A hearing panel of the Investment Dealers Association of Canada has fined and suspended a broker at the Toronto office of Caldwell Securities Ltd. for unauthorized trading and falsifying documents.

On January 24, the hearing panel accepted a settlement agreement negotiated between IDA staff and Thomas Clarke.

Clarke admitted that he engaged in conduct unbecoming, in that he:

  • conducted unauthorized trading in two client accounts;
  • issued false and misleading account documents which misrepresented the holdings in the accounts of the two clients;
  • forged the signatures of the two clients; and
  • filed false hold mail authorizations without the knowledge or consent of the two clients.

The panel fined Clarke $55,000, ordered him to pay $10,000 in costs. As well, Clarke is prohibited from approval to act in any registered capacity with an IDA firm for a period of one year.

Following the one year suspension period, Clarke will be permitted to resume his employment at Caldwell in a registered capacity and he will be subject to the following restrictions and conditions on his registration:

  1. all trading must have prior approval from a Caldwell director;
  2. he shall only enter the premises of Caldwell when he is accompanied by another employee of Caldwell;
  3. the CEO of Caldwell or his designate will monitor the securities in his client accounts on a daily and monthly basis;
  4. any client account generating in excess of $1,500 per month in commissions will be reviewed by the CEO of Caldwell or his designate;
  5. he will only sell packaged products, Investment Management Services, or mutual funds; and
  6. unsolicited orders from clients must have prior approval of Caldwell.

In addition, the CEO of Caldwell or his designate will file a report on a monthly basis with the IDA in an agreed upon form which confirms Caldwell’s compliance with the restrictions. The report will also confirm whether Clarke, to Caldwell’s knowledge, is conducting himself in accordance with the restrictions.

Clarke agreed that in the event that he does not conduct himself in accordance with the restrictions that govern his registration and in accordance with good business practices as determined by the CEO of Caldwell, his designate or the IDA, he will immediately surrender his registration as a Registered Representative and will not re-apply to be a Registered Representative. All of the restrictions and conditions noted above will continue to apply for the duration of Clarke’s registration with the IDA.

The panel noted that serious financial losses were suffered by the clients as a result of the unauthorized trading. The clients have been reimbursed for their losses by Clarke and Caldwell. Clarke has contributed the sum of $368,000 towards those settlements and continues to contribute amounts to Caldwell for this purpose.

Since the misconduct was discovered in mid-2005, Clarke has been working under strict supervision.

For a complete summary of facts, please see IDA Bulletin 3611 at www.ida.ca or www.accovam.ca.