The Investment Industry Regulatory Organization of Canada (IIROC) has sanctioned a trio of reps for distributing almost $1 million in securities to clients under prospectus exemptions without verifying that the clients actually qualified for those exemptions.
Specifically, IIROC settled with James Alexander Moon, Michael Edward Comeau and Mitchell Torch over violations that occurred when they worked in the Toronto branch of All Group Financial Services Inc., which has since closed up shop.
According to the settlement, the three admitted that they violated IIROC rules by failing to verify that certain clients qualified as accredited investors, which they claimed to be in order to participate in exempt distributions amounting to almost $1 million. In addition, Moon, who was president, CEO and chief compliance officer of All Group, admitted to supervisory failures.
Under the terms of the settlement, Moon has been fined $35,000; Comeau $20,000; and Torch $15,000. They also agreed to pay $6,000 in costs.
“The respondents should have taken reasonable steps to confirm the clients’ accredited status and should not have allowed these clients to participate in the distributions until they did so,” the settlement says. “As registrants, the respondents had an obligation to ensure that the exemptions were properly being relied upon. The respondents did not question the clients’ reliance on the exemptions nor did they take steps to confirm that the clients had the net financial assets or income required to rely on the exemptions.”
Earlier this year, IIROC suspended All Group because of its “ongoing and increasing financial and operating difficulties.”
Hampton Financial Corp. acquired All Group’s wealth-management business and most of its accounts have been transferred to Hampton Securities Inc.
Moon and Comeau are now with Hampton, and Torch has moved to Aligned Capital Partners Inc.
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