Advisor accused of breaking cardinal rule

Advisor accused of breaking cardinal rule

Advisor accused of breaking cardinal rule An IIROC Hearing Panel met earlier this month to set a date for a disciplinary hearing of Krishna Sammy, a former registered representative and portfolio manager with DWM Securities Inc., who is alleged to have recommended and bought securities for clients while simultaneously selling those same securities out of his own personal account.

“If these allegations are true, they are pretty bad,” says Dan Hallett, a vice president and principal with HighView Financial Group. “There’s nothing wrong with advisors or portfolio managers buying individual stocks – but they must follow policies and procedures to protect clients’ interests.  And advising clients to buy when doing the opposite for yourself is a clear conflict of interest – which may be worsened if those trades happen on the same day.”

The statement of allegations, which are detailed in the IIROC Amended Notice of Hearing, suggests the Brampton advisor, who is no longer registered with an IIROC-regulated firm, broke several Dealer Member Rules including the ones mentioned above as well as the recommendation of unsuitable products based on the financial situation and risk tolerance of several clients.

WP asked Hallett for a plausible explanation why an advisor would undertake such a series of trades. The 20-year veteran of the industry doesn’t have an answer.

“I can’t figure out why any advisor would take the actions described in these allegations,” Hallett opined. “I cannot explain why an advisor would be buying on the same day that a client is selling (and vice versa) in small, speculative and perhaps illiquid securities.”

IIROC’s investigation into these allegations go all the way back to April 2012. At that time the advisor in question had moved on from DWM Securities and was a supervisor with Canaccord Genuity’s Brampton branch until December 2012.

No longer working for Canaccord or any other IIROC firm; the discipline hearing on this matter will take place in late November in Toronto.