IIROC Fines Broker for making client $1.4 million
IROC fines Pace for profitable, discretionary trades
2019-04-10 17:30 PT - Street Wire
by Mike Caswell
The Investment Industry Regulatory Organization of Canada has fined former Desjardins Securities Inc. employee Fernando Pace $25,000 after he carried out more than 700 discretionary trades in the accounts of a client over a four-year period. IIROC says that Mr. Pace carried out the trades while not being authorized to handle discretionary accounts. Mr. Pace received the fine despite the fact that the client made $1.4-million from the trading.
The penalty for Mr. Pace is contained in a brief settlement agreement that IIROC released on Monday, April 8. In addition to the $25,000 fine, Mr. Pace must pay $5,000 in IIROC's costs. He must also rewrite the Conduct and Practices Handbook exam within six months.
 | | MACKIE | | Fernando Pace |
The sanction stems from trades that Mr. Pace entered in the account of a client only identified in the settlement as "DS." The client and his wife owned a business in the food industry, earned $150,000 annually and had assets worth $8-million. They had margin accounts and corporate accounts with Mr. Pace, the settlement states.
The problems, as set out in the settlement, stem from 700 discretionary trades that Mr. Pace entered in the accounts between Nov. 1, 2012, and Feb. 1, 2016. During that period, Mr. Pace had regular contact with the husband, but not with the wife. The husband eventually told Mr. Pace not to contact him before entering trades.
Unlike many cases involving discretionary trading, there were no losses to the client. In fact, according to the settlement, the trading generated $1.4-million in profits for the client. It also generated $200,000 in commissions for Mr. Pace. Regardless, the trades still violated the rules, hence the $25,000 fine.
It is not clear from the settlement how IIROC learned about the trading, as the client seems unlikely to have complained. It is possible that Desjardins was looking into Mr. Pace's activities. According to the settlement, the firm fired him in May, 2016.
For Mr. Pace, the settlement marks his first brush with regulators in the 18 years he has worked in a registered capacity. He is now at the Montreal branch of Mackie Research Capital Corp.
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