IIROC fines former advisor $ 150,000 for excessive trading and client borrowing

The panel also ordered that Rha, who has not been registered since 2018, pay a fee of $ 15,000 and, if he requests registration again, be subject to 12 months of close monitoring.

The sanctions follow the panel’s findings that in 2016 and 2017, Rha engaged in excessive and inappropriate transactions for two groups of clients – two retiree couples – and borrowed $ 95,000 from one client. in 2017 died two years later without being reimbursed.

The excessive trading and borrowing were both motivated by Rha’s misplaced confidence in his tactical trading strategy, according to the panel.

The panel noted that in May 2017, Rha’s then-firm Richardson GMP said, “It appears that [Rha] has only one “tactical” business strategy that is applied to a number of accounts receivable, and accounts receivable do not appear to benefit, while [he] seems to earn a commission.

Throughout 2016 and 2017, Rha went through a number of personal, professional and financial difficulties, the panel noted, including a divorce. In October 2016, he was placed under close scrutiny by his company over concerns about his ability to maintain adequate margin on his personal trading account, “which has lost approximately $ 3 million in the past five years.” indicates the decision.

In May 2017, Rha moved businesses and later that year borrowed $ 95,000 from a client, which was used to fund his distressed trading account.

The Hearing Panel stated that it viewed the client’s loan “as a reflection of the Respondent’s desperate and mistaken faith in his” tactical “negotiating strategy, which was also the root cause of the other contraventions.”

While the trading strategy generated commissions for Rha, that was not the goal, the panel said.

“In this case, the commissions were not the motive – they were a by-product of the Respondent’s ‘tactical’ strategy and his mistaken, but obviously sincere, belief in that strategy,” he said. he declared. “The excessive and inappropriate trading here resulted from the Respondent’s inability to recognize the flaws in his strategy […]. “

In interviews with IIROC investigators, Rha admitted that the trading was excessive and the lending was prohibited, the panel said.

Rha did not participate in the disciplinary process, so the panel accepted the allegations of IIROC law enforcement staff as proven and imposed penalties.

The fine of $ 150,000 included restitution of the outstanding loan of $ 95,000, restitution of $ 35,000 (which is part of the excessive trading commissions) and $ 20,000 for violations.

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