A hearing panel of the Investment Industry Regulatory Organization of Canada (IIROC) has imposed a $732,500 fine against Blackmont Capital Inc. and a $265,000 fine against Dean Shannon Duke after an earlier decision found they had violated business conduct and trade authorization rules.
As part of the penalty decision dated December 20, 2010, the panel also gave Mr. Duke a six-month prohibition against re-approval for registration commencing January 1, 2011.
The penalty also stipulates that if Mr. Duke wants to apply for re-registration after June 30, 2011, he must successfully complete the Conduct and Practices Handbook examination and his first six months of re-registration must be done under strict supervision.
The panel’s earlier decision, dated September 1, 2010, had found that Blackmont and Mr. Duke had violated IIROC rules when they:
- participated in an arrangement which involved payment of commissions to a third party who acted as an “external asset manager” for banks resident in either Switzerland or Liechtenstein, and who placed orders in the accounts of seven clients. Blackmont and Mr. Duke did not disclose this arrangement to these clients, which constitutes business conduct detrimental to the public interest, contrary to IIROC Rule 29.1 (formerly IDA By-law 29.1) and IIROC Rule 29.6 (formerly IDA By-law 29.6); and
- effected trades in four client accounts based on third-party instructions without having a written trading authorization, contrary to IIROC Rule 200.1(i)(3) [formerly IDA Regulation 200.1(i) (3)].
The panel also found that Blackmont engaged in business conduct detrimental to the public interest, contrary to IIROC Rule 29.1, when it failed to meet the requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations by failing to obtain the following documentation for certain client accounts:
(a) Corporate records which indicated the “power to bind” a corporate client;
(b) Signature documentation regarding trading authorization; and/or
(c) Identity verification for authorized trading individuals.
All of these violations occurred between January 2003 and October 2007.
The IDA (now part of IIROC) began investigating Blackmont’s conduct on December 10, 2007, and Mr. Duke’s conduct on February 1, 2008. The violations occurred when Mr. Duke was a Registered Representative with the Vancouver Branch of Blackmont. Mr. Duke is no longer registered in any capacity with an IIROC-regulated firm.
Blackmont Capital Inc. is now Macquarie Private Wealth Inc., following a name change on February 1, 2010. The firm was previously named First Associates Investments Inc. before becoming Blackmont Capital Inc. in 2005.