IIROC fines rep for failing to report $750,000 gift from client

On May 1, 2017, an IIROC hearing panel accepted a settlement agreement, with sanctions, between IIROC staff and Paul Sian.

Sian admitted he failed to report to his firm his registered assistant’s receipt of a $750,000 gift from a client and the subsequent lawsuit against the assistant; and that he failed to make reasonable inquiries regarding the client’s instructions to liquidate her account.

Specifically, Sian admitted to the following violations:

• Between March 2008 and July 2013, he acted contrary to IIROC dealer member rule 29.1 by failing to report to his dealer member firm his assistant’s receipt of a $750,000 gift from a client.
• He failed to report to his dealer member firm the initiation of a lawsuit against his assistant in relation to this gift.
• He acted contrary to IIROC dealer member rule 1300.1 (a) by failing to make reasonable inquiries into the circumstances surrounding a client’s instruction to liquidate her account.

The settlement agreement states that the client’s lawyer suggested to Sian that the client be assessed for mental competency. The suggestion was made five days before Sian liquidated the client’s entire account at her request and without questioning her as to the reason.

Further, after Sian’s assistant accepted the gift and deposited it into his personal trading account, Sian was asked by the bank branch manager if the funds came from a client. Sian said that they didn’t.

Pursuant to the settlement agreement, Sian agreed to the following penalties:

• a fine of $20,000; and
• $5,000 in costs.

A mitigating factor in the decision was an internal fine of $20,000 imposed on Sian by Scotia Capital for his failure to report the gift received by his assistant.

Another mitigating factor was a civil action in 2015 brought against Sian, his assistant and Scotia Capital contesting the validity of the gift. The settlement agreement states that this action “was settled with the consent of all parties.”

On December 20, 2016, a settlement agreement between IIROC staff and the assistant, Brian McCullough, resulted in a fine of $80,000 and a five-year suspension.

IIROC formally initiated the investigation into Sian’s conduct in November 2015. The violation occurred while Sian was a registered representative at the Powell River branch of Scotia Capital Inc., an IIROC-regulated firm. Sian is currently a registrant with Scotia Capital Inc., an IIROC-regulated firm.

Read the full settlement agreement.

Staff

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