The New Brunswick Securities Commission has approved a settlement agreement with a former broker, James Hanley, banning him for 20 years from being registered to deal or provide advice in securities, prohibiting him for 20 years from taking advantage of any exemptions provided by the Securities Act, and directing him to pay an administrative penalty of $45,000.

Hanley must also pay an additional $5,000 for costs related to the investigation.

The NBSC says that Hanley admits he violated the Securities Act, and acted contrary to public interest by failing to keep two clients informed of the whereabouts of their investments, and providing them with misleading account statements and information. He also made misrepresentations to commission investigators that certain of the monies provided by these clients were business loans to his incorporated numbered company, 510003 NB Ltd., when that was not the case, it says. Hanley was formerly employed by Assante Capital Management Ltd. as a branch manager and salesperson.

The commission notes that its investigation revealed that the infractions were committed by Hanley against two elderly ladies, and took place over a number of years. “On several occasions Hanley redeemed investments for his clients and had them subsequently write cheques to him for reinvestment. These funds were then presented by Hanley to a financial institution, which made deposits to his personal account or the account established for his numbered company. When subsequently asked about these transactions, Hanley presented them to his clients as off-book investments or personal loans,” it says.

“The daughter of one of the women reviewed the financial affairs of her mother and her aunt, and asked Hanley to provide a list of their current investments. Hanley provided a financial statement that contained a section called off-book funds. Hanley advised that these funds had been put aside to avoid detection by the government should the client have to go to a nursing home, but the client indicated that she had not given Hanley these instructions,” it adds.

The regulator says that Assante launched an investigation into the handling of these accounts in May 2005. In January 2006, Hanley provided each of his clients with a cheque, advising it represented repayment of a loan that he claimed they made to him and his numbered company, 510003 NB Ltd. Hanley repaid about $39,000 to one client and $33,000 to the other.

The commission approved the settlement agreement at a hearing held on February 26. The provincial Securities Act requires that proceeds of this penalty be placed in a specific fund to be used for education and other capital market initiatives.

The NBSC encourages members of the public to take an active interest in their investments, and to not be embarrassed to come forward if something doesn’t seem right. “One red flag is a lack of clear and regular account statements,” said NBSC executive director, Rick Hancox. “It’s your right to ask for information about your investments directly from your dealer or advisor, and to question vague reports about the location of your money. This case was dealt with because someone had the courage to call and ask questions. We are the place to call if you have concerns about unfair, improper or fraudulent practices related to your investments.”