B.C. advisor’s insurance licence cancelled for five years

The investigation that led to the five-year license cancellation focused on McIntosh’s business activities between 2003 and 2007. In that period, McIntosh, who formerly operated under the name of Roberta Myers, solicited funds in excess of $3 million from her existing and former insurance and mutual fund clients for capital investment in Dexior Financial Inc., an unregulated Vancouver-based private equity investment company, which went bankrupt in 2008.

Among the cases referenced was that of an elderly couple in their 80s, who liquidated $500,000 of their mutual fund investments to raise capital to invest in Dexior. Their entire capital investment of $500,000 was lost when Dexior went bankrupt, the ICBC decision notes.

Prior to 2003, McIntosh was both a licensed life insurance agent and mutual fund representative for about 20 years. In 2003, she left the mutual fund industry to join Dexior. However, she maintained her insurance licence and continued to process business with a managing general agency during the period investigated.

As she was no longer a registered mutual fund representative at the time she joined Dexior, McIntosh claimed that it was up to clients to determine the suitability of the Dexior Investment, conduct their own due diligence, and decide on the amount they wanted to invest in the venture. She stated she was “prohibited under securities rules and regulations from providing financial advice respecting the Dexior investment and that she abided by these requirements.” Moreover, she described her role with the firm as “administrative.”

As a result of its investigation, the ICBC found that McIntosh’s involvement was far more than “administrative.” Her various titles included vice-president, senior private client manager and investment consultant.

It also did not accept her claim that she did not advise clients on the nature of the Dexior investment. “By virtue of her prior relationships with clients, Council determined she was influential in their decision to invest.”

Beyond advice, the ICBC also found that McIntosh also paid the mutual fund redemption charges that clients incurred when they were liquidating funds to make the investment into Dexior. She also misrepresented Dexior as a “safe investment”, which clients could invest in for a short period of time, as well as advised clients about leveraging to invest, and assisted them with their calculations regarding Dexior.

“[The ICBC] found the Licencee’s characterization of Dexior, an unregulated and risky financial product, as being safer than a regulated financial product, reflective of the Licencee’s unsuitability to hold a licence,” the ICBC decision notes.

“What this [decision] suggests is that a regulator can look to your outside [business] activities, and say ‘this [advisor sold product in] an area we don’t license, but he or she displays a lack of regard for his or her clients and for that reason, he or she may not be suitable for their license and pose a risk to the public’,” says Lawrence Geller, president of L.I. Geller Insurance Agencies Ltd. in Campbellville, Ont.