IIROC fines and suspends portfolio manager for falsifying client records

An Investment Industry Regulatory Organization of Canada (IIROC) hearing panel has fined and suspended Echelon Wealth Partners Inc. portfolio manager, Douglas John Eley, ordering Eley to pay a fine of $50,000 and costs of $50,000 after an earlier hearing panel found he improperly altered previously signed client documents.

In addition to the fine and costs, Eley is suspended from registering with IIROC for a period of 12 months. Upon re-registration he will also be subject to close supervision for 18 months.

In its decision, dated January 28, 2020, IIROC alleges that Eley had altered previously signed documents, added client objectives and risk tolerances after the client had signed documents, used previously signed mutual fund switch tickets to transfer free units, and in some cases altered some switch tickets from the company where he previously worked, by superimposing the Echelon letterhead on the amended switch tickets. “The respondent denied making improper alterations to his client’s files but could offer no explanation as to how they had occurred,” IIROC writes in its decision on sanctions and costs.

The allegations are said to have occurred between May 2015 and November 2015 after he re-registered as a registered representative and as a portfolio manager and resumed the service of his former client’s accounts. (Eley had been terminated for cause from his previous firm after being disciplined by IIROC for inflating some client’s worth and falsely endorsing signatures for several clients on account documentation and other forms. At the time he was suspended six months, ordered to undergo strict supervision for one year and fined $50,000 plus costs of $15,000.)

During its deliberations, IIROC staff argued that to be a deterrent to Eley and to other potential respondents, the sanctions for his second offence must be more serious than that in his first disciplinary hearing. Eley’s representative argued that his conduct in this case is not as serious as that in the first. “The panel has taken both of these points of view into consideration but did not permit Mr. Naster (Eley’s representative) to continue arguing about the merits. The panel has decided that the nature of the misconduct in this case, although egregious, is not of itself deserving of the permanent bar requested by IIROC staff.”