An Investment Industry Regulatory Organization of Canada (IIROC) hearing panel on June 25 accepted a settlement, with sanctions, between IIROC staff and former Regina-based  advisor Darryl Joseph Yasinowski, including a fine of $90,000 and suspension for six months.

In the settlement, Yasinowski admitted that he failed to know five clients and made unsuitable recommendations pursuing an aggressive investment strategy that involved many high-risk, speculative securities, such as options (covered and uncovered) and leveraged and inverse ETFs.

According to the panel’s decision, he also employed extensive use of  margin in some of the clients’ accounts.

“The clients, which included a senior, were vulnerable and had limited investment knowledge. They sustained significant losses, with two clients losing more than half of their portfolios,” IIROC says in a news release.

“The clients sustained losses of between 32% and 58% of their portfolios,” the decision states.

The violations occurred while Yasinowski was a portfolio manager and a registered representative with the Regina branch of Mackie Research Capital Corp.

Specifically, Yasinowski admitted to the following violations:

  • between approximately May 2010 and October 2014, he failed to use due diligence to learn and remain informed of the essential facts relative to five clients’
  • between May 2010 and October 2014, he failed to use due diligence to ensure that recommendations were suitable for five clients.

In addition to the fine and suspension, Yasinowski agreed to undergo close supervision for 18 months upon return to the industry, and to pay $10,000 in costs.

As additional considerations, the panel’s decision states: “Yasinowski did spend a considerable amount of  time with the clients, and developed personal relationships with them.” Yasinowski “felt he was acting in the best interests of the clients,” the panel adds.

In addition, the clients’ portfolios were in discretionary, fee-based accounts, which generated fees based on the value of the accounts, rather than trading commissions.

The panel also took into consideration that Yasinowski participated in a formal mediation process with IIROC staff to reach the settlement.