Firm penalized after client losses and violations expose gaps in compliance and oversight
The Canadian Investment Regulatory Organization (CIRO) penalized Desjardins Securities Inc. after a settlement hearing held on November 5.
The hearing, conducted under the Investment Dealer and Partially Consolidated Rules, revealed significant supervisory shortcomings by the firm over the activities of two registered representatives.
The panel issued its decision on December 9, confirming fines and disgorgement. Desjardins Securities Inc. agreed to pay a $225,000 fine, disgorge $623,924.73—representing commissions earned—and cover $25,000 in costs.
The firm admitted its failure to establish and maintain a supervisory system sufficient to oversee the actions of its representatives.
One representative, identified as JV, conducted prohibited transactions from 2019 to 2021 by enabling Quebec residents to participate in securities offerings they were ineligible for.
The firm had knowledge of these actions but failed to intervene adequately.
Another representative, MB, engaged in unsuitable options trading strategies from 2020 to 2022, resulting in substantial client losses.
Two clients incurred significant capital losses of $468,809 and $52,931, despite positive portfolio returns during the respective periods.
Monthly commissions charged to clients exceeded $3,000 in multiple instances, leading to client complaints.
Desjardins Securities Inc. has since implemented measures to prevent similar violations, including stricter supervisory policies and mandatory retraining for the implicated representatives.
CIRO stated that the firm’s acceptance of penalties aligns with precedents and serves as a deterrent.
