IIROC announces penalty hearing for Kenneth Gareau

VANCOUVER, Nov. 11, 2011 /CNW/ - A penalty hearing has been scheduled before a Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC), in the matter of Kenneth Gareau.

The Hearing Panel will consider the appropriate penalty to be imposed as a result of their Decision dated September 26, 2011 finding that Mr. Gareau acted contrary to IIROC Rules.  Mr. Gareau was found to have recorded inaccurate "know your client" information on client account forms, made unsuitable recommendations and made a transaction against the express wishes of a client. The Hearing Panel's Decision and Reasons are available at http://docs.iiroc.ca/DisplayDocument.aspx?DocumentID=4B62FAFF04194B01B0F7D5DA56C008F2&Language=en

The penalty hearing is open to the public, unless the Hearing Panel orders otherwise. The Hearing Panel's decision on penalty will be made available to the public at www.iiroc.ca.

Hearing Date:             November 23-24, 2011

          Hotel Saskatchewan Radisson Plaza
2125 Victoria Avenue
Regina, SK

Specifically, the Hearing Panel found that:

  • Mr. Gareau acted contrary to IDA By-law 29.1 and IIROC Rule 29.1 by:

    • Inaccurately recording the risk tolerance and investment objectives of JR and ER on each of three New Client Application Forms (NCAFs) completed in August 2007.
    • Inaccurately recording the risk tolerance and investment objectives of RH and JH on an NCAF completed in June 2008.
    • Inaccurately recording on NCAFs completed in September 2006 and June 2008 that RH and JH had not borrowed money to make investments.

  • Mr. Gareau acted contrary to IDA Regulation 1300.1(q) and IIROC Rule 1300.1(q) between July 2006 and October 2008 by failing to ensure recommendations he made to clients were suitable investments for them. In particular by:

    • Recommending and overseeing portfolios composed of virtually all equity assets for both RH and JH and for JR and ER, all four of whom were retired and reliant on their investment portfolio.
    • Recommending that RH and JH purchase $100,000 of a hedge fund on margin.
    • Recommending that RH and JH purchase $170,000 in limited partnerships, some of it on margin.
    • Recommending to JR and ER that Bell Canada bond units, a fixed income investment yielding as high as 6.7%, be sold to buy equity mutual funds.
    • Recommending extensive use of margin accounts by RH and JH and failing to take positive steps to reduce the margin once it reached excessive amounts.

  • Mr. Gareau acted contrary to IDA By-law 29.1 (now IIROC Rule 29.1) in September 2007 by selling 51,000 units of a Bell Canada bond against the express wishes of his client and fully knowing that his client did not want it to be sold.

IIROC formally initiated the investigation into Mr. Gareau's conduct in March 2009. The violations occurred when he was a Registered Representative with the Regina sub-branch of Dundee Securities Corporation, an IIROC regulated firm.  Mr. Gareau continues to be registered in Regina, at the same firm, now known as DWM Securities Inc.

*  *  *

IIROC investigates possible misconduct by its member firms and/or individual registrants. It can bring disciplinary proceedings which may result in penalties including fines, suspensions and permanent bans or terminations for individuals and firms.

All information about disciplinary proceedings relating to current and former member firms is available in the Enforcement section of the IIROC website. Background information regarding the qualifications and disciplinary history, if any, of advisors currently employed by IIROC-regulated firms is available free of charge through the IIROC AdvisorReport service. Information on how to make investment dealer, advisor or marketplace-related complaints is available by calling 1.877.442.4322.

IIROC is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada. Created in 2008 through the consolidation of the Investment Dealers Association of Canada and Market Regulation Services Inc., IIROC sets high quality regulatory and investment industry standards, protects investors and strengthens market integrity while maintaining efficient and competitive capital markets.

IIROC carries out its regulatory responsibilities through setting and enforcing rules regarding the proficiency, business and financial conduct of dealer firms and their registered employees and through setting and enforcing market integrity rules regarding trading activity on Canadian equity marketplaces. 

SOURCE Investment Industry Regulatory Organization of Canada (IIROC) - General News

For further information:

Warren Funt
Vice President, Western Canada
604 331-4750
                    Elsa Renzella
Director, Enforcement Litigation



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