The Investment Industry Regulatory Organization of Canada has imposed a $130,000 penalty against Berkshire Securities Inc. for failing to properly supervise a registered representative.

In a settlement agreement accepted by an IIROC hearing panel, Berkshire admitted that it failed to effectively supervise one of its rep and the recommendations the rep made to clients.

The penalty against Berkshire includes a $120,000 fine and $10,000 in costs.

Specifically, Berkshire admitted that it failed failed to properly supervise a rep who:

Recommended to five clients that they use investment loans to fund their investment accounts, when borrowing money to invest was not suitable for these clients; and
made a personal guarantee to a client, unrelated to the to previously mentioned unsuitable recommendations, to cover financial losses in that client’s account.

The violations occurred from May 2007 to September 2007.IIROC began its investigation into Berkshire’s conduct in July 2008.

The violations occurred when Berkshire was a member firm of the Investment Dealers Association of Canada, now part of IIROC). Berkshire was subsequently purchased by Manulife Financial Corporation, and changed its name to Manulife Securities Inc., an IIROC-regulated firm.