A former Quebec City registered representative has been fined $100,000 by the Investment Industry Regulatory Organization of Canada (IIROC) for impeding an investigation and failing to use due diligence to learn the essential facts relative to his client.

A penalty decision released on Friday states that Stéphane Rail, a former registered rep with the Quebec City branches of TD Evergreen and Canaccord Capital Inc., has been permanently banned from approval with IIROC.

In December, an IIROC hearing panel found that Rail failed to use due diligence to learn and remain informed of the essential facts relative to his client. Specifically, between 1995 and 2001, he failed to use due diligence to learn that the person identified as the “authorized individual” on an account had been deceased since December 1994.

Quebec City rep violated rules: IIROC panel

During that period, Rail conducted more than 124 transactions in the account, none of which were authorized by the mandated person. Considering that no other person was authorized on the account, IIROC found that he violated know your client rules by accepting instructions from an unauthorized individual.

Rail also obstructed an investigation conducted by the Investment Dealers Association (now IIROC). During examinations in 2005 and 2006, Rail lied by failing to reveal that he had become aware that the authorized individual on the account had died. This obstruction was intentional and willful in order to cover up a situation of non-compliance with the standards of conduct, according to IIROC.

“The clients suffered no actual harm, but the integrity of the profession and the reputation of the securities market have been tainted by the respondent’s lying attitude toward his professional organization, and which he maintained before a court of justice moreover,” IIROC said in its penalty decision.

It added: “[Rail’s] behaviour over several years and his insistence on hiding a non-compliant situation leads us to conclude that his conduct was intentional.”

In addition to the $100,000 fine, Rail has been ordered to pay costs of $10,000.