Portfolio manager suspended and fined $90,000

An IIROC hearing panel has fined and suspended a former registered representative for six months because of due diligence and suitability failures.

Darryl Joseph Yasinowski admitted that he failed to know five clients and made unsuitable recommendations, pursuing an aggressive investment strategy that involved many high-risk, speculative securities, an IIROC release said.

The investments included options (covered and uncovered), and leveraged and inverse-leveraged ETFs. Yasinowski also employed “extensive use” of margin in some clients’ accounts, says the settlement agreement.

The clients, which included a senior, were vulnerable and had limited investment knowledge, the release said. They sustained losses of between 32% and 58% of their portfolios.

IIROC formally initiated the investigation into Yasinowski’s conduct in December 2014. The alleged violations occurred while he was a portfolio manager and registered representative with the Regina branch of Mackie Research Capital Corporation.

The settlement agreement says Yasinowski stated “that he felt he was acting in the best interests of the clients,” with the 2% fees he charged tied exclusively to the accounts’ net values.

He is no longer a registrant with an IIROC-regulated firm.

Specifically, Yasinowski admitted to the following violations:

Between about May 2010 and October 2014, he failed to use due diligence to learn and remain informed of the essential facts relative to the five clients, contrary to Dealer Member Rule 1300.1(a).
During the same time frame, he failed to use due diligence to ensure that recommendations were suitable for the clients, contrary to Dealer Member Rule 1300.1(q).

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