A former branch manager with Northern Securities Inc. has been fined $50,000 by the Investment Industry Regulatory Organization of Canada for failing to adequately supervise a registered representative and the accounts of a client.
David Wilson Murdoch, a registered rep and former branch manager with Northern Securities in Vancouver, has also been suspended from acting as a branch manager or in any supervisory capacity for 12 months in a settlement agreement accepted by IIROC.
IIROC initiated an investigation into Murdoch’s conduct in May 2009. The regulator found that from August 2005 to February 2008, he failed to adequately supervise David Kenneth Smith, a registered rep, and the accounts of a client of Smith’s.
Specifically, IIROC said Murdoch failed to adequately question Smith with respect to changes to the investment objectives of a client’s accounts, high amounts of commissions earned on the accounts, excessive trading in the accounts and discretionary trading in the accounts.
The accounts belonged to a 75-year-old retired client who was also Smith’s mother-in-law. Her accounts were averaging 66 trades per month, and were generating approximately $15,000 in commissions per month.
The firm’s head office compliance department queried the account several times, raising concerns about the investments in high-risk securities, but Murdoch did not raise any concerns with Smith, and did not contact the client.
As branch manager, Murdoch “ought to have confirmed with the client that she was in agreement with and understood the activities undertaken in her account,” IIROC said.
Murdoch agreed to the suspension, the $50,000 fine, and also agreed to pay costs of $3,500.