Respondent discloses he is more than $500,000 in debt before IIROC hands down $95,000 penalty
A heavily in-debt portfolio manager has been handed a $95,000 penalty and suspended for nine months by IIROC for off-book recommendations, unauthorized trading and failing to ensure investments were suitable for clients.
The contraventions occurred when Joseph Debus was registered at Macquarie, formerly Blackmont. During the time of the violations, he was always under supervision, except for a period of about five months, and was later terminated by Macquarie.
In 2009, Debus recommended that two clients purchase shares of My Screen Mobile Inc outside of their accounts and without disclosing this activity to the firm. The respondent was prohibited from being involved in the high-risk stock but still encouraged one client, and facilitated the other, to purchase My Screen through other dealers.
The second and third contraventions occurred between June, 2009 and February 2013, and involved unauthorised trades in one client’s account and unapproved discretionary trading in another. As these were not managed or discretionary accounts, Debus was required to obtain approval from the client for security, price, quantity and timing of the trade, with each client testifying that they did not provide specific approval.
The settlement hearing stated: “The panel concluded that the respondent’s argument that his notes accurately reflected calls with his clients was not reliable and was not consistent with other evidence showing discrepancies in the elements of timing, price and quantity.”
The final contravention regarded making unsuitable investment recommendations beyond a client’s risk tolerance, exceeding the 20% portfolio range up to a peak of 23.9%.
During the hearing, Debus disclosed that he owed more than $500,000, including approximately $150,000 to the Canada Revenue Agency, $140,000 in bank and credit card debt, and more than $210,000 to his former lawyer and former paralegal.
In his early fifties, after being sacked by Macquarie he first joined Mackie Research Capital and later Echelon Wealth Partners Inc and was not under supervision at either until IIROC place him under close supervision in September, 2017.
The hearing added: “He has remained active in the industry and Echelon is both satisfied with his compliance and will continue supervision to ensure the ‘public is adequately protected’.”
Debus was fined a combined $65,000 for the contraventions and must also pay $30,000 towards the cost of IIROC’s investigation and prosecution. Upon his return from suspension, he will be under strict supervision for 12 months and be required to successfully re-write and pass the Conduct and Practices Handbook examination.
