Frank Mauro did not ensure his investment recommendations were suitable for his client, CIRO concluded
An investment advisor whose client was new to options trading has been fined $30,000 for failing to ensure that it was an appropriate investment for them.
A hearing panel of the Investment Dealer Division of the Canadian Investment Regulatory Organization (CIRO) accepted a settlement agreement, with sanctions, between Enforcement Staff and Francesco Mauro, a.k.a. Frank Mauro.
Mauro is a registered representative at the West Vancouver business location of Wellington-Altus Private Wealth Inc. The firm was not accused of any wrongdoing and was not fined.
The matter related to a new client who was introduced to Mauro by her brother who had told her that he was making money from options trading. The client had no prior knowledge of this type of investment.
The investments included put options on blue-chip stocks such as Apple, Tesla, and IBM, but while most proved profitable, the client suffered significant losses of approximately US$176,799 (including approximately $14,983 in margin costs) from participating in the Options Trading Program.
Unsuitable investment
CIRO determined that these higher-risk investments were not right for the client given her financial situation ($1m liquid assets, $90K annual income), investment objectives (long term investing), time horizon (over 20 years), and risk level (50% medium, 50% high).
The regulator’s investigation concluded that between October 2017 and March 2020, Mauro had failed to use due diligence in ensuring that the investments he recommended were suitable for the client, contrary to Dealer Member Rule 1300.1(q).
Along with the $30,000 fine, Mauro agreed to pay costs in the amount of $5,000.
