Advisor barred and fined for failing to cooperate and changing account beneficiaries without consent
Canadian Investment Regulatory Organization (CIRO) found that Michael Rolland Smith misappropriated client funds and changed designated beneficiaries on accounts to his family members.
The decision followed a June 2 disciplinary hearing under the Mutual Fund Dealer Rules.
CIRO also found that Smith failed to cooperate with its investigation.
According to CIRO’s decision, between March 2017 and May 2023, Smith processed 236 mutual fund redemptions and 200 cash withdrawals from client BR’s accounts.
He directed the proceeds to his personal bank account by falsely portraying it as belonging to the client.
The panel found that Smith misappropriated a total of $460,126.47 and deposited an additional $26,500 from blank cheques BR had signed for investment purposes.
BR was unaware of these transactions and suffered tax consequences of $41,578.50 and deferred sales charges of $1,678.20.
On March 17, 2022, Smith submitted forms changing the designated beneficiaries on BR’s two registered accounts from BR’s cousin to three individuals who were not at arm’s length from Smith.
BR was unaware of these changes.
During a January 2024 interview with CIRO staff, Smith stated he had “borrowed” money from BR and had been repaying it.
However, the panel concluded this was false. Smith failed to provide the documentation and information requested by CIRO despite multiple extensions, and had not made any repayments.
The panel concluded that Smith violated Mutual Fund Dealer Rules 2.1.1 and 6.2.1. They imposed a global fine of $1,509,879.41, which included disgorgement of misappropriated funds and a fine for failing to cooperate.
Smith was also permanently prohibited from conducting securities related business in any capacity with any CIRO Dealer Member, and ordered to pay costs of $20,000.
At all relevant times, Smith was registered with Investors Group Financial Services Inc. in the Amherst, Nova Scotia area. He is not currently registered in the securities industry in any capacity.
