IIROC fines advisor $100,000, issues two-year suspension

The Investment Industry Regulatory Organization of Canada (IIROC) announced that it has fined Calgary advisor, Michael Francis O’Brien, $100,000 for borrowing a significant amount of money from an elderly client without his employer’s knowledge or approval, and for making misleading representations to his client’s bank and to IIROC staff during its investigations.

In addition to the fine, O’Brien is suspended for two years. Upon re-entry to the industry he will also be under close supervision for 18 months. O’Brien must also successfully re-write the Conduct and Practices Handbook exam and pay IIROC costs of $20,000 before returning to work.

All of the alleged violations occurred while O’Brien was a registered representative with the Calgary branches of RBC Dominion Securities Inc. and Raymond James Ltd. O’Brien, currently a registered representative with Raymond James, was terminated by RBC in November 2017.

In its reasons for decision, IIROC says O’Brien had served as the client’s advisor since he began working in the securities industry back in 2002. He remained her advisor after her husband died in 2010. Without knowledge or approval from RBC Securities, he then borrowed at least $156,603.82 from the 81-year-old client over a four month period between May and September 2017. The borrowed funds included a series of electronic payments from the client’s personal bank account to O’Brien’s credit cards and lines of credit. He also incurred expenses on the client’s credit card where he was added as a secondary cardholder. The client then made an online electronic payment from the client’s account to a line of credit belonging to O’Brien’s mother-in-law, and paid another $24,000 to the Canada Revenue Agency (CRA) on the advisor’s behalf.

Despite his long tenure in the industry, O’Brien says he was not aware he needed his firm’s approval to borrow money from a client. O’Brien says he borrowed the money to make home repairs. IIROC investigators did not find expenses related to home repairs, but did find a number of new charges to his credit cards for expenses incurred in London, Paris and Las Vegas. During the course of RBC’s investigation O’Brien also falsely claimed he was the client’s power of attorney. A letter from the client’s legal council stated that she had loaned the money, and it was repaid, but said at no time in the past or present, was O’Brien named as her power of attorney.