An investment representative agreed to pay almost $400,000 in fines and disgorgement for engaging in unapproved discretionary options trading for a couple of clients.
A hearing panel of the Canadian Investment Regulatory Organization (CIRO) settled with Michel Bédard, a rep and former branch manager with Desjardins Securities Inc. in Pointe-Claire, Que., who admitted to making discretionary trades in two clients’ accounts without approval for discretionary trading.
He also admitted to several other violations, including failing to ensure suitability of the trades for one client, falsifying notes about the trades, and failing to disclose the trading fees to clients.
According to the settlement, Bédard opened option margin accounts for a couple of clients in the summer of 2020 to deploy a trading strategy that relied on short-term price fluctuations in underlying securities to boost clients’ returns.
However, one client lost $468,809 on the strategy, and the other lost $52,931, despite generating overall portfolio returns of 27.5% and 0.2%, respectively, at the same time.
To settle the case, Bédard agreed to a $150,000 fine, along with $226,492 in disgorgement and $10,000 in costs. He was also suspended for two months.
The settlement noted that Bédard was disciplined by the firm when the trading was discovered.
Desjardins imposed a monetary penalty of $150,000 on him, and required him to re-write the Conduct and Practices Handbook exam and to submit to 12 months of strict supervision.
However, the firm lifted the monetary penalty in light of the sanctions imposed in the settlement with CIRO.