Branch Manager Receives Lower Than Requested Penalty for Failure to Supervise
Re Ahrens 2014 IIROC 46
A IIROC Hearing Panel had decided that the Respondent did not take adequate steps, on either a daily or a monthly basis, that were reasonable in light of various red flags and significant information from compliance and others, including credit, provided to him or available as a Branch Manager in respect of his supervision of the trading activity of one registrant in respect of two securities in certain client accounts. At the penalty hearing, IIROC sought the following penalties and costs:
- A six to eight month suspension from registration in any supervisory capacity with IIROC;
- A fine of $35,000.00;
- A rewrite of the Branch Manager’s course or its equivalent, should the Respondent reapply for registration in any supervisory capacity; and
- Costs of $20,000.00.
The Panel instead ordered:
- A four week suspension;
- A rewrite of the branch manager’s course on or before December 31, 2014.
- $15,000.00 in fines;
- $5,000.00 in costs;
- The fine and costs were payable over a two month period;
In so holding, the Panel noted:
- There was no evidence of harm to clients, the employer or the market in this case;
- The Respondent acknowledged that he had the responsibility and the opportunity to review and monitor the investment advisor’s activity;
- The Respondent did not participate at any of the investment advisor’s activity;
- There was no evidence that the Branch Manager was enriched by the investment advisor’s conduct;
- The Branch Manager had received no previous disciplinary history and there was no evidence of any complaints after the events under consideration;
- The Respondent accepted full responsibility, acknowledged his misconduct and spoke as to remorse; and
- The Respondent was fully cooperative throughout the investigation and disciplinary process.
The Panel noted that the majority of the authorities relied upon by IIROC counsel pertained to branch managers who, at the time of the decision, were no longer in a supervisory role but had continued employment in the industry as investment advisors.
This Respondent did not have an active book of clients and therefore continuing as an investment advisor was not open to him. In addition, the panel viewed the Respondent’s conduct as properly characterized as an error in judgment in a narrow period of time regarding one investment advisor. There was no suggestion and no evidence that there was conduct involving manipulative, fraudulent or deceptive practices.
Finally, the Panel considered the Respondent’s personal circumstances, including his negative net worth and the fact that a significant suspension or fine would likely be career ending. To the Panel’s mind, that would serve no useful purpose, particularly given that this was approximately five years post the event in question.
The full text of the decision can be read here.
Personal Financial Dealings with Clients: IIROC Discipline Follows Internal Fine
Re Sydney Azancot, 2014 IIROC 44 DN
A settlement agreement reached between Sydney Azancot and IIROC Staff whereby Azancot agreed that he had engaged in personal financial dealings with a client without the knowledge of his employer, and that he had misled his employer in his responses on his annual disclosure forms respecting his personal dealings with clients. His contraventions were found to be in violation of Dealer Member Rule 29.1.
The first contravention covered a period from October 2008 to December 2012. During this time, Azancot advanced multiple cash loans to a client, totaling $133,000.00.
The second contravention was in respect of the annual disclosure forms for 2009, 2010, 2011 and 2012. In the disclosure forms, Azancot was required to inform his employer whether he (a) was acting as a trustee for an individual, and (b) whether he had loaned money to a client. Azancot replied in the negative to both questions when, in fact, he was acting as a trustee for a family member’s trust and he had loaned money to a client.
In 2013, his employer conducted an internal investigation and found that Azancot had committed the two contraventions. He was fined a total of $20,000.00, placed on strict supervision and required to rewrite the Conduct and Practices Handbook Course.
Despite the internal investigation and fine, in the settlement agreement, Azancot agreed to pay an aggregate fine of $15,000.00 to IIROC and costs in the amount of $3,000.00.
The full text of the settlement agreement can be accessed here.