Portfolio manager fined for altering client records

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This article was published 13/12/2019 (2305 days ago), so information in it may no longer be current.

In a case that may be without precedent, a Winnipeg portfolio manager has been fined and suspended by the securities industry regulator for deliberately changing telephone numbers in the client records of a firm he was leaving.

Clinton James Orr admitted to doctoring the phone numbers of close to 400 of his clients at National Bank Financial shortly before he left to join Canaccord Genuity, in an effort to make it more difficult for National Bank to retain those customers and to give himself an unfair edge in getting the clients to follow him to Canaccord Genuity.

Orr admitted to those allegations in a settlement agreement, which an independent panel of the Investment Industry Regulatory Organization (IIROC) accepted in a hearing in Winnipeg earlier this month.

IIROC imposed a fine of $22,500, a 30-day suspension and compelled Orr to rewrite the Conduct and Practices Handbook examination within six months of re-registration. Orr also agreed to pay $2,500 in costs for the IIROC investigation.

Warren Funt, IIROC’s vice-president for Western Canada, said penalties are typically based on precedent and the facts of the case.

Having said that, however, Funt acknowledged that is was a very unusual scenario.

“It was a unique case,” Funt said. “I have a hard time thinking of a similar type of case where someone (the respondent) is changing phone numbers. As well, when it comes to the 30-day suspension, I think we were breaking new ground on this one. But this is just where we ended up as a negotiated place.”

He said when setting the penalties, IIROC also takes into account client risk, and the clients were never at risk in this case. He suggested it was debatable as to whether or not there was even a disruption in communications.

“It would depend on what the clients wanted to do,” Funt said. “Whether the client wished to follow Mr. Orr to his new firm or whether they wished to remain at National Bank. It is up to them.”

The activities took place between November 2017 and May 2018, during which time Orr was preparing to leave National Bank Financial, where he was a registered representative since 2007 and a portfolio manager since 2013.

As part of the agreed facts in the settlement agreement, Orr “made the changes to gain a competitive advantage, in order to impede NBF’s ability to contact the clients following his departure…. In addition, Orr made false or misleading statements to IIROC staff concerning the nature and extent of the changes.”

He changed one or two digits to 455 telephone numbers for about 394 of his clients.

IIROC became aware of the activities via information that is required by IIROC to be filed when a professional leaves a firm and joins another firm. In its notice of termination, NFB noted that Orr had changed phone numbers in the client database. In a subsequent letter to IIROC staff, Orr denied that he was responsible for the vast majority of the inaccurate information in the NBF database.

martin.cash@freepress.mb.ca