A former TD Waterhouse registered representative has been fined $70,000 for accepting a personal loan from clients, carrying out unauthorized trading in client accounts and other misconduct, the Investment Industry Regulatory Organization of Canada announced Monday.

At a penalty hearing on Dec. 3, Michael Scott Leigh admitted to various contraventions that occurred between August 2004 and September 2006, when he was a registered rep with TD Waterhouse’s Oshawa branch.

According to an IIROC hearing panel, Leigh engaged in conduct unbecoming or detrimental to the public interest by seeking and accepting personal loan from two of his clients without the knowledge, consent or authorization of his employer. He paid back the loan to the clients in part by gains/profits earned in the their account that they were nevertheless entitled to, and by discounting his commissions.

The hearing panel also found that Leigh carried out unauthorized trading in the accounts of two other clients, without their prior knowledge or consent.

In addition, Leigh failed to know his clients and engaged in unsuitable trading, the hearing panel said. In particular, he failed to use due diligence to ensure that the recommendations he made to his clients were suitable based on their actual financial situation, limited investment knowledge and experience, actual investment objectives and risk tolerance when trading in their joint margin account.

Leigh now faces a fine of $70,000, as well as investigation and prosecution costs of $36,000. He is also suspended from approval with IIROC for a period of 10 years, and will be required to re-write the CPH exam prior to applying for re-approval following the suspension period.

In the event that Leigh is again registered as an approved person, he will be subject to a period of strict supervision for the first 12 months of his employment as an approved person.

The Investment Dealers Association of Canada first formally initiated the investigation into Leigh’s conduct in July 2006. Leigh is no longer a registrant with an IIROC regulated firm.

IE