Assante Fined $400,000

By Andrew Rickard | October 30 2015 11:49AM

Assante Capital Management has agreed to pay a $400,000 fine for failing to adequately supervise a husband and wife team in its branch in Red Deer, Alberta.

On Oct. 27, the Investment Industry Regulatory Organization of Canada (IIROC) announced that it had accepted a settlement agreement with Assante after allowing a husband and wife team to operate without proper controls.

Christine Malley was the non-producing branch manager of the Red Deer branch, while her husband Brian Malley was a registered representative. In 2014, IIROC ruled that Brian Malley had given unsuitable advice to ten clients, recommending that they hold highly concentrated positions in speculative securities such as junior issuers and commodity based leveraged exchange traded funds in which they suffered losses ranging between 23% to 54%.

The regulator banned Brian Malley from the business for life and fined him $300,000. IIROC also ruled that Christine Malley, acting as her husband’s supervisor, had erred by approving these inappropriate recommendations; she failed to prevent him from engaging in these highly aggressive trading strategies, and she also failed to undertake any meaningful supervision with respect to the activities in his clients’ accounts. She was also permanently banned from registration, and given a $250,000 fine.

In this most recent ruling, IIROC found that Assante had failed to make supervisory inquiries in circumstances where they ought to have been made, and that it had accepted responses from the couple which should have been rejected as inadequate or questionable. While Assante knew that the Malleys were husband and wife, IIROC found that the investment dealer did not provide the kind of supervision that was required under the circumstances.

"The Respondent was aware throughout the Material Time that the Malleys were spouses and that they resided at the same home address. A heightened level of supervision was therefore required to mitigate the potential for conflict of interest," reads the decision. "However, the Respondent failed to take steps to mitigate against the potential for conflict of interest and conduct adequate supervision to ensure that Christine Malley was conducting adequate Tier 1 supervision of her husband’s trading activity."