Rep fined $50K for due diligence failures

IIROC has fined and suspended a former registered representative for due diligence failures that resulted in unsuitable investments and significant losses for clients.

On March 12, an IIROC hearing panel accepted a settlement agreement, with sanctions, between IIROC staff and Steven Fred Bodon.

Bodon admitted that he failed to use due diligence to know two senior clients, and failed to ensure that recommendations were suitable for them. Both senior clients were vulnerable and had limited investment knowledge, says the settlement agreement.

Specifically, Bodon admitted to the following violations:

• Between approximately January 2011 and October 2015, Bodon failed to use due diligence to learn and remain informed of essential facts relative to two clients, contrary to Dealer Member Rule 1300.1(a).
• Between approximately January 2011 and October 2015, Bodon failed to use due diligence to ensure that recommendations were suitable for the two clients, contrary to Dealer Member Rule 1300.1(q).

At the time of the violations, Bodon worked for a branch of CIBC World Markets in Calgary. A semi-annual review of one client’s accounts indicated that equity holdings made up between 62% and 86% of the client’s total portfolio, with about 80% of the equities classified as medium risk issuers, says the settlement agreement.

For the other client, a semi-annual review between June 2011 and June 2015 indicated equity holdings made up between 65% and 91% of the client’s total portfolio, with about 76% of the equities classified as medium risk issuers.

Bodon’s investment strategy involved concentrations in the energy and industrial/utilities sectors.

“In an approximate four-year period, the clients sustained total losses in their portfolios of approximately 34% and 43% respectively,” says the settlement agreement.

Pursuant to the settlement agreement, Bodon agreed to a six-month suspension from registration in any capacity with IIROC. Bodon also agreed to pay costs of $5,000.

Read the full settlement agreement.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.