A hearing panel of the Canadian Investment Regulatory Organization (CIRO) has for a second time sanctioned registered representative, John Reyes, after Reyes admitted he failed to use due diligence to ensure that the investment recommendations he made to two vulnerable clients were suitable.

First registered in 2005, Reyes has worked with Richardson Wealth Limited and its predecessor organizations since July 2012. He currently works as a registrant with Richardson in Calgary, Alberta, operating under the name Reyes Wealth since May 2016.

Between January 2017 and 2020, Reyes is accused of initially failing to use due diligence to ensure his investment recommendations were suitable for two clients – a married couple, both on disability benefits with limited investment experience. The clients suffered losses of $16,138 or 21 per cent of their investment and $6,323 or nine per cent of their investment when they were placed in medium and high-risk securities. Investment objectives indicated the clients wanted 50 per cent income and 50 per cent capital gains and that they had a long-term time horizon with a target year of 2030. Their holdings were generally concentrated in less than five securities and included investments in various sectors, including energy, and two cannabis securities. “This was inconsistent with the client’s actual financial situation, investment knowledge and experience,” the settlement agreement states.

They note that by the end of the relevant period, the client’s accounts had almost entirely been moved out of high-risk securities, based on Reyes’ recommendation before any client complaints and before CIRO staff commenced its investigation. “Although Reyes was disciplined in 2018 for similar conduct, he has made sincere efforts to improve his practice,” the settlement agreement continues. “However, Reyes did not make the necessary changes to the accounts of RM and CM in a timely enough way. The misconduct in this case was not intentional, willfully blind or reckless. It was primarily negligent but was nonetheless serious.” 

Reyes agreed to pay a fine of $22,461, the amount clients lost during the relevant period. Richardson has since that time fully compensated both clients. He will also disgorge $9,000 in commissions earned and agree to six months of close supervision.