IIROC has fined TD Waterhouse $140,000 for inadequately supervising an advisor’s trading.
The advisor, David Gary Durno, traded in securities and government bonds for two senior clients from 2010 to 2015 that were not in their financial interests and generated large commissions, the IIROC settlement agreement says.
The commissions generated by Durno’s trades often exceeded TD Waterhouse’s thresholds for selecting accounts for monthly review. Durno generated commissions of approximately $1.2 million.
TD Waterhouse should have identified the trading and required Durno to explain why it was consistent with the clients’ investment objectives and financial interests, and whether the clients should’ve been in fee-based accounts given their active trading and costs of transactions, the settlement agreement says.
The firm failed to identify, question or prevent his trading and therefore didn’t adequately supervise him, the agreement says.
TD Waterhouse responded to a client complaint and then expanded its investigation, IIROC said. The firm has paid $550,000 in compensation to the three clients affected.
The firm improved its supervision of commissions by implementing and improving an electronic trade surveillance system in its head office that detects trading that “generates excessive commissions,” the settlement agreement says.
In addition to the fine, TD Waterhouse will pay costs of $10,000.
Durno was fined $150,000, inclusive of disgorgement, by IIROC in August.
Read the settlement agreement here.