An Investment Industry Regulatory Organization of Canada (IIROC) hearing panel has accepted a settlement agreement with investment advisor Kamal Lidder wherein the former BMO Nesbitt Burns Inc. registered representative admits to discretionary trading in several client accounts and admits he distributed sales and marketing materials to clients which had not been approved of by his firm.
From February 2018 until April 2019, Lidder admitted he prepared sales literature that contained performance summaries and failed to get those materials vetted by any supervisor prior to them being sent to clients. IIROC formally initiated an investigation into Lidder’s conduct in January 2020.
“The respondent developed a strategy that he believed would compound gains and achieve superior results to the broader market. The strategy consisted of picking one large cap stock at the beginning of the week and selling it at the end of the week. The process was repeated with a new stock the following week. The respondent prepared and sent sales and marketing materials to some clients to inform them about the strategy,” IIROC writes in its settlement agreement with Lidder. To implement the strategy, he then engaged in discretionary trading for 15 client households that agreed to participate. “Clients were aware of the respondent’s discretionary trading in their accounts, but the respondent did not obtain prior written authorization from the clients.”
They add that Lidder would send emails to all clients participating in the strategy indicating what security was recommended for that week. He did not always follow up with this email to obtain instructions, “and therefore, engaged in discretionary trading to execute some of the transactions for the strategy.” More, they say Lidder was in the process of becoming a registered portfolio manager, but during the time in question was still not qualified to engage in the discretionary trading. Pursuant to the settlement agreement, Lidder agreed to pay a fine of $15,000 and costs of $2,000.
