An Investment Industry Regulatory Organization of Canada (IIROC) hearing panel has fined a Kelowna, B.C.-based former financial advisor $80,000 for making unsuitable recommendations and engaging in discretionary trading without permission.
Ferdinand Renaud, who is no longer registered, has also been suspended for one year and required to pay $20,000 in costs for infractions he committed between 2007 and 2013. Renaud was an advisor with Vancouver-based Canaccord Genuity Corp. and then Toronto-based Raymond James Ltd. when the infractions occurred, according to IIROC’s discipline decision released Wednesday.
The violations are related to Renaud’s dealings with two married couples identified as “GM and ADM,” who were retired, and “RB and JB,” one of whom was retired. Renaud failed to use due diligence to ensure that his investment recommendations for both sets of clients were suitable, according to the hearing panel.
Both couples’ documented risk tolerance levels indicated that they should be invested mostly in low- and medium-risk securities. However, in both cases, a large portion of the holdings in their accounts was invested in high-risk securities.
The market value of GM and ADM’s accounts decreased by approximately $525,211 between January 2007 and June 2013 as a result of those unsuitable investments. This drop came in addition to $30,959 in interest charges because of the use of margin in their accounts. RB and JB lost $306,585 in their accounts during the same period.
“The losses that occurred in the clients’ accounts are significant,” IIROC stated in its decision and reasons. “Given the ages and circumstances of the clients, it is unlikely they would be able to recoup the losses.”
Renaud also engaged in discretionary trading within GM and ADM’s accounts, although the clients had not given permission for such trading, and Raymond James, his employer at the time, did not approve the accounts as discretionary.
In determining the penalty, the panel considered various factors, including the protection of the investing public and IIROC’s membership as well as general deterrence.
IIROC initiated its investigation into Renaud’s conduct in September 2013. Renaud is no longer a registrant with an IIROC-regulated firm.
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