A former Nanaimo investment advisor has been banned for life from offering financial services by an investment regulator and fined $125,000 for violations dating back to 2013.
The Investment Industry Regulatory Organization of Canada, a national trading marketplace regulating body, informed Kenneth Edward Smith in January 2017 he was under investigation. Its written decision report notes that Smith was found to have violated numerous dealer-member rules without the knowledge of Queensbury Securities Inc., the company for which Smith was the lone registered representative in Nanaimo between 2011 and 2016. These included extracurricular business and financial dealings.
Smith didn’t co-operate with investigators and didn’t attend any interviews, said Warren Funt, IIROC’s Western Canada vice-president.
Smith opened Shine-On Chrome and Graphic Finishes Inc. with partners in May 2014, according to facts in the report. In 2016, he received a business loan for $7,500 from a client (referred to as R.F.), whom Smith knew since childhood, and was responsible for R.F.’s Queensbury accounts.
The report stated Shine-On was located at the same building as the Queensbury office. Despite being responsible for R.F.’s accounts, Smith asked R.F. if he would loan money for equipment and the two signed an agreement in February 2016 contrary to rules. Smith and another individual signed on behalf of Shine-On.
Terms saw R.F. loaning $7,500, with Shine-On agreeing to give R.F. $1,750 a month for six months. R.F. was paid $1,500 in April 2016 and $1,000 in May 2016. Shine-On stopped paying “pursuant to the agreement.” R.F. tried to collect money owed on numerous occasions and additional payments have not been made to this date, according to the report.
Smith also sold and bought futures for R.F. between June 2013 and May 2014 at another Queensbury location, despite not being authorized to trade futures.
R.F. informed Queensbury about Smith’s stake in Shine-On and the loan and Queensbury terminated Smith as representative with cause in September 2016.
In June 2015, Smith contacted C.B. (a former client) about day trading on her behalf. C.B. assumed her money would be invested with Queensbury and gave Smith $10,000. Smith instructed C.B. to make a cheque payable to BC1009062, of which Smith was the sole director. Smith told her her investment was increasing in value, but when she asked him to return the funds in January 2017, he claimed he had invested them in a one-year locked-in investment in December 2016.
After C.B. complained in May 2017, she learned she didn’t have an account with Queensbury.
The ban is in effective across Canada, said Funt, and Smith can appeal.
“His time would be running out,” said Funt. “Any decision of IIROC can be appealed to the provincial securities commission I believe it’s within 30 days.”
In addition to the fine and ban, Smith was also ordered to pay $20,000 in costs.
Funt said it is “pretty rare” to see someone refusing to participate in the proceedings.
“Most times, at least they go through the interview stage, the investigative part,” said Funt. “The hearing, sometimes, [maybe] or [maybe] not. Frankly they may just walk away from the process and say, ‘Do what you’re going to do to me,’ and just move on.”
Queensbury Securities Inc. was contacted for comment, but did not respond by press time.
The decision made no mention of any current Queensbury Securities Inc. reps in Nanaimo.