A Canadian Investment Regulatory Organization (CIRO) hearing panel recently reached a settlement with Ontario’s Andrew David Tachauer, an Investors Group Financial Services Inc. representative.
He was fined $40,000 for failing to follow several policies and procedures and assessed $5,000 to cover the costs of his hearing.
The decision states that Tachauer failed to accurately record a client’s know-your-client (KYC) information when opening a tax-free savings account (TFSA).
The decision states that in 2017, when Tachauer first created the investor’s profile, he noted that the client’s investment time horizon was more than 10 years. However, the client said she had indicated a much shorter term, as she wanted to use the investment returns to renovate her house in a couple years.
In 2019, the client took out a second mortgage and asked Tachauer’s advice on a short-term (up to five months) investment. He recommended mutual funds in TFSA via a new non-registered account.
Even with this new account, Tachauer failed to note the client’s correct investment time horizon.
He then proceeded to recommend unsuitable investments using borrowed monies, a contravention of multiple Mutual Fund Dealer Association (MFDA) of Canada rules.
Tachauer’s actions led to the client losing $34,007.05 from the loan she had used to invest. He also received $2,849.79 in commissions, which he was not asked to return.
In addition to the financial penalty, Investors Group Financial Services Inc. issued a warning letter to Tachauer and conducted a warning call with him as well.