The Investment Industry Regulatory Organization of Canada (IIROC) has fined a former branch manager in Alberta $40,000 for supervisory failings.
On November 9, an IIROC hearing panel accepted a settlement agreement, with sanctions, between IIROC staff and Richard MacDonald.
MacDonald admitted that while he was a branch manager in Calgary with DWM Securities Inc., he failed to effectively exercise his supervisory responsibilities with respect to the suitability of holdings in the accounts of six clients.
Specifically, MacDonald admitted that from June 2004 to March 2009, he failed to take the supervisory steps that were reasonably required with respect to the suitability of holdings in the accounts of six clients.
The six clients (three married couples), all inexperienced investors and retired or approaching retirement, suffered losses between 50%-74% respectively as a result of unsuitable recommendations from their registered representative, James Jones.
Former rep fined $200,000 for suitability failures
MacDonald was the branch manager and was responsible for supervising Jones. The hearing panel said MacDonald failed in his supervisory duties as he did not take sufficient steps to ensure that the recommendations were suitable for these clients.
MacDonald agreed to pay a $40,000 fine, and $3,000 in costs. He is also prohibited from acting in a supervisory capacity for five years.
IIROC formally initiated the investigation into MacDonald’s conduct in August 2010. He is no longer a registrant with an IIROC-regulated firm.