(December 4 – 15:25 ET) – The Saskatchewan District Council of the Investment Dealers Association of Canada has imposed discipline penalties on Byron Cronk, a former rep in the Regina branch office of Midland Walwyn Capital Inc.

Cronk was fined $5,000, and must rewrite and pass the Conduct and Practices Handbook for Securities Industry Professionals exam or the Branch Managers Exam by May 31, 2001. In addition, Cronk must pay $3,200 towards the IDA’s investigation costs.

Cronk admitted that between February 1996 and June 1998, he failed to use due diligence to ensure that every recommendation made for two separate client accounts was appropriate and in keeping with the clients’ investment objectives.

According to the IDA, on Feb. 6, 1996, a client opened an RRSP account under Cronk’s direction. The client’s investment objectives allowed for 5% speculation. Cronk recommended the sale of Atlas Canadian High Yield Bond Funds and the subsequent purchase of Abacan Resources shares for the account.

Cronk further recommended the purchase of William Resources Inc. Convertible Debentures; however, subsequent to the purchase, the company suspended interest payments on the debentures and later forced the conversion into the underlying common shares. The IDA determined that the percentage of speculative securities in the client’s account exceeded the 5% allowance in 28 of the 29 months of review.

In another incident, on July 12, 1996, a married couple opened a corporate margin account under Cronk’s direction. The clients’ investment objectives called for 75% Income and 25% Capital Gains — with no provision for speculation.

Cronk also recommended the purchase of William Resources Inc. Convertible Debentures in this account. The IDA determined that there were speculative securities in the clients’ account in each of the 14 months under review.

Cronk is currently employed by Credential Securities Inc. in Regina.
-IE Staff