Former rep agrees to $100K fine, suspension for suitability failures

A former broker has agreed to a multi-year suspension and a $100,000 fine after admitting to violating securities rules by recommending excessively risky investments to several clients.

An Investment Industry Regulatory Organization of Canada (IIROC) hearing panel has approved a settlement with Preston Henry Smith, who was a rep with Blackmont Capital Inc., Macquarie Private Wealth Inc. and Richardson GMP Ltd. in Calgary, but is no longer registered.

In settling the disciplinary allegations against him, Smith agreed to a two-and-a-half year suspension, 12 months of close supervision, a fine of $100,000 and $5,000 in costs.

According to the settlement, he hasn’t worked in the industry since 2017, and recently declared bankruptcy.

The sanctions stem from violations of IIROC rules that involved recommending unsuitable, high-risk investments to five groups of clients.

“This includes recommending the purchase of certain high-risk corporate debentures, the risks of which the respondent and his clients did not fully appreciate, as well as the unapproved alteration of one client’s account document,” the settlement said.

When his firm’s compliance department flagged the fact that certain client holdings were outside their reported risk parameters, “[Smith] had these clients increase the risk tolerances to match their high risk holdings,” it noted.

Several of his clients were compensated by his firm for their losses, the settlement said.

Staff

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