Advisor faces $14,000 fine and nine-month ban for failing to verify client account details
The Canadian Investment Regulatory Organization (CIRO) held a hearing on December 3 and approved a settlement agreement with sanctions against Emilio Nafarrate.
CIRO’s decision followed Nafarrate’s admission that he failed to perform diligent inquiries regarding a proof of funds letter he prepared for a potential client, R.V.
Nafarrate, who was employed by RBC Dominion Securities Inc. (RBCDS) at the time of the incident, created the letter based on unverified verbal information provided by the client.
The letter inaccurately stated that an RBCDS account contained $250m in liquid assets and claimed the funds were free of liens or restrictions. The letter was prepared without additional due diligence or adherence to RBCDS compliance procedures.
Nafarrate sent the letter from his personal email and later confirmed its contents during a Zoom meeting with R.V. and a lender on September 1, 2023.
The lender, upon reviewing the letter, escalated concerns to RBCDS, prompting an investigation by RBC’s Global Special Investigations Unit (RBCGSIU). The investigation revealed that the account referenced in the letter had a negative balance.
RBCGSIU interviewed Nafarrate in late September 2023, during which he admitted to creating the letter. Shortly thereafter, on October 18, 2023, his employment with RBCDS was terminated.
Under the terms of the settlement agreement, Nafarrate accepted a nine-month prohibition from conducting securities-related business with any CIRO-regulated firm, effective October 19, 2023.
He agreed to pay a $14,000 fine and $3,000 in costs and must complete the Conduct and Practices Handbook Course or an equivalent.
The settlement agreement acknowledged mitigating factors, including Nafarrate’s full cooperation during the investigation, his early admission of misconduct, and the fact that he derived no financial benefit. Additionally, no investors experienced losses.
CIRO cited these factors in applying a 30 percent reduction to the originally proposed sanctions.
At the time of the settlement, Nafarrate was not registered in the investment industry.
