The Investment Industry Regulatory Organization of Canada (IIROC) announced that it has fined and sanctioned Halifax investment advisor, Shirley Locke for failing to use due diligence to learn and remain informed of essential client facts, for failing to ensure that trades were suitable for several clients based on their investment objectives and risk tolerances, and for conducting unauthorized trading in at least three clients accounts.
Registered since October 1979, the violations Locke is accused of occurred while she was a representative with National Bank Financial, Industrial Alliance Securities and Aligned Capital Partners. Locke is currently employed with Aligned Capital Partners.
In addition to her $90,000 fine, Locke is also suspended for nine months, commencing July 20, 2020, will be under six months of close supervision upon re-registering and must rewrite and pass the Conduct and Practices Handbook examination within six months of re-registration. Locke is also required to pay IIROC costs in the amount of $30,000.
“The panel heard evidence over nine days in respect to the allegations and received and considered voluminous exhibits,” the regulator writes in its penalty decision. During the proceedings, IIROC’s senior enforcement council “drew the panel’s attention to the fact that the violations occurred over several years and were not isolated events. The length of time and number of clients showed a pattern of misconduct. The number of unauthorized trades demonstrated a pervasive misconduct unbecoming a registrant of Ms. Locke’s lengthy experience.”
During the relevant period Locke held senior supervisory positions for several dealers. “Her misconduct occurred over several years and demonstrated a blatant disregard for her professional regulatory and ethical obligations to her clients, dealer and the industry.”
Earlier decision documents describe a pattern where Locke would prepare know-your-client (KYC) and new client application forms for signatures that were not representative of the client’s risk tolerances or objectives. (The forms often overstated client risk tolerances, in particular.) Notes taken by Locke were unintelligible “and of little value in advancing Ms. Locke’s contention that all the trading was authorized.” IIROC says trading also reflected a flagrant disregard for a client’s explicit needs.
