A registered representative in Regina has been fined $30,000 by the Investment Industry Regulatory Organization of Canada (IIROC) for failing to use due diligence to ensure that recommendations were suitable for a client.
On December 5, an IIROC hearing panel accepted a settlement agreement between IIROC staff and John Hanna.
Hanna admitted that he failed to use due diligence to learn and remain informed of the essential facts relative to one client, and failed to use due diligence to ensure that recommendations were suitable for that client.
According to the settlement agreement, the client was 68 years old, retired and had limited investment knowledge. Only 10% the securities in her accounts were allocated to lower risk, income producing securities. Approximately 84% of securities were allocated to the two categories of “moderate to higher risk, income producing securities” and “moderate risk, growth oriented securities”. The remaining 6% of the accounts was allocated to high risk, speculative securities.
Over the 40 months of the life of the accounts, the client’s portfolio declined approximately 11.6%, reflecting a loss of approximately $61,012 from its initial $540,000 amount.
The conduct occurred between April 2006 and August 20009 when he was a rep with the Regina branch of Wellington West Capital Inc.
Hanna agreed to pay a $30,000 fine, and to be suspended from registration with IIROC in any capacity for a period of 30 days.
Hanna will be subject to a period of six months of close supervision upon the expiry of his suspension; and must re-write and successfully complete the Conduct and Practices Handbook examination within 12 months. He also agreed to pay $2,500 in costs.
IIROC formally initiated the investigation into Mr. Hanna’s conduct in December 2010. Hanna is currently a registered representative at National Bank Financial Ltd.