Advisor fined $20,000 for risk-tolerance violations

Scotia Capital rep handed penalty by IIROC for purchasing unsuitable investments for client

Advisor fined $20,000 for risk-tolerance violations

An advisor has been fined $20,000 by IIROC for recommending the purchase and holding of securities that were not suitable for a client based on their risk tolerance.

The violations occurred when Jacques Maurice was a registered representative with the Montreal branch of Scotia Capital Inc., where he continues to be employed.

IIROC fined Maurice $10,000 for the above contravention and a further $10,000 for handling a written complaint filed by one of his clients, which is a breach of member rules.

Two accounts were initially opened in January 2012, each with a risk tolerance of 100% low. In November of that year the first account was updated and approved to a risk tolerance of 50% low and 50% medium. A similar change form for the second account was not submitted.

Therefore, the purchases made in this account in February 2012, of Veresen, and in May 2012, of Northland Power, did not tally with the risk tolerance factors stipulated for the latter, as indicated in the account opening forms. These firms include the operation of pipelines and distribution of electricity.

Also, a lower credit rating in August 2015 for the Enbridge Inc. securities, purchased by the Respondent in March 2012 and May 2013 respectively, meant that these holdings no longer met the risk tolerance factors that were defined when the account was first opened.

The ruling stated: "Around December 11, 2015, Maurice sent to the client an amended account information change form for the account of the second account, which stated that the risk tolerance factors for that account would henceforth be '35% low, 45% medium and 20% high'. The client refused to consent to this change and never signed the amended form."