(September 29 – 10:45 ET) – The Pacific District Council of the Investment Dealers Association of Canada has imposed discipline penalties on James Wooster, a registered rep at the Vancouver offices of Burns Fry Ltd. and Nesbitt Burns Inc.
The IDA fined Wooster $12,000 and ordered him re-write and pass the Conduct and Practices Handbook for Securities Industry Professionals exam. In addition, the IDA ordered Wooster to pay $2,000 toward the costs of the investigation.
As part of the settlement Wooster acknowledged that he failed to use due diligence to ensure that recommendations he made for the account of a client were in keeping with the client’s investment objectives, and he failed to learn essential facts about the client.
From November 1992 to September 1995, Wooster was responsible for the cash and RRIF accounts of a retired woman on a fixed, limited income, with limited or no investment knowledge, whose initial investment objectives comprised 50% income and 50% long term growth. Over this period, Wooster recommended trades in speculative securities for the accounts which, by the end of July 1995, resulted in 100% of the funds in the cash account being invested in speculative securities.
Wooster also failed to recommend the purchase of any primarily income-generating securities for the cash account, and failed to make recommendations for the account consistent with his client’s investment objective of long-term growth.
In February 1995, the client signed a form sent to her by Wooster that purported to update her investment objectives to 0% capital preservation, 35% income, 50% growth and 15% aggressive trading. In August 1995, Wooster, without prior consultation, sent the client a margin agreement and a new client application form that purported to update the client’s investment objective to 100% aggressive trading with high risk factors.
The client’s actual investment objectives had not changed since she initially opened the account, and the only material change in her relevant circumstances was a decline in her net worth occasioned by the trading losses in her account.
In October 1995, Nesbitt Burns Inc. cancelled the unsuitable transactions in the account. A financial settlement was subsequently made with the client.
The IDA has also formally reprimanded Gary Brookes. Brookes was branch manager of the BMO Nesbitt Burns Vancouver office at the time of Wooster’s activities. In August 1995, Brookes signed the updated new client application form without questioning either Wooster or the client.
Brookes was ordered to pay $500 to cover the costs of the investigation. The IDA stresses that the contravention of its by-laws took place in 1995, before current guidelines were adopted. It says were this conduct to occur today, it would expect the penalty to be considerably higher.
Wooster continues to be approved as a registered representative with the Vancouver branch of BMO Nesbitt Burns Inc.
-IE Staff