Two advisors fined combined $99,600 over outside sale of securities

Two advisors from Surrey, B.C., who work together as partners, have been fined a combined total of $99,600 (that total includes $84,600 in disgorgement) for accepting “remuneration for securities-related activities from someone other than their Dealer Member firm,” says IIROC in a Thursday release.

The two advisors, Martin Wendall Matthews and Arnold Ward Francis, currently work at PEAK Securities Inc., the release says, but at the time of their misconduct they worked together at Raymond James.

According to the settlement agreement, they “received payments related to the sale of a security that was purchased by some of their Raymond James clients. The security was never approved for sale by Raymond James and was not recorded on the books of Raymond James.”

Further, says IIROC, Matthews and Francis didn’t report the money they received to their firm.

The security they sold was units of WIP Investment Properties Limited Partnership (WIP), a B.C.-based limited partnership that’s “in the business of acquiring and operating a portfolio of working class residential apartment buildings” in the Greater Vancouver Area, says IIROC.

The advisors “had recommended and sold a previous offering of WIP” before joining Raymond James, the settlement agreement says, but Raymond James had never approved WIP units for sale and they “were never approved to be held in Raymond James accounts.”

Still, the respondents “continued to introduce their Raymond James clients to WIP and the units.” As a result, they “received $84,600 in finder’s fees from WIP for the purchases made by those 22 clients,” the SRO says.

IIROC also notes that, in 2012, “Matthews replied in writing to the B.C. Commission and advised that [he and Francis] had not provided any services to WIP” in response to an information request. After this, IIROC adds, neither advisor accepted further payment from WIP.

While the units were suitable and “produced a positive rate of return” for clients, IIROC says, the respondents broke Dealer Member Rules 18.15 and 29.1, which pertain to advisor requirements and business conduct.

The two must also pay costs of $5,000 combined, for a total payment of $104,600 between both advisors.

Read the full settlement agreement.

Staff

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