An Investment Industry Regulatory Organization of Canada (IIROC) hearing panel has reached a settlement with an investment advisor who has agreed to pay a $150,000 fine, after admitting to violating IIROC rules by “[failing] to adequately consider and address the best interests of two clients.”
The settlement will also see David Gary Durno pay costs of $5,000 and be subject to close supervision until the end of the year.
Durno, who is now a rep with Canaccord Genuity Corp., violated IIROC rules when he was with TD Waterhouse Canada Inc. in Toronto, by implementing an active trading strategy in the accounts of two senior clients, which, “generated large commissions for himself and his firm but reduced client profits,” according to the settlement.
Specifically, the settlement indicates that the strategy generated more than $250,000 in trading commissions from one senior client during the course of five years and more than $125,000 from the other client.
“Overall, between 2010 and 2015, [the clients’] costs would have been significantly lower in fee-based accounts. The respondent did not adequately consider the overall impact of the transaction costs on the profits realized in [the clients’] accounts,” the settlement notes. “In recommending the active trading described in this settlement agreement in new issues and other securities, the respondent failed to adequately consider and address the best interests of [the clients].”
The settlement also notes that after one of the clients complained, the firm and Durno compensated her for the difference between the commissions she paid and the fees she would have paid had she been in a fee-based account.
Other mitigating factors include the fact that the risk profile of the securities employed in the trading strategies were in line with the clients’ stated risk tolerance; that Durno has no disciplinary history; and that he has been under close supervision since January 2016 with no further disciplinary issues.