The Investment Industry Regulatory Organization of Canada (IIROC) has fined a former financial advisor in Hamilton, Ont. $400,000 for misappropriating client funds and providing false account statements.
Between 2009 and 2012, Alistair Melville deposited over $2 million from approximately 15 clients in two discount brokerage accounts under his own name. Melville was an advisor with Assante Capital Management Ltd. during those years. The former advisor intended to use the funds to actively trade in high-risk investments, such as options, so as to make up for losses in the clients accounts.
Clients were aware where their money was held and provided Melville with cheques – sometimes redeeming funds from registered accounts to do so – to deposit in the brokerage accounts, according to IIROC. Between trading losses and the withdrawals the accounts were quickly depleted between 2010 and 2012 and one discount brokerage account was sold out in early 2013 as a result of margin calls.
Melville provided some of the clients with false account statement to mislead clients regarding the true state of the investments, according to IIROC.
Assante has compensated some of Melville’s former clients and is in continued discussions regarding compensation with others. According to IIROC, Assante had paid roughly $1.35 million to Melville’s former clients as of February 2014.
In addition to the fine, Melville agreed to pay $10,000 in costs and is permanently banned from registration with IIROC.