Desjardins must pay $875,000 for improperly monitoring two financial advisors

Desjardins Securities (VMD) agreed to pay nearly $875,000 for improperly supervising two financial advisors who violated basic rules of their profession.

• Also read: A Desjardins financial advisor punished for causing two clients to lose more than $500,000

• Also read: Data theft at Desjardins: defense asks for more time due to voluminous evidence

The Desjardins Group subsidiary will have to pay a fine of $225,000 to the Canadian Investment Regulatory Organization (OCRI) and reimburse nearly $624,000 in commissions collected on questionable transactions by the two advisors, Michel Bédard and John Viron. She will also have to pay costs of $25,000.

“VMD admitted to having failed in its obligation to establish and maintain a system allowing it to adequately monitor the professional activities of at least two of its representatives,” summarized the OCRI in a press release published last week.

In the first case, Michel Bédard caused two clients to lose more than $500,000 by carrying out nearly 450 transactions that they had not approved.

Juicy commissions

These unauthorized transactions allowed Bédard, from the VMD branch in Pointe-Claire, to receive no less than $226,492 in commissions from June 2020 to November 2021.

Advisor Bédard had decided, in the summer of 2020, to adopt an active negotiation strategy on stock options for these two clients, but without talking to them about it.

To camouflage these unauthorized transactions, Michel Bédard had created “false notes reporting supposed conversations” with the two clients. He had ignored reminders from his employer to this effect, according to OCRI.

In February, the organization imposed on Bédard the reimbursement of commissions and a fine of $150,000. He is no longer employed by VMD.

In this case, the institution received more than $1.1 million in commissions.

The injured customers received “compensation” from Desjardins which covers all of the commissions they paid as well as the financial losses they suffered, a spokesperson for the cooperative, Jean-Benoît Turcotti, assured the Journal.

He circumvents a ban

For his part, John Viron, on three occasions, in 2019, 2020 and 2021, helped Quebec clients make investments which were nevertheless prohibited to them.

To circumvent this rule, Viron had clients outside Quebec buy the investments before reselling them to Quebec clients, all outside the stock markets.

VMD “knew that these operations were being carried out and permitted them,” concluded OCRI.

A member of VMD’s Laval office, John Viron’s clients include municipalities, paragovernmental organizations, foundations and family trusts, his website states.

“Desjardins reviewed certain surveillance and control practices of representatives following the conclusions of the OCRI,” maintained Mr. Turcotti.