A Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC) has imposed a fine of $125,000, disgorgement in the amount of $579,000 and a permanent ban on IIROC registration for one of its members, Mark Odorico.
IIROC alleged that Odorico, who had been employed at CIBC World Markets, misappropriated funds from three clients, effected unauthorized trades in the account of one client, known only as RM, and that he also failed to co-operate with IIROC enforcement staff who were conducting an investigation.
During RM’s testimony, who said she had only a grade 8 education, was divorced and unemployed when she met Odorico after he purchased her house in 2013. At Odorico’s request, RM took back a mortgage for $500,000, which was ultimately repaid. Following the house purchase, RM became Odorico’s client. She said she knew nothing about investing, but she trusted the advisor and needed to earn greater returns than she had been receiving. She testified that Odorico suggested she give him additional funds to invest in his name on her behalf and that he could make more money for her than she could in the CIBCWM investment accounts held with him.
RM gave Odorico $449,000 in total, all based on his assurances that she was making money from her investments. The hearing was told that Odorico never told her where the funds were invested and never showed her any documents to substantiate that she was making money.
The Hearing Panel found RM’s testimony to be simple, straight forward and sincere. On the other hand, Odorico’s testimony was said to be “rambling, vague, self-pitying and lacking anything to substantiate his claim regarding [home] repairs or payment of interest.” He did not return to the hearing for cross-examination of his testimony.
Based on both the demeanour of the witnesses and other factors, the Panel found that the $449,000 given by RM to Odorico was to be invested by him for RM and was not a loan to him. In addition, the Panel found that the $449,000 has not been returned to RM.