Completing KYC forms outside registered scope among violations of rules
A former dealing representative has been fined and banned by the Canadian Investment Regulatory Organization (CIRO) for several violations of Mutual Fund Dealer Rules.
Ontario based Patrick Joseph Conlin was an Approved Person for Investors Group Financial Services Inc. (IGFS) and, under the firm’s policies and procedures, he was authorized to help clients with account applications to its affiliated investment dealer Investors Group Securities Inc. (IGSI). However, the rules specifically prohibited Approved Persons to complete Know Your Client information in this regard.
When Conlin met with a client of another, unnamed, investment firm in or around December 2020, he advised that the client transfer the balance of his Registered Retirement Savings Plan with his existing firm to a new RRSP account at IGSI. He also advised the client to transfer his company’s investment account to IGSI.
Contrary to IGFS rules, Conlin also completed KYC forms and signed the NAAFS as the consultant on the accounts at IGSI.
In 2021, the client asked Conlin for advice on investing the RRSP and corporate funds held at IGSI and was given recommendations on certain non-mutual fund securities at IGFS despite not being registered to trade or advise in non-mutual fund securities in client accounts at IGSI or at all.
The action violated IGFS’s policies and procedures and several parts of the Mutual Fund Dealer Rules.
Later in 2021, the client asked Conlin to transfer funds from the corporate account they held at IGSI to their RRSP at IGFS and also to use $275,000 from the RRSP for mutual fund investment. The request was not fulfilled, and a query submitted to Conlin was not replied to.
The client complained to IGFS that Conlin had failed to process transactions requested by a client contrary to Mutual Fund Dealer Rule 2.1.1. IGFS offered to compensate the client for reported losses and appointed a new Approved Person to manage their account.
Complaint to regulator
The client’s complaint was reported to the MFDA and its staff (now staff at CIRO) began an investigation but Conlin failed to cooperate or respond on several occasions.
On October 19, 2021, IGFS terminated Conlin.
Following a disciplinary hearing held on April 26, 2024, CIRO’s hearing panel found that Conlin:
a) completed Know Your Client information on account opening documents to open accounts for investors at an investment dealer where he was not registered and provided recommendations to an investor in respect of non-mutual fund securities outside the Dealer Member;
b) failed to process transactions requested by a client; and
c) failed to cooperate with an investigation by the MFDA into his conduct.
Along with a $75,000 fine and a permanent prohibition from conducting securities related business while in the employ of or associated with any Dealer Member of CIRO, Conlin was ordered to pay costs of $10,000.
CIRO’s Notice of Hearing and Statement of Allegations can be viewed online.
