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by Mike Caswell
The Investment Industry Regulatory Organization of Canada has begun a case against former Chippingham Financial Group Ltd. employee Alfred Drose, claiming that he used the account of a client with Alzheimer's disease to generate $231,782 in commissions. In the process, he inflicted $1.06-million in losses on the client, IIROC says. The loss represented most of the value of the client's account.
The allegations are contained in a notice of hearing that IIROC released on Monday, Sept. 14. The sole respondent is Mr. Drose, 62, who has worked in the industry on and off since 1983. The case centres on his largest client at Chippingham, only identified in the hearing notice as "GA." According to IIROC, the client was once a lawyer, but was forced into retirement by Alzheimer's disease. The condition of GA was well documented, with the Law Society of Ontario imposing an order ending GA's practice in 2012 because of his deteriorating health.
IIROC says that GA became one of Mr. Drose's clients on Feb. 14, 2014, opening an account that listed his investment objectives as entirely speculative with a risk tolerance of "100% high." Even though GA's law practice had ended two years prior, the account opening documentation listed his annual income as $90,000 and his occupation as that of a lawyer. IIROC says that Mr. Drose did nothing to verify GA's account opening information, and had no conversations with him after opening the account, only dealing with somebody who had power of attorney. GA made several deposits to the account, with the amounts totalling $1.3-million.
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