A regulatory hearing panel has dismissed enforcement allegations against a former rep who was accused of due diligence and suitability violations — ruling that it believed the ex-rep’s testimony over the evidence from the clients that complained about him.
In April 2024, staff at the Canadian Investment Regulatory Organization (CIRO) filed enforcement allegations against a former advisor with Canaccord Genuity Corp. in Calgary, William Robert Hall — alleging that he breached the self-regulatory organizations rules in 2019 by failing to learn essential facts about a couple of clients and failing to ensure that recommendations for those clients were suitable.
Specifically, the SRO alleged that Hall incorrectly recorded a couple’s investment objectives and risk tolerances, and then invested the vast majority of their portfolio (over 95%) in a single, speculative security, the shares of a private cannabis company, StillCanna Inc.
However, the regulatory panel that heard the case dismissed the allegations against Hall.
Today, the self-regulatory organization issued the panel’s reasons for that decision — revealing that it believed Hall’s evidence over the evidence from his former clients in the case.
“This was a hearing on the merits in which the primary issue was credibility,” the panel said, as Hall and the former client who complained about his conduct “gave starkly different versions of events.”
Ultimately, the panel accepted Hall’s account of events and rejected the client’s testimony.
It said that the clients claimed, among other things, that they told Hall that they didn’t want high-risk investments, that they didn’t know that they bought a risky investment, and didn’t understand the risk acknowledgements they signed.
However, the client refused to testify at the regulatory hearing, and couldn’t be cross-examined, which the panel said “was a significant factor in [its] assessment of credibility and rejection of [the client’s] evidence.”
Hall maintained that the clients approached him about the investment, that they insisted on taking a concentrated position in the security despite being advised of the risks, and that they provided information about their finances to claim accredited investor status.
“The hearing panel considered [Hall’s] demeanour as a witness and found him credible. The hearing panel also found that [Hall’s] evidence was in harmony and consistent with the evidence as a whole,” the panel said in its ruling.
That evidence included the fact that the complaining client had previously made investments in risky cannabis stocks, which generated huge (2,500%) returns for him; that he made risky investments in the past, including a private placement; and that the client knew about the stock before meeting with Hall.
The panel also noted that the client’s original complaint to Canaccord and his communications with Hall made no mention of being misled, or not understanding the risks associated with the investment.
“Logic and reason dictate that, if those claims were legitimate, they would have been raised at the first opportunity,” the panel said. “The fact that they were not, combined with the fact that [the] complaint made several serious allegations (unrelated to risk) that were all unfounded, supported the hearing panel’s conclusion on credibility.”
As a result, the panel found that the allegations against Hall were not proven, that he did use due diligence to know his clients, and to the extent that the effort failed, “it was because the [clients] misrepresented those facts to [Hall].”
It also found that he did not breach his suitability obligations to the clients, as the investment would have been suitable if the information they provided to him about their finances was true.
According to the original allegations, Hall was suspended by the firm for failing to complete a required licensing course, and in March 2020, he was terminated by the firm. The complaint from the client was made in 2022, after Hall was out of the industry.