Montreal-based National Bank Financial Inc. (NBF) has agreed to pay a $110,000 penalty for failing to adequately supervise an advisor’s use of leveraged ETFs, the Investment Industry Regulatory Organization of Canada (IIROC) announced Wednesday.

An IIROC hearing panel accepted a settlement agreement in which investment dealer admitted that it violated IIROC rules by “failing to establish and maintain a system that allowed adequate supervision” of investment advisor Christian Cloutier between 2009 and 2011, IIROC says in a news release.

According to the settlement, NBF found that Cloutier had a large number of clients with positions in leveraged ETFs, which didn’t comply with the firm’s own guidelines for these products. The firm repeatedly pushed him to liquidate these positions, but continued to find clients that didn’t meet its guidelines for holding these products.

Cloutier was terminated by the firm in latte 2011. At the time, some of the clients still held leveraged ETF positions that did not meet NBF’s guidelines.

As a result of this persistent non-compliance by Cloutier, NBF “failed to adequately supervise” him and his clients’ accounts for approximately two-and-a-half years, the hearing panel stated it its decision. “Of the 75 clients concerned, 13 sustained an average loss of $1,050,” it added.

The panel noted that NBF made numerous efforts to correct the issue, and that it took measures to ensure that its advisors had adequate knowledge of the features and risks of leveraged ETFs.

Ultimately, the panel found that, based on precedent, the fine agreed fine was appropriate to the misconduct in the case.

In addition to the fine, NFB agreed to pay $10,000 in costs.