According to IIROC, Matthews often traded in high-risk investments, including leveraged and inverse exchange-traded funds (LETFs), which resulted in client losses. For example, in the case of one client — a self-employed oil field consultant who took early retirement from a pervious oilfield job — Matthews made 519 trades in the client’s accounts between January 2009 and June/July 2010. During that time, the accounts had a loss of 81,762 comprised of $14,379 in losses and $67,384.
Matthews is not currently a registrant with an IIROC-regulated firm. A penalty has yet to be determined.