Registered representative Wayne Wing Fat Chiu of Vancouver must pay the Investment Industry Regulatory Organization of Canada (IIROC) a fine of $20,000 for failing in his due diligence of a client’s holdings.
Chiu’s client first opened a registered retirement savings plan (RRSP) and a margin account with him around 2001. The client’s Account Information Form indicated she had a medium risk tolerance and her investment objective was 100% moderate growth.
In 2006, the client telephoned Chiu to discuss an oil stock, Groundstar Resources Ltd., which Chiu had purchased for a friend of the client. Groundstar is considered a high-risk security, however, between June 2006 and March 2007, Chiu purchased 30,200 shares of Groundstar for the client’s RRSP account for $44,586 and 68,500 shares in the margin account for $79,194. After those purchases, Groundstar made up a substantial portion of the client’s portfolio.
By February 2011, the Groundstar shares in the client’s RRSP account had a market value of $13,288 while the shares in the margin account had fallen to $30,140. By March 2011, the client had transferred her accounts to another dealer member.
Furthermore, between January 2007 and November 2010, Chiu purchased other high-risk resource securities for the client.
In addition to the fine, Chiu must disgorge $2,000 in commissions, pay costs of $3,000 and successfully complete the Conduct and Practices Handbook Course. As well, Chiu is suspended from approval as a registered representative for 30 days and must be closely supervised for six months following the suspension.
Throughout the time of the incident, Chiu worked with Canaccord Genuity Corp. Currently, Chiu is employed by Wolverton Securities Ltd. in Vancouver.