The Industry Regulatory Organization of Canada (IIROC) has fined a former Alberta investment advisor $70,000, including any disgorgement of commissions.

An IIROC panel found that David Schayes made unsuitable recommendations to clients, failed to preform due diligence and remain informed of a client’s essential facts and engaged in unauthorized discretionary trading. Schayes was an advisor at the Edmonton-branch of CIBC Wood Gundy at the time the violations occurred.

In 2006, a client deposited $110,000 with Schayes to deposit in a non-registered money market fund so as to allow her easy access to the funds when necessary. However, according to IIROC documents, Schayes deposited $10,000 in the money market fund and then invested the remaining funds in eleven mutual funds and income trusts.

In 2008, Schayes took $5,500 from the client’s registered retirement savings plan (RRSP) as a First Time Home Buyers withdrawal without the client’s knowledge or consent. The respondent told the client the withdrawal was made in error. However, according to IIROC, the funds were withdrawn so as to make up for losses generated by the sale of equities originally purchased without permission.

In a separate incident, Schayes purchased $80,000 worth of investments in 2007 without the client’s knowledge or approval. The client asked Schayes to contact her before making such purchases in future after learning of the investments. IIROC found that Schayes continued to purchase securities without approval.

Following that incident, the client discovered that Schayes had opened a margin account on her behalf and was borrowing money to invest, say IIROC documents. By 2007, the client’s total liabilities from the account eventually totaled $183,727.

The client was in her fifties and retired and had only fair investment knowledge at the time the margin account was opened. As such, IIROC deemed the use of margin for the client to be unsuitable.

In addition to the fine, IIROC also suspended Schayes from the securities industry for two years and ordered that he re-write the Conduct Practices Handbook exam and be closely supervised for six months should he return to an IIROC firm. Schayes must also pay $20,000 in costs.