IIROC fines, suspends former advisorBy The IJ Staff | October 09 2019 04:36PM
The Investment Industry Regulatory Organization of Canada (IIROC) announced that it has accepted a settlement agreement, with sanctions, between IIROC staff and former investment advisor, Alykhan Kassam.
In the agreement, Kassam admits that he made unsuitable recommendations for two clients that were outside their risk tolerance and investment objectives. Both clients suffered losses that represented a significant portion of their total portfolio.
The violations occurred during Kassam’s tenure as a registered representative with the Vancouver branch of Canaccord Genuity Corp., where he worked from 2003 until September 2015 when he changed firms to work with the Vancouver branch of Scotia Capital Inc. Kassam is no longer a registrant with any IIROC-regulated firm.
According to the settlement documents, between March 2013 and January 2015 the advisor made a series of recommendations for the purchase and sale of securities in a client’s RRSP account which caused it to become heavily weighted in high-risk securities. The account consisted of 30 per cent high-risk securities in January 2014. By March 2015, that concentration had risen to 95 per cent of the client’s portfolio. A second client, dubbed ‘DT’ in the decision documents, held a spousal RSP with the advisor. Account information from March 2004 indicated that the client was a moderate growth, medium risk client. No account update forms were signed by the client after 2004.
In December 2013, the advisor recommended and executed the purchase of speculative, high-risk securities that were not suitable for DT’s account. By December 2014, 92 per cent of the client’s assets were invested in speculative, high-risk securities. The following December, 89 per cent of the client’s portfolio was concentrated in high-risk securities. By the time Kassam had transferred to Scotia Capital, the client’s assets were down 68%.
For failing to use due diligence to ensure that recommendations were suitable for his clients, IIROC has suspended the advisor from working in any capacity for 60 days. He must also undergo nine months of close supervision if he returns to work with any IIROC regulated firm. Kassam will also pay a penalty of $15,000.