A former advisor previously registered with the Investment Industry Regulatory Organization of Canada (IIROC) has been fined and suspended for unsuitable recommendations that cost his clients more than half the value of their accounts.
An IIROC hearing panel accepted a settlement agreement between William Alan Heakes, a former registered representative with Mackie Research Capital Corp. in Mississauga, Ont., and IIROC staff that sees Heakes fined $20,000, suspended for two years and agreeing to pay $2,500 in costs, after he admitted to making unsuitable recommendations to four clients between January 2011 and July 2015 (two of the clients were married with a joint account).
The clients subsequently suffered combined losses of more than $800,000.
According to the settlement agreement, the clients’ losses represented between 52% and 59% of the value of their accounts, at a time when the S&P/TSX Composite Index declined by just 2%.
It also noted that the married couple decided to sell their house in the wake of their investment losses, amid concerns about their ability to afford retirement.
The unsuitable recommendations involved high concentrations in a handful of securities and sectors, which didn’t meet the clients’ needs given their ages, investment objectives and risk tolerances.
The settlement agreement said the firm compensated the clients last year for more than half their losses. It also said that the fine would have been higher “but for certain health and financial circumstances,” that Heakes was “experiencing challenging personal circumstances due to a family illness” during the relevant time period, and that there was no evidence the misconduct was intentional.
For full details, read the IIROC settlement agreement.