A disciplinary hearing panel has sanctioned a former rep who admitted to misappropriating a client’s assets and deploying a risky, unapproved trading strategy in an effort to recoup the money.
An Investment Industry Regulatory Organization of Canada (IIROC) hearing panel ordered $100,000 in fines, $12,600 in disgorgement and $10,000 in costs against Philippe Bélisle, a former rep with National Bank Financial Inc. in Montreal. He was also suspended for eight years, 10 months.
The sanctions follow an earlier ruling, which stated that “Bélisle had appropriated a client’s funds for his personal use, in addition to executing unauthorized trades in a client’s account that were not within the bounds of good business practice.”
Initially, Bélisle sought to oppose the disciplinary proceeding, but ultimately admitted the alleged violations.
According to the panel, Bélisle admitted to transferring $210,000 from the accounts of a client — his father’s spouse — first to his father’s account, and ultimately to his own account, without the client’s knowledge. The transfer was ostensibly to finance renovations on Bélisle’s house.
Bélisle then sought to trade the client’s accounts on a discretionary basis, with the goal of generating profits through risky, leveraged options trading to recover the money he’d taken.
“The respondent admitted to enforcement staff that the client had not given her prior consent to apply the strategy in her margin accounts,” the panel said in its decision.
The panel noted that Bélisle made almost 1,250 trades in the accounts, generating $33,800 in gross commissions and $12,600 in net commissions for himself.
Yet the accounts had an average debit balance of nearly $360,000.
According to the decision, IIROC staff sought a $200,000 fine and a permanent ban, along with costs and disgorgement. The panel opted for a lesser fine and a 10-year suspension, which it reduced by 14 months due to a delay in bringing the case.