Rep fined, disgorged over leveraged ETFs

Following a disciplinary hearing held on September 12, 2012,a hearing panel of the Investment Industry Regulatory Organization of Canada (IIROC) found Benoît Beaulne committed the following violations:

1. Between October 2008 and April 25, 2010, Beaulne failed to exercise due diligence to ensure his investment recommendations in leveraged ETFs constituted a suitable investment for two of his clients, given their financial and personal circumstances and their investment objectives, contrary to IIROC Dealer Member Rule 1300.1 (a), (p) and (q);

2. Between June 2008 and April 25, 2010, he failed to exercise due diligence to ensure e had sufficient knowledge of the features and risks inherent in leveraged ETFs before recommending such an investment to two of his clients, contrary to IIROC Dealer Member Rule 1300.1 (a).

The hearing panel assessed the following penalties against Beaulne:

a) A fine of $30,000;

b) Disgorgement of $1,490.72 in fees collected;

c) A two-year suspension of approval in any capacity with an IIROC-regulated firm; and

d) Upon expiration of the two-year suspension, having repeated or repeating the CPH course before seeking re-approval and, in the event of re-approval, strict supervision for a period of twelve months.

The panel also ordered he pay costs in the amount of $10,000.

IIROC formally initiated the investigation into Beaulne’s conduct in July 2010. The violations occurred he was a registered representative with the Montréal branch of Laurentian Bank Securities Inc., an IIROC-regulated firm. He’s no longer a registered representative with an IIROC-regulated firm.

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