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IIROC fines Richardson GMP, cites supervisory failures

2020-07-03 20:41 ET - Street Wire

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by Mike Caswell

Richardson GMP Ltd. has agreed to pay $550,000 to settle allegations from the Investment Industry Regulatory Organization of Canada over supervisory failures and internal control problems. Despite many red flags, the firm allowed a since-banned Calgary employee to place vulnerable clients into risky junior oil companies. It also allowed another Calgary employee to purchase high-risk debentures in the accounts of retired or nearly retired clients. In both cases, clients suffered substantial losses, IIROC says.

The fine is contained in a settlement agreement that IIROC released on Friday, July 3. The penalty stems from problems in the firm's operations in Calgary and Toronto. The transactions at issue occurred between 2011 and 2016, with some occurring at Macquarie Private Wealth Inc., a firm that Richardson GMP acquired in 2013.

The case stems in part from losses suffered by clients of a Calgary employee, Preston Henry Smith. Over a period of four years, he placed a group of clients into high-risk debentures, with the investments generating substantial commissions for himself and the firm. The clients at issue (four married couples and two individuals) ranged in age from their mid-50s to their mid-70s. All were investing to pay for their retirement or for their pending retirement.

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