IIROC bans, fines former advisor $1 million

By James Langton | January 6, 2022 | Last updated on January 6, 2022
2 min read
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A former advisor has been banned from the industry and fined $1 million for falsifying client signatures and misappropriating client money.

An Investment Industry Regulatory Organization of Canada (IIROC) hearing panel ordered that Joan McCarthy, a former rep with MD Management Ltd. in St. John’s, N.L., is permanently banned from the industry, fined $1 million and must pay over $100,000 in costs.

The sanctions follow the panel’s finding that McCarthy falsified signatures, took funds from clients’ accounts and refused to cooperate with the self-regulatory organization’s investigation. Also, she didn’t participate in the disciplinary hearing.

According to IIROC, between 2006 and 2019, McCarthy misappropriated “approximately $775,000 from the accounts of six elderly clients by forging their signatures on over 160 cheques.”

The panel accepted that forgery had taken place based on expert evidence from a certified document examiner, the decision noted, and the lack of response from McCarthy and her counsel to IIROC enforcement staff established that she “had no intention of cooperating with the investigation in any way.”

In handing down its sanctions, the panel said the conduct was “premeditated, intentional and has criminal-like components.”

It also said the sanctions should reflect that misappropriating money from vulnerable clients is one of the most serious breaches of trust that a rep could commit.

“The conduct demonstrates a total lack of integrity and a pattern of dishonesty involving fraudulent conduct over a significant period of time for the personal benefit of the respondent,” it said.

The $1-million fine set by the panel includes $775,000 intended as disgorgement of McCarthy’s ill-gotten gains.

The panel said that, while the fine is very large and unlikely to be paid, “it is not disproportionate to the conduct of the respondent and the amount of money misappropriated and the need to disgorge what was obtained through the misconduct.”

In all of 2020, IIROC fined industry reps less than $800,000 combined (in 22 disciplinary cases), and in 2021, reps’ fines totalled $938,000 (in 20 cases).

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James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.