An interim branch manager of Wellington West Capital Inc. and the firm itself have been fined $15,000 and $175,000 respectively by the Toronto-based Investment Industry Regulatory Organization of Canada (IIROC).
On November 1, an IIROC hearing panel accepted a settlement agreement, with sanctions, between IIROC staff and Wellington West and Lesley Walters-Sagher.
Walters-Sagher and Wellington West admitted they failed to properly understand and to exercise diligence in recommending leveraged exchange-traded funds (ETFs) to registered representatives. They also admitted they failed to properly supervise reps who were recommending the products to clients.
The lapse in supervision and due diligence took place between January 2009 and June 2009. Walters-Sagher was working as an interim branch manager in Thunder Bay, Ont. She was also a compliance officer based-out of the firm’s Winnipeg offices.
During the time in question, an investment advisor at the branch recommended the high-risk ETFs to roughly 145 of his clients who suffered losses as a result. While Walters-Sagher was aware of the recommendations neither she nor Wellington West took steps to independently learn about the products, label them as high risk and to assess the suitability of the investments for the clients.
Wellington West also agreed to pay $10,000 in costs.
Walters-Sagher is now an IIROC registrant of Montreal-based National Bank Financial Ltd. National Bank acquired Wellington West in July 2011.