Inaccurate KYC costs advisor $167,000

A hearing panel of the Investment Industry Regulatory Organization of Canada (IIROC) found on September 26, 2011that Kenneth Gareau recorded inaccurate “know your client” information on client account forms, made unsuitable recommendations and made a transaction against the expressed wishes of a client.

In a penalty decision dated January 2, 2012, the panel imposed the following penalties on Gareau:

(a) An order that he may not seek registration for a period of one year from the date of the decision on penalty; (b) A fine of $100,000; (c) Disgorgement of commissions in the amount of $47,383; (d) Before seeking re-registration, he must successfully re-take the Conduct and Practices Course; (e) If he is re-registered, he must be subject to strict supervision for one year followed by a further six months of close supervision; and (f) Payment of costs of $20,000.

“The respondent must take responsibility for his actions. They were not the result of not knowing what was appropriate, or even negligence,” the hearing panel said in its penalty decision. “We did not find, and do not find, that the respondent’s conduct was fraudulent or deceptive. However, they were not isolated incidents but, with respect to the two client families, were repeated and pervasive.”

Read the decision and reasons on liability (dated September 26, 2011).

Staff

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