Case Studies


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Investors' Risk and Financial Profiles Ignored by Advisor

Posted on Friday, November 12, 2004 04:00 PM

A few years after immigrating to Canada, a middle-aged couple opened an account with a full service investment firm and deposited $80,000 from the sale of their home in the UK and the husband's severance pay.

The clients said they told their investment advisor that they planned to use this money, which represented their entire wealth, for a down payment on a house and for their daughter's upcoming wedding. At the time, the husband worked as a tradesman and the wife was employed as a receptionist,...

Mutual Fund Change Caused Fees to Increase

Posted on Friday, November 12, 2004 03:45 PM

Nearly three-quarters of a 91-year-old client's account at a full-service brokerage firm was invested in a bond mutual fund. The investment advisor convinced the client's son, who held Power of Attorney for the client, to switch the investment in the no-load bond fund to the back-end load version of the same fund. The mutual fund company paid the advisor and the brokerage firm a $30,500 commission for the switch.

The advisor did not explain that the back-end load version only allowed the client to...

Giving Your PIN to Your Friend

Posted on Friday, November 12, 2004 12:45 PM

A client and his friend went to a night-club one evening after having several drinks at home. The client was intoxicated by the time they arrived at the club, but he ordered and paid for a round of drinks. He then left his wallet containing his bank debit card on the table while going to the washroom. When the client returned to the table he did not notice that his wallet was gone. Shortly afterwards, the client and his friend left.

The next morning, the client realized that his wallet was missing...

Small Business Relied on Authorization Number

Posted on Friday, November 12, 2004 12:45 PM

An established merchant specializing in product sales through telemarketing decided to begin accepting credit card payments. His bank set up a merchant credit card account during a brief exchange over the phone and he was faxed documents to sign.

In part of the bank's material sent to the merchant, it said that obtaining an authorization number for each transaction would protect the merchant against fraud. In another place, it said that the merchant must obtain an imprint of the card and the cardholder's...

Investor Complained Advisor Traded Too Frequently

Posted on Thursday, December 11, 2003 03:00 PM

The investor, a client of a full-service investment dealer, conducted more than 200 trades in an eight-month period. He then moved his account, claiming that he had suffered losses as a result of the advisor “churning" his account. (Churning is excessive trading by an advisor to maximize commissions.) The investor also said the stocks bought and sold were overly concentrated in the volatile high tech sector.

When we looked at the complaint, we agreed that the account was frequently traded and highly...

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