Interesting!!! How many people put thier retierment money in SLI because they where told it was a sure thing... IIROC does not like that very much!!!
IIROC suspends Martens after couple loses life savings
Ticker Symbol: C:*IIROC
IIROC suspends Martens after couple loses life savings
Investment Industry Regulatory Organization o (C:*IIROC)
Tuesday June 04 2013 - Street Wire
by Mike Caswell
The Investment Industry Regulatory Organization of Canada has secured $55,000 in penalties for Henry Martens, a former Wolverton Securities Ltd. employee from Kelowna who put a nearly retired couple into junior mining stocks. His actions caused the couple to lose much of the $290,000 they invested with him. IIROC claimed that he failed to properly warn them that the stocks were risky, and instead showed them a sample portfolio with returns of 25 per cent or more.
The penalty, announced by IIROC Monday, June 3, is part of a settlement agreement the regulator reached with Mr. Martens. He agreed to pay a $50,000 fine plus costs of $5,000. He also agreed to a one-year suspension from working in any registered capacity. He had faced sanctions ranging from a reprimand to a maximum fine of $1-million.
In settling the case, Mr. Martens admitted that he failed to recommend suitable investments for the couple. He also admitted that he failed to use due diligence to ensure couple's investments were suitable, given their financial situation and their lack of investment knowledge.
Details of Mr. Marten's actions are contained in a settlement agreement dated May 13, 2013. The agreement describes how the couple, only identified as IS and SP, transferred their accounts to Mr. Martens in January, 2007. The couple were 60 and 57 and wanted to be semi-retired in a few years. The husband had worked in the swimming pool industry for most of his working life and the wife had worked as a sales clerk for more than 30 years. They placed their life savings of $290,000 with Mr. Martens.
The problems, as described by the settlement agreement, began immediately. The couple's application form stated that their investment objective was "100% Speculative" and their risk tolerance was "100% High Risk." The form also listed their investment knowledge as good and their total net worth as $900,000. The information, however, was incorrect. Neither the husband nor the wife had good investment knowledge, and their total net worth was only $600,000. The $290,000 represented all their investable assets.
Another problem was that Mr. Martens invested their money primarily in junior mining companies, but he did not properly explain the risks of junior mining. He did tell the couple his strategy was risky, but did not tell them that they could lose their entire investment. A sample portfolio he showed them indicated annual returns of 20 to 25 per cent or more.
In the four years that followed, Mr. Martens largely traded stocks under 50 cents for the couple. Unfortunately his strategy was unsuccessful and resulted in substantial losses. By September, 2011, the couple's accounts were worth just $18,123, down from $289,798. After accounting for $40,700 in withdrawals, the total loss they suffered was $230,974.
"The Respondent's investment strategy and trading pattern were not suitable for IS and SP as they had limited investment knowledge, a low risk tolerance, little understanding of the risks involved, low income and could not afford to sustain any significant decline in the value of their investments as they were nearing retirement," the settlement agreement states. Commissions and other charges on the account totalled $25,462, with Mr. Martens realizing $12,072.
For Mr. Martens, the fine and ban represent his first disciplinary action. He has worked in the industry since 1980, when he started with Pemberton Securities Ltd. He began at Wolverton in May, 2004.
© 2013 Canjex Publishing Ltd.