Protection of the public

 

Simplified summaries of the decisions of our Disciplinary Committee

 

The Chambre in collaboration with SOQUIJ, publishes simplified summaries of decisions rendered by its Disciplinary Committee for the benefit of consumers. These summaries deal with the most common ethical misconduct committed by counsellors and are in keeping with the Chamber's mission to protect the public.

Disclaimer

The summaries of these decisions are provided for information purposes only. Each case is unique and many factors, including aggravating and mitigating factors specific to the case, will influence the decision of the Disciplinary Committee.

Case 1

Charge(s)

The disciplinary complaint filed against the representative includes only one count.

It is alleged that she placed herself in a conflict of interest by borrowing $5,000 from a client.

Professional(s) obligation(s) referred to in this decision

The relationship established between a client and his representative is based on trust. The representative must not take advantage of this special relationship to use it for his own benefit. In performing the tasks his client assigns him, he must make decisions and recommendations objectively and independently, with no regard to his own personal gain.

More: InfoDéonto
Outcome

The representative admitted her guilt.

She was struck for one month.

Reasons(aggravating or mitigating factors considered in imposing the penalty)

  • The representative did not have a disciplinary record and had less than one year of experience
  • Guilty plea
  • Significant objective gravity of the offence
  • Putting herself in a position of conflict of interest compromised the representative’s independence toward her client and broke the relationship of trust she had with that client, which is the core of the exercise of the profession
  • Friendly relationship with the consumer, whom she repaid in full
  • Resigning member, definitive abandonment of the practice
Consult the full decision

The full text of the decision on conviction and on penalty can be found here.

 

Case 2

Charge(s)

The disciplinary complaint filed against the financial security advisor and representative of the mutual funds broker includes 6 counts.

Four counts alleging that he placed himself in a real or potential conflict of interest:

  • while he was acting as a representative for a client, by taking part in the preparation of a procuration executed before notary granting him certain powers (counts 1 and 2) 
  • by simultaneously acting as representative for two clients (count 3)
  • by acting as an intervener in a proceeding titled “Conservatory voluntary intervention” in a Superior Court file (count 4)

One count alleging that he made a false or misleading sworn statement in a judicial proceeding (count 5)

One count alleging that he made false or misleading statements in an investigation concerning him by the syndic (count 6)

Professional(s) obligation(s) referred to in this decision

The representative must always keep in mind and never forget that all of his actions as a representative must be in the client’s best interests.

More: InfoDéonto
Outcome

The advisor and representative pleaded guilty.

He had developed a special relationship with his clients that went well beyond the usual professional relationship.

He invested a great deal in them, in spite of his ethical obligations.

In the context of that relationship, he had access to privileged information and found himself at the center of domestic and family disputes that he tried to settle.

His role exceeded that of a financial planner.

A 2-week suspension from practise was imposed for count 3.

Fines totalling $6,000 were imposed for the three other counts alleging that he had placed himself in a conflict of interest (counts 1, 2, and 4).

During his intervention in the judicial file that opposed members of his clients’ family, he claimed under oath that he was never aware of the mandate given by his client and that he did not take part in its signature or preparation, but this statement was false.

A $4,000 fine was imposed for count 5.

All of his false statements hindered the work of the syndic of the Chambre de la sécurité financière in the search for the truth and the mission of protecting the public.

A 1-month removal from the roll was imposed for count 6.

It was ordered that the two temporary removal periods be served consecutively.

Reasons(aggravating or mitigating factors considered in imposing the penalty)

  • joint recommendations of the parties
  • age and vulnerability of the consumers
  • family dispute
  • years of experience
  • duration of the offence
  • lack of malicious or fraudulent intent
  • lack of disciplinary record
  • acknowledgment of the facts
Consult the full decision

The full text of the decision on conviction and on penalty can be found here.

 

Case 3

Charge(s)

The disciplinary complaint filed against the financial security advisor and representative of the mutual funds broker includes 13 counts.

The first 12 counts allege that he failed to put his client’s interests before his own personal interests:

  • by replacing the leveraged loan and the segregated fund contract with a nearly identical new contract that did not procure any additional benefit (counts 1 to 4) 
  • by replacing the leveraged loan and the investment account with a new investment account that did not procure any additional benefit (counts 5 and 6) 
  • by cancelling his segregated fund contract to replace it with another one containing a new scale for redemption fees to invest the difference in the redemption fees already charged to the client (counts 7 to 10)
  • by making withdrawals from the segregated fund account of one client to then invest the difference in the redemption fees already charged to the client in the segregated fund account with the new scale for redemption fees (counts 11 and 12)

One count alleging that he failed to act with competence and to respect the limits of his understanding by proposing leveraging strategies to his clients.

Professional(s) obligation(s) referred to in this decision

The representative must make sure that using leveraging is in the client’s best interests based on his personal and financial situation, his investment objectives, his risk tolerance, and his understanding of financial markets. He must also put his client’s interests before his own personal interests and warn him if he requests a transaction that goes against his interests.

More: InfoDéonto
Outcome

The advisor and representative was convicted of every count in the complaint.

He did not put his clients’ interests before his own personal interests by replacing several leveraged loans and by closing and opening investment accounts, resulting in redemption fees for the clients and a commission for himself.

18-month periods of removal from the roll were imposed on each of the first 12 counts.

He acted incompetently and recklessly by implementing a strategy he did not sufficiently understand.

A 1-month removal from the roll was imposed for count 13.

It was ordered that these temporary removal periods be served concurrently.

Reasons(aggravating or mitigating factors considered in imposing the penalty)

  • Flagrant disloyalty to his clients
  • Objective seriousness of the offence
  • Repetition of the offences over a 10-year period
  • Guilty plea
  • Precarious financial situation and state of health
Consult the full decision

The full text of the decision on conviction and on penalty can be found here.

Charge(s)

The disciplinary complaint filed against the financial security advisor includes six counts.

  • Three counts allege that he failed to collect all the information and perform a complete analysis that complies with the client’s needs when asking that client to purchase a segregated fund contract (counts 1 and 2) and life insurance contracts (count 3).
  • One count alleging that he incorrectly completed the replacement notices for a personal insurance contract (count 4).
  • Two counts alleging that he did not endeavour to ensure that an existing universal life insurance contract was maintained in effect for a client (count 5) and a declining balance term life insurance contract (count 6).
Professional(s) obligation(s) referred to in this decision

The financial needs analysis, commonly called the “FNA,” is an essential process that the financial security advisor must complete to properly advise their client and cover their insurance needs.

More: Info-Déonto

See also:

Replacement Notice
Assurance et planification financière

Outcome

Convicted on all six charges.

The client’s refusal to provide the information required for the needs analysis does not exempt the advisor from his ethical duties.

Reasons(aggravating or mitigating factors considered in imposing the penalty)

The decision on the penalty has not yet been rendered.

Consult the full decision

The full text of the decision on conviction and on penalty can be found here.

The full text of the decision on penalty here.

Charge(s)

The disciplinary complaint filed against the mutual fund dealer representative includes two counts.

  • One count alleges that he failed to practise with integrity by performing several unauthorized transactions in the bank accounts or mutual fund investments of clients (count 1).
  • One count alleges that he appropriated $28,500 for personal purposes from the bank accounts of two clients (count 2).
Professional(s) obligation(s) referred to in this decision

The proper operation of the financial markets requires consumer confidence in those markets. That confidence, in turn, depends largely on the integrity of financial market professionals.

It is therefore crucial to show consumers that they can have confidence in the financial markets because there exist rigorous standards of practise that are applied and respected by industry members.

More: InfoDéonto

Outcome

Convicted on both counts.

Reasons(aggravating or mitigating factors considered in imposing the penalty)

The decision on the penalty has not yet been rendered.

Consult the full decision

The full text of the decision on conviction and on penalty can be found here.

The full text of the decision on penalty: to come.

Case 1

Charge(s)

The clients referred to in this complaint include the spouse and two young children of a car accident victim, who received benefits from the Société de l’assurance automobile du Québec after his death.

The disciplinary complaint filed against the financial security advisor and group annuity and insurance advisor includes four counts.

  • One count alleging that he failed to know the financial and personal situation of a client and that client’s investment goals (count 1)
  • One count alleging that he had a client purchase a product that was not in keeping with his needs or financial situation (count 2)
  • One count alleging that he performed, about 12 times, inter-fund transfers without obtaining his client’s authorization (count 3)
  • One count alleging that he signed a document as a witness to the signature of a person who was not present (count 4)
Professional(s) obligation(s) referred to in this decision

Having a limited transaction authorization does not entitle the representative to perform discretionary transactions. Each transaction must be preapproved by the client. The representative must document the trades made pursuant to this  authorization, in particular by noting the time, date, person who performed the transaction, the means of communication and content of the conversation.

More: InfoDéonto

Outcome

The advisor was convicted on counts 3 and 4 and acquitted of the first two counts in the complaint.

As to count 3, the purpose of the limited authorization letter is not to allow a representative to perform discretionary transactions.

The advisor may not claim that he is dispensed from having to obtain the client’s preauthorization just because the financial institution does not ask the representative to produce it before performing the requested trade. This obligation is still incumbent upon him.

The advisor failed to act with professional integrity and competence within the meaning of section 16 of the Act respecting the distribution of financial products and services and practised his activities negligently within the meaning of section 35 of the Code of Ethics of the Chambre de la sécurité financière. It was not proved, however, that he lacked integrity.

A fine of $4,000 was imposed on the advisor for this count.

As to count 4, it was proved that the advisor signed as a witness to the signature of the client even before the documents in question had been signed.

This action shows a lack of professional integrity, but not a lack of honesty or loyalty, given that it appears that the action was done for the purpose of efficiency and not to mislead the consumer.

A fine of $2,000 was imposed on the advisor for this count.

Reasons(aggravating or mitigating factors considered in imposing the penalty)

  • lack of disciplinary record
  • the objective seriousness of the offence committed
  • offence committed for the purpose of convenience
  • lack of benefit to the advisor
  • lack of maliciousness or dishonesty
  • age of advisor
  • absence of prejudice suffered by the clients
Consult the full decision

The full text of the decision on conviction can be found here.

The full text of the decision on penalty can be found here.


Case 2

Charge(s)

The disciplinary complaint filed against the financial security advisor and mutual fund dealer representative contained five counts related to her conduct while selling an individual term life insurance proposal.

  • 1 count alleging that she failed to collect all the information and to perform a complete analysis that meets clients’ financial needs (count 1).
  • 2 counts alleging that she failed to complete or correctly complete the Notice of Replacement of Insurance of Persons Contract (counts 2 and 3).
  • 2 counts alleging that she failed to act with competence and professional integrity by not providing information to the insurer and by entering inaccurate medical information in the individual term life insurance proposal (count 4) and by signing in place of her clients (count 6).
Professional(s) obligation(s) referred to in this decision

The disciplinary process and rules of ethics are meant to promote proper conduct and exemplary conduct. Thus, acting with integrity, loyalty and competence and in the interests of the client, understanding the products being offered, and offering advice and products that suit a client’s situation are ethical obligations that are not satisfied by merely filling out all the required forms.

More: InfoDéonto

See also:

Insurance and Financial Planning
Replacement Notice

Outcome

The representative pleaded guilty to all 5 counts.

A $5,000 fine was imposed for count 1.

The financial needs analysis, commonly called a “FNA,” is a fundamental document used to determine the clients’ needs and serves as the basis for the representative’s recommendations.

Fines totalling $5,000 were imposed for counts 2 and 3.

A correctly completed replacement notice allows clients to make an informed decision in their interest.

A $5,000 fine was imposed for count 4.

Failure to communicate accurate medical information is a serious breach because the consumer risks losing coverage and it also undermines the relationship of trust between the insurer and the representative.

She was temporarily removed for 1 month for count 6.

The representative acted negligently by signing a letter to cancel existing insurance policies for and on behalf of her clients, even with their verbal consent. This authorization must be by way of a written power of attorney.

Reasons(aggravating or mitigating factors considered in imposing the penalty)

  • Joint recommendations of the parties
  • Consequences of the offence
  • Guilty plea
  • Lack of disciplinary record
  • The representative had 13 months of experience
  • The offences were committed during 1 transaction
  • Lack of blameworthy intention
  • Sincere regrets
  • Participated in training
Consult the full decision

The full text of the decision on conviction and on penalty can be found here.

Charge(s)

The disciplinary complaint filed against the financial security advisor and group insurance plans advisor contained 1 count.

He was accused of being negligent by failing to communicate and follow up with the client after receiving a “notice of lapse” concerning an insurance policy.

Professional(s) obligation(s) referred to in this decision

Representatives governed by the CSF have ethical duties and obligations toward their clients. These duties and obligations dictate the conduct to maintain in relationships with clients. In the practice of their profession, representatives must:

  • act with prudence and diligence
  • maintain an honest and competent practice
  • demonstrate loyalty

For more information: InfoDéonto.

Outcome

The advisor pleaded guilty.

He was temporarily removed for 30 days.

Reasons(aggravating or mitigating factors considered in imposing the penalty)

  • Joint recommendation of the parties
  • Years of experience
  • Consequences of the offence
  • Lack of disciplinary record
  • Lack of dishonest or malicious intent
  • Isolated act
  • Offence related to 1 client only
  • Age of the professional
  • Member resigned
  • Low risk of repeat offence
Consult the full decision

The full text of the decision on conviction and on penalty can be found here