Advisor fined for client RRSP violations

Alberta dealing rep used own discretion, which was prohibited, to carry out two redemptions

Advisor fined for client RRSP violations

An advisor has been fined for using his own discretion to process two RRSP redemptions for a disabled client.

Richard Charles Rhodes, who has been a dealing rep with Sun Life Financial Services in Alberta since 2001, admitted the violations to the MFDA and also to obtaining, possessing and using to process transactions, seven pre-signed account forms in respect of five clients. He also admitted to altering and processing four account forms in respect of one client, without having the client initial the alternations.

Rhodes was fined $6,500 and told to pay costs of $2,500.

In respect of the unapproved discretionary trading, the client, who passed away after the redemptions were authorized, requested three redemptions of $15,000 each from their Sun Life RRSP. Given the tax implications, Rhodes and the client agreed to process the redemptions in three increments, particularly given client PG’s disability status and financial hardship.

The respondent emailed to client PG a single order ticket form to redeem $5,000 from his RRSP account at Sun Life, which the client returned completed. Rhodes then used the same order ticket form to process three separate redemptions of $5,000 and used his own discretion to determine the timing of the latter two redemptions without obtaining instructions from the client.

Rhodes explained that this happened because of difficulty in receiving documentation from the client, who only had the ability to send documentation via a public fax machine at the time.

The MFDA said: “When an Approved Person engages in discretionary trading, there is potential for significant client loss. The Respondent redeemed $15,000 from the client’s account without the client’s instruction regarding the timing of the redemptions.

“He never attempted to communicate directly with the client before the transactions. He simply relied on his own discretion and advised the client after the redemptions were completed.”

There was no evidence the respondent received any financial benefit from engaging in the misconduct, and there is no evidence of any client loss.