IIROC fines former rep $100,000 for unsuitable investments

By Staff | October 16, 2018 | Last updated on October 16, 2018
2 min read

An IIROC hearing panel has fined a former rep $100,000 for failing to know two clients and making unsuitable investment recommendations after transferring their mutual fund investments to high-risk junior exploration stock.

Edward Peter Bodnarchuk, a representative with National Bank Financial Ltd. and PI Financial Corp in Winnipeg from 2008 to 2016, failed to use due diligence to know his clients, made unsuitable recommendations and discretionary trades, and failed to disclose activities that created a conflict of interest, an IIROC penalty decision says. He no longer works for an IIROC-registered firm.

An IIROC hearing panel originally issued its decision and reasons for the case in June.

The IIROC investigation found one client was completely invested in junior exploration stock without understanding the risk involved. Bodnarchuck filled out a new client application form for the client and had the client sign, the penalty decision says. “This document was prepared despite the fact the client was of modest earning means and wished to use the funds invested for retirement.”

Bodnarchuck also filled out a form for a second client, who showed a higher risk tolerance, the penalty decision says. IIROC’s investigation found the client didn’t understand the real risk that he could be “wiped out” with such investments and that a large part of the client’s investment portfolio was involved.

The first client lost approximately $30,000 and the second client lost $212,000, the penalty decision says. The concentration of high-risk for the former was 80% and 90% for the latter.

Bodnarchuk also carried out discretionary trading by telling his clients about the respective trades after the fact, the decision says. He didn’t have permission to involve his clients in such trades.

Bodnarchuk, who spoke briefly at the hearing, had no previous disciplinary record and IIROC has no knowledge that he made a profit from his actions.

Bodnarchuck “has left the industry, is likely unemployable and living in reduced circumstances,” the penalty decision says. “He acknowledged he had breached his duty to his clients, acceding to their demands for high-risk stock.” He also said he had moved many clients out of high-risk investments after these proceedings started.

Bodnarchuk is suspended for 18 months from the date of the penalty decision. He must rewrite the Conduct and Practices Handbook exam after his suspension and must be strictly supervised by a dealer for 12 months upon requalification. He was also ordered to pay costs of $20,000.

Read the penalty decision here.

Advisor.ca staff


The staff of Advisor.ca have been covering news for financial advisors since 1998.