In a decision on October 6, 2011, an IIROC hearing panel found Carolann Steinhoff, former rep at Wellington West Capital, acted contrary to IIROC rules.
She made discretionary purchases in a client’s account, practiced unsuitable use of margin and unsuitable investments for clients. When her firm’s compliance department questioned the purchases, Steinhoff told them the topic of margin was raised by the client, when she knew that was a false statement, says IIROC.
Read: Suitability: Time for a refresher?
Following a penalty hearing held on February 23, 2012, an IIROC hearing panel imposed the following penalty on:
(a) A 12-month suspension from registration;
(b) After the expiration of her suspension, a condition that her future re-registration be subject to strict supervision for a period of 12 months, and to close supervision for a further 12 months for a total period of 24 months supervision;
(c) A fine of $100,000;
(d) Disgorgement of commissions of $6,813; and
(e) A five-year prohibition from serving as a director or officer of a Member Firm.
Read: Fiduciary versus suitability standard
Steinhoff is also required to pay costs in the amount of $20,000 and is ineligible for reinstatement until she has paid the fine, disgorgement and costs. She also has to pass both the Partners Directors and Officers Course, and the Branch Managers Course.
On July 10, 2012, Steinhoff requested the British Columbia Securities Commission conduct a hearing and review of both the liability and penalty decisions.
The commission ordered a stay of the sanctions imposed against her pending its hearing and review of this matter.
Read: Make sure you’re compliant
IIROC formally initiated the investigation into Steinhoff’s conduct in November 2008. The violations occurred when she was a registered representative in Victoria, British Columbia with Wellington West Capital Inc., an IIROC-regulated firm.
She is currently registered in Victoria with Queensbury Securities Inc., an IIROC-regulated firm.
Read the penalty decision.