The dealer has been found guilty of improperly recommending high-risk strategies to unqualified clients
The MFDA has issued multiple sanctions against Rodney Warren for improper recommendation of leveraged mutual fund strategies.
On two separate instances, he advised two married couples in British Columbia to take on high-risk investment strategies. On his recommendation, they each took on large loans – totaling $238,000 and $300,000, respectively – to finance a leveraged investment into mutual funds.
Though the clients indicated that they had fair-to-good investment knowledge, high risk tolerance, growth objectives, and were looking at a long-term time horizon, they were not suited to take on a leveraged strategy because of their age (at an average of 64.25 years old), life status (at or near retirement), ability to afford the costs associated with the investment loans, and ability to withstand investment losses. Both couples sustained losses when the value and distributions of their mutual funds declined.
Warren then failed to report to his employing firm when one of the couples threatened legal action for the mishandling of their account and demanded their initial investment back, instead attempting to settle matters with the clients himself. Under MFDA policy, he should have reported the complaint within two business days to his firm’s chief compliance office, which has the sole authority to negotiate settlements for the firm.
According to the reasons for decisions document relating to Warren’s case, he has not been the subject of any other MFDA disciplinary hearing, and he cooperated with the MFDA’s investigation of the allegations made against him.
The MFDA has issued multiple sanctions against Warren, including a 90-day suspension from conducting securities-related business followed by 2 years of supervision, a $100,000 fine, and a permanent prohibition on leveraging clients.
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On two separate instances, he advised two married couples in British Columbia to take on high-risk investment strategies. On his recommendation, they each took on large loans – totaling $238,000 and $300,000, respectively – to finance a leveraged investment into mutual funds.
Though the clients indicated that they had fair-to-good investment knowledge, high risk tolerance, growth objectives, and were looking at a long-term time horizon, they were not suited to take on a leveraged strategy because of their age (at an average of 64.25 years old), life status (at or near retirement), ability to afford the costs associated with the investment loans, and ability to withstand investment losses. Both couples sustained losses when the value and distributions of their mutual funds declined.
Warren then failed to report to his employing firm when one of the couples threatened legal action for the mishandling of their account and demanded their initial investment back, instead attempting to settle matters with the clients himself. Under MFDA policy, he should have reported the complaint within two business days to his firm’s chief compliance office, which has the sole authority to negotiate settlements for the firm.
According to the reasons for decisions document relating to Warren’s case, he has not been the subject of any other MFDA disciplinary hearing, and he cooperated with the MFDA’s investigation of the allegations made against him.
The MFDA has issued multiple sanctions against Warren, including a 90-day suspension from conducting securities-related business followed by 2 years of supervision, a $100,000 fine, and a permanent prohibition on leveraging clients.
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