IDA Hearing Panel Fines Steven James Westman $20,000 for Making Unsuitable Recommendations to Two Clients
VANCOUVER, April 2 – A Hearing Panel of the Investment Dealers Association of Canada (IDA) appointed pursuant to By-law 20 has imposed discipline penalties on Steven James Westman, at all material times an Approved Person with the Winnipeg branch of Merrill Lynch Canada Inc., an IDA Member firm. In an agreed statement of facts, Mr. Westman admitted that between May 1999 and March 2001, he contravened former IDA Regulation 1300.1(c) by making unsuitable recommendations for two clients. He also admitted that between February and March 2001, he contravened former IDA Regulation 1300.1(a) by failing to adequately inform himself as to the nature or details of two income trusts that he had recommended.
For his misconduct, the following sanctions have been imposed on Mr. Westman:
Mr. Westman must also pay costs in the amount of $18,000 and is prohibited from being re-approved until the ordered fine and costs are paid.
One of the two clients was established to purchase land for certain First Nations of Manitoba to fulfill land treaty entitlement obligations of the governments of Canada and Manitoba. A corporate trustee had been appointed to manage that client’s accounts and investments were to be made in accordance with a “Framework Agreement”. The other client was a trust established to receive government funds for an Aboriginal group. Investments in that account were similarly to be made in accordance with a concluded agreement. Some of the investments recommended by Mr. Westman were not suitable for these two clients and did not conform with the agreements.
In determining penalty, the Hearing Panel considered the following mitigating factors:
(i) the clients suffered no losses; (ii) the two clients were relatively sophisticated and they, the corporate trustee, and the employing Member firm must assume some of the responsibility for the investments not complying with the governing agreements; (iii) one of the unsuitable recommendations was suggested to Mr. Westman by his manager; (iv) Mr. Westman has no prior disciplinary record; and (v) Mr. Westman fully cooperated with the IDA investigation.
Mr. Westman is currently not employed with an IDA Member firm.
The IDA first learned of these matters in July 2005 through a ComSet filing.
The Investment Dealers Association of Canada (IDA) is the national self-regulatory organization of the securities industry. The IDA’s mission is to protect investors, foster market integrity and enhance the efficiency and competitiveness of the Canadian capital markets. The IDA enforces rules and regulations regarding the sales, business and financial practices of its Member firms and their approved persons. Investigating complaints and disciplining Members and approved persons is part of the IDA’s regulatory role. It is IDA policy to ensure that where relevant, referrals to the appropriate policing authority are made.
For further information: Warren Funt, Vice-President, Western Canada, (604) 331-4750 or firstname.lastname@example.org; Jeff Kehoe, Director, Enforcement Litigation, (416) 943-6996 or email@example.com