The Investment Industry Regulatory Organization of Canada (IIROC) has fined Dwight Cameron Mann $250,000, has ordered Mann to pay costs in the amount of $50,000 and has ordered Mann to pay for a compliance audit after IIROC’s hearing panel found that Mann engaged in misleading conduct in certain client accounts, made unjustified promises of specific results and failed to report a client’s complaint.
All of the alleged violations occurred while Mann was a portfolio manager and registered representative with a Vancouver branch of National Bank Financial. National Bank terminated Mann’s employment in April 2018. IIROC commenced a suitability review when Canaccord Genuity sought conditional registration for Mann as a dealing representative that same month. Mann is currently a portfolio manager and registered representative at the Vancouver branch of Canaccord Genuity.
Under IIROC’s order, in addition to a fine and costs, Mann is also ordered to retain an independent and appropriately qualified compliance auditor to conduct a compliance audit of his team for the period between July 1, 2020 and June 30, 2021. The order further states that “Mann is required to exclusively pay all compensation and expenses of the compliance auditor.”
“The compliance auditor shall have reasonable access to all of the Mann Team’s books and records, including all emails sent or received by the Mann Team necessary to complete the compliance auditor’s mandate,” IIROC writes.
The sanctions follow allegations that Mann abused policies which allowed advisors to correct situations in which they failed to execute a trade on behalf of a client. “For up to 30 days following such an error, the advisor was allowed to execute the trade at the current market price. In the client account, the transaction would be registered at the price at which the original trade should have occurred. Any cost difference arising from a price differential between the intended and actual trade dates would be charged to the advisor.”
National Bank also had a policy for correcting orders that had been mistakenly executed in the wrong client account. “The policy permitted an advisor to cancel the erroneous transaction and transfer the security position to the correct account at the original price. The economic effect of a cancel and correct transaction was to return both accounts to the capital positions they should have occupied but for the mistaken order execution. During the relevant period, Mann allegedly executed 29 backdated transactions under false pretenses and 103 cancel and correct transactions under false pretenses. The total value of Mann’s error account attributed to the backdated transactions for Mann’s clients was approximately $316,000. During the relevant period Mann had discretionary trading over most of his client accounts. He also administered assets in excess of $700-million for over six hundred family and thousands of individual accounts. The majority of Mann’s client accounts were fee based.
In addition to engaging in the misleading activity in the affected client accounts, Mann on several occasions also promised clients that he would generate returns between five and 10 per cent. He also failed to report a client complaint when a client’s power of attorney sent an email to Mann alleging that Mann had engaged in unauthorized trading in his client’s accounts. (Mann did not hold discretionary authority over trading in the client’s accounts.) The email also referred to know-your-client, know-your-product and suitability failures. Mann admitted the mistake, saying he did not report the complaint at the time because it did not come from the client directly.
