The B.C. Securities Commission has ordered an investment advisor to pay $18,000 for failing to ensure his client was not trading on inside information when he carried out her trade order.

According to the BCSC, James Macdonald, who was a registered investment advisor with Raymond James Ltd., breached the “Know your client and suitability” rules when he helped Catharine Wright, his sister, purchase 25,000 shares of Velvet Exploration Ltd., a TSX-listed company, on May 25, 2001.

Wright’s husband, Alwyn Wright, was a director of Velvet when he directed her to buy the shares based on information that Velvet was in negotiations to be taken over by El Paso Corp. He learned of this yet-to-be publicly disclosed information through his position as an insider of Velvet.

Macdonald placed the order to buy the shares when he knew that his sister was in a special relationship with Velvet but he failed to ensure that she was not trading in breach of the Securities Act.

In a settlement with the BCSC in December 2002, Christopher Wright was barred from acting as a director or officer of any issuer for four years and ordered to pay the commission $34,000.

Catharine Wright has also been banned from the securities market for four years subject to conditions and ordered to pay $24,000.

As part of their settlement, the pair also had to turn over to the commission $107,937.50, a sum that represents the profits of the trading on inside information.