Branch manager fined $30,000 for failing to supervise advisor
While he was a branch manager at Raymond James, John Donnelly failed to prevent an advisor from making unsuitable investments with a widow's life insurance proceeds.
A 51-year-old client who was unemployed and recently widowed came to Raymond James to invest the $2 million she had received from a life insurance policy. While her advisor Probhash Mondal originally proposed a 90% bond portfolio, he went on to make unapproved discretionary trades that were increasingly aggressive and speculative: he concentrated funds in a single stock, made significant use of margin, ran large debit balances, and conducted frequent short term trading and short selling. Ultimately, Mondal earned approximately $40,000 in commissions while the client lost about $600,000.
In its investigation into the matter, the Investment Industry Regulatory Organization of Canada (IIROC) found that Donnelly failed to make inquiries to ensure that the activity was suitable for the client. The regulator also ruled that Donnelly failed to make inquiries of Mondal when on he placed numerous unsolicited trades for the same securities on the same day for this client and several others.
In a settlement agreement released on July 5, Donnelly agreed to pay a $30,000 fine as well as costs in the amount of $1,500. Donnelly has also been suspended from acting in a supervisory capacity for one year.
In a separate settlement reached in 2015, IIROC suspended Mondal from the business for five years and ordered him to pay a $100,000 fine and costs in the amount of $10,000.