The Manitoba Securities Commission today approved a settlement agreement between the commission, BMO Nesbitt Burns Inc. and the manager of its Winnipeg branch, Thomas Waitt. The settlement relates to the ineffective supervision of three Winnipeg-based Nesbitt reps.

The settlement agreement requires BMO Nesbitt Burns Inc. and Waitt to make a $100,000 payment to the provincial treasury, plus $60,000 in costs. This is the largest payment of its kind made to the commission. A written reprimand will be placed in the registration files of each of Nesbitt Burns and Waitt. Nesbitt Burns and Waitt consented to this order and waived their rights to a full hearing.

The MSC alleges that BMO Nesbitt Burns and Waitt, the manager of the firm’s Winnipeg branch, acted improperly and contrary to the public interest in supervising three of the firm’s brokers, Randy McDuff, Michael Sidiropoulos and Charles Edward Griffith.

The commission says that Nesbitt Burns and Waitt failed to detect on a timely basis the extent of unsuitable securities, over-concentration of securities and the unacceptable use of margin in certain of the accounts of clients of McDuff.

The it also says that Nesbitt Burns and Waitt failed to detect the actions of Sidiropoulos in a timely manner; and that they failed to act in a timely and effective manner when potential problems regarding the accounts of each of McDuff, Sidiropoulos and Griffith were identified. The MSC notes that Waitt continues to have a role in the ongoing monitoring of client accounts as well as the monitoring of the activities of salesmen at Nesbitt.

“Effective supervision by a firm of its salespeople is critical to ensure that investors are not exposed to unnecessary risks. A firm must not only identify problems, but be in a position to respond to those problems in a timely manner to minimize the risk of additional harm to investors,” said Doug Brown, director of Legal and Enforcement for the commission.

The MSC and the Investment Dealers Association conducted a compliance review of the Winnipeg office of BMO Nesbitt, with the cooperation of BMO Nesbitt and Waitt. The review confirmed that BMO Nesbitt has organized policies and procedures in place for the supervision of its representatives and is in a position to effectively deal with similar circumstances in the future.