A former mutual fund rep has been sanctioned in a settlement with regulators for failing to fully disclose his outside business activities, including the financial involvement of clients in a pair of bowling alleys he owned.
A hearing panel of the Canadian Investment Regulatory Organization (CIRO) approved a proposed settlement with James Benjamin Peddle — a former rep with Investors Group Financial Services Inc. in St. John’s, Nfld. — which saw him admit to breaching the self-regulatory organization’s rules by engaging in personal financial dealings with clients, unapproved outside business activity, and making false or misleading statements to his dealer during its investigation.
According to the settlement, Peddle owned and operated a bowling alley business, Paradise Bowl, which included several clients as shareholders, creditors and loan guarantors. He eventually sold his stake in that business to a client.
While his stake in the business was disclosed to his dealer, which approved the activity, the SRO alleged that he made misleading statements about the extent of his involvement in the venture.
Among other things, the regulator alleged Peddle claimed the bowling alley was just an investment, when he was actually involved in its operations. It said he failed to disclose the financial dealings with clients that created conflicts of interest.
In 2021, after selling his stake in Paradise Bowl, Peddle bought another bowling alley, Plaza Bowl, which he acquired from clients through a holding company and helped finance through a loan and loan guarantee from a couple of clients.
After Peddle disclosed the sale of one bowling business and the purchase of another to his dealer, the firm began an investigation. It revealed the financial dealings with clients in these ventures and led to his termination in November 2021.
The settlement noted none of the clients complained to the dealer or to CIRO. While one of the business loans remains outstanding, it has not come due, and the client has received payments from the company that owns Plaza Bowl.
Under the settlement, Peddle agreed to a five-year suspension, a $45,000 fine, and to pay $5,000 in costs.