Posted: 30 Jul 2007 05:21 pm Post subject: Banks Rob Client!! Film at Eleven.
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NEWS
Last updated at 6:26 AM on 11/07/07
Sentence pending for bank manager who didn't supervise corrupt employee
JENNIFER TAPLIN
They lost their life savings: $500,000. "It ruined our lives," said a woman who didn't want to give her name.
The woman and her husband drove from Cape Breton yesterday to witness a sentencing hearing held by the Investment Dealers Association of Canada for bank manager Frank Youden.
He was charged and found guilty in January 2006 of failing to supervise employee Hugh Bagnell. About a dozen of Bagnell's clients at RBC Dominion Securities in Halifax lost significant amounts of money between 2000 and 2002.
Bagnell was fined $61,700 in 2003 for failing to attend a regulatory investigation, and barred by the IDA.
Yesterday, a three-man panel met in Halifax for a sentencing hearing. They heard from lawyers representing both sides, but they did not give a judgment yesterday. They will release a written decision at a later date.
The Cape Breton couple said they got "mixed up" with Bagnell in 1998.
"He was from Cape Breton and he came in like a friend, have-a-cup-of-tea kind of thing, sit at the table, and we trusted him."
Now they're working with several other former clients and have hired a lawyer to get their money back.
"I'm going to enjoy (the money) and share it with the children now for all the hell our family went through."
Kathryn Andrews, representing the IDA, suggested Youden receive a four-year suspension, a $50,000 fine and pay for $106,000 in costs.
She pointed out Youden didn't call the clients or check into Bagnell's activities even after red flags were raised.
"There were a number of times the respondent was directed to contact clients, but he did not."
One of the clients was a farmer with little investment knowledge and limited education. His account was drained to $2,000 from $173,000.
"We're seeking a serious penalty because serious issues are involved here," Andrews said.
Nigel Campbell, Youden's lawyer, asked for a reprimand.
"What you're really dealing with here is a judgment error," he said.
A reprimand makes sense because there were no findings of an absence of supervision, it was just insufficient, he said.
His client has a 38-year industry history which is discipline free, added Campbell. Plus Youden is close to retirement, which is an important time where consequences could be particularly impactful. Youden is still working as a bank manager in Halifax.
Campbell also pointed out that Bagnell, not Youden, was the primary actor in this incident.
"There's absolutely no evidence that a severe penalty is warranted to prevent something like this happening again," he said.
The incident was unique and not indicative of his usual behavior, Campbell added.
A penalty in this case is "totally wrong," he said.
jtaplin@hfxnews.ca
NEWS RELEASE
For immediate release
For further information, please contact:
Alex Popovic Connie Craddock
Vice-President, Enforcement Vice-President, Public Affairs
(416) 943-6904 or
apopovic@ida.ca (416) 943-5870 or
ccraddock@ida.ca
IDA Hearing Panel finds Frank Youden guilty of failure
to supervise
January 9, 2006 (Toronto, Ontario) – A Hearing Panel of the Investment Dealers Association of Canada (IDA), appointed pursuant to By-law 20, has found that Frank Youden, branch manager of RBC Dominion Securities (RBCDS) in Halifax, failed to supervise the trading activity in Approved Person Hugh Bagnell’s accounts, in particular, to ensure recommendations made by Mr. Bagnell were appropriate for his clients and in keeping with their investment objectives. The panel found that Frank Youden acted contrary to Policy 2 and Regulations
1300.1 (c) and 1300.2.
The main issue at the hearing was the reasonableness of the supervisory steps taken by Mr. Youden with respect to Mr. Bagnell’s client accounts. Between 2000 and 2002, Mr. Bagnell was the Approved Person for a number of client accounts, and Mr. Youden was the branch manager responsible for the supervision of Mr. Bagnell. In December 2003, the IDA’s Nova Scotia District Council disciplined Mr. Bagnell for failing to attend and give information in respect of an investigation being conducted by the IDA’s Enforcement Department. He was permanently prohibited from approval to act in any registered capacity with a Member of the IDA and fined costs of $61,700 (Bulletin #3231).
Following a disciplinary hearing held on April 5-8, 2005, and April 12-15, 2005, in Halifax, Nova Scotia, the Hearing Panel released its decision on January 3, 2006. The Panel found that Mr. Youden failed to:
• reasonably supervise Mr. Bagnell’s client accounts;
• adequately address the high turnover ratios in many of Mr. Bagnell’s client accounts, in that he either did not address them at all with Mr. Bagnell or he repeatedly accepted Mr. Bagnell’s explanations in spite of numerous red flags that called for action;
• adequately review a number of monthly statements that generated more than $1,000 commission per month; and
• contact Mr. Bagnell’s clients himself to confirm the suitability of the trading activity in the face of repeatedly high turnover ratios, high commissions, significant losses and trading activity that was inconsistent with the client objectives on file.
A date will be set for a penalty hearing on the above charges.
The Investment Dealers Association of Canada is the national self-regulatory organization and representative of the securities industry. The IDA’s mission is to protect investors 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 its approved persons. Investigating complaints and disciplining Members and approved persons is part of the IDA’s regulatory role.