The Investment Industry Regulatory Organization of Canada has fined a former Red Deer, Alta. advisor $75,000 for Know Your Client (KYC) and suitability violations concerning three clients.
Kelly Jones admitted to an IIROC hearing panel that between January 2008 and May 2012, while employed as a registered representative with the Red Deer branch of Richardson GMP Ltd., he failed to use due diligence to know the essential facts relative to three clients. The clients were retired or semi-retired, reliant on their investments for income, and were inexperienced investors, the panel noted.
Jones also admitted that he failed to use due diligence to ensure that his recommendations were suitable for the three clients when he recommended highly concentrated positions in individual sectors and securities (including commodity-based leveraged exchange-traded funds) with virtually no low-risk holdings.
The panel noted that the clients sustained total losses in their accounts of 25% and 53% of the average equity value.
In addition to the $75,000 fine, Jones agreed to a one-year suspension from registration, and to pay $5,000 in costs.
IIROC formally initiated the investigation into Jones’s conduct in October 2012. He is no longer a registrant with an IIROC-regulated firm.
The panel noted that Jones had no previous discipline history and cooperated throughout IIROC’s investigation.