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by Mike Caswell
The Investment Industry Regulatory Organization of Canada has found former Toronto brokerage employee Yonathan Chanoch Shields liable for an options strategy that inflicted $1.3-million (U.S.) in losses on nine investors. The regulator has determined that he failed to ensure trades he executed were suitable for the clients. He also did not properly explain the risks of the strategy, with those risks ultimately proving to be substantial.
The ruling against Mr. Shields, a former employee of R.J. O'Brien & Associates Canada Inc., is contained in a decision that IIROC released on Wednesday, July 28. A three-member panel has found him liable for violations of the rule regarding the suitability of trades. IIROC has not yet set out any fines or bans, as the regulator will hold a separate hearing to determine Mr. Shields's penalties.
The finding stems from an options strategy that Mr. Shields employed starting in February, 2016. According to IIROC, the strategy was only suitable for clients that could withstand a high degree of risk. It involved uncovered options on futures that included the S&P 500 E-minis, crude oil, natural gas and gold. The strategy could supposedly produce a 20-per-cent annual return.
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