On June 10, 2013, a hearing panel of the Investment Industry Regulatory Organization of Canada (IIROC) accepted a settlement agreement, with sanctions, between IIROC staff and Derek George Laidlaw Axford.

Axford admitted that he failed to use due diligence to ensure that investment recommendations were suitable for his clients and to learn and remain informed of the essential facts relative to orders accepted when his clients purchased certain inverse ETFs.

Specifically, Axford admitted to the following violations:

(a) From April 2010 to August 2011, he failed to use due diligence to ensure investment recommendations were suitable for his clients, contrary to IIROC Dealer Member Rule 1300.1(q); and

(b) From April 2010 to August 2011, he failed to use due diligence to learn and remain informed of the essential facts relative to orders accepted, when his clients purchased certain inverse exchange traded funds, contrary to IIROC Dealer Member Rule 1300.1(a).

Pursuant to the settlement agreement, Axford agreed to the following penalty:

(a) A suspension from approval in any registered capacity with IIROC for a period of four months;

(b) A fine of $30,000;

(c) A requirement that Axford successfully complete the Conduct and Practices Handbook (CPH) course prior to seeking re-registration; and

(d) A requirement that Axford be placed under close supervision for a period of six months upon re-approval.

Axford also agreed to pay costs in the amount of $2,500.

IIROC formally initiated the investigation into Axford’s conduct in September 2011. The conduct occurred when he was a registered representative with a London, Ontario branch of RBC Dominion Securities, an IIROC-regulated firm. Axford is currently employed as a registered representative with the Komoka, Ontario branch of Worldsource Securities, an IIROC-regulated firm.