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IIROC suspends advisor over risky naked options strategy

The Shield was suspended until October 20, 2022 and was liquidated for $40.00. In addition, he or she must pay more than $64,000, pay $35,000 in costs, successfully rewrite the CPH exam before re-registration, and be under close supervision for one year before re-registration.

Shields was a registered representative with the Toronto branch of RJ O’Brien & Associates Canada Inc. He is no longer a registrar with the IIROC-regulated firm.

The clients were referred to Shields by another client, Sean Dubin, who is also a registered representative at Scotia Capital. Dubin told Shields that the clients were sophisticated investors who wanted to trade the same strategy as Dubin was using.

But when Dubin referred clients and provided information about them to Shields, Shields assumed he appreciated the risks involved in the trading strategy. They did not make the inquiries recommended in their employer’s policy and procedures manual, and did not inform them of the nature and scope of risks of options-based trading on futures, failing to effectively determine their risk tolerance.

According to IIROC, Shields spoke with five customers, but usually only briefly. She did not contact the two other clients, instead only talking to their husbands, who had trading rights over their accounts; For those cases, she included information on her NCAF that reflects the husband’s trading experience, not that of his clients. In the last two cases, he failed to meet or talk to customers who had joint accounts with the husband, and treated the husband as a customer in each instance.

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