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Case Studies

  • Advisor made excessively frequent trades for the sole purpose of increasing commissions

    The client, a novice investor in her 60s, was looking to invest $75,000 of an inheritance she received. This money was a significant portion of her net worth. With the help of a long-time friend, she opened a margin account with the firm. Through her friend, the client completed the account opening documentation. She never met with the advisor. In fact, they only spoke twice by phone when the client wanted to withdraw money from her account.

  • Payments processing scam

    The client was recruited by a company, via the Internet, to collect accounts receivable on their behalf. She would be sent cheques from Canadian companies to be deposited to her account. She would then wire 90 per cent of the amounts to designated third parties overseas, and keep 10 per cent as her collection fee.

  • Retired investor borrowed to buy high risk investments

    When the client met the advisor, she was 67 years of age, retired and recently divorced. The client could no longer work because of her failing health. For most of her adult life, she did not work outside the home. Her income consisted of Old Age Security, Canada Pension and $250 a month from her ex-husband.

  • Using easily guessable passwords

    The client woke up one morning to find his wallet missing. After an unsuccessful search, he called the bank to report the missing cards. In the meantime, the fraudster was able to make ABM cash withdrawals and debit purchases from the client's bank account totalling $3,437. For all of the disputed transactions, the client's Personal Identification Number (PIN) was entered correctly on the first attempt by the fraudster.

  • Investors complained after accepting firm's error

    A couple had been investing with their advisor for several years. The husband instructed the advisor to make a small change in one of his accounts. About a week later, both the husband and the wife received trade confirmation slips in the mail indicating that a large number of units of mutual fund A had been switched to mutual fund B in their accounts.

  • Forged signature on lost cheques

    The client was shocked to discover that a cheque for $4,900 has been cleared through his account the previous month – and he didn't write it. He informed the bank immediately, which produced the original cheque. It was obvious that the signature was a forgery, and the client asked for the money back.

  • Low risk investor held high risk debentures

    The client was a low-risk investor looking for safe, income-producing investments. He wanted to avoid the volatility of the stock market, although he would tolerate a small share of his portfolio in equities as an inflation hedge.

    The client's investment advisor recommended an investment in Air Canada debentures, suggesting they were “not very risky." He failed, however, to share the prospectus for the debenture which contained rating agency descriptions ranging from “lower quality" to “speculative and non-investment grade." More than $43,000 of the client's money was invested in the debentures.

  • New advisor did not ask about risk tolerance or investment horizon

    When this couple went to a new advisor in 1995, they were earning a combined income of about $55,000, had no debt and had accumulated about $300,000 in liquid and fixed assets.

  • Unauthorized ATM withdrawal

    The client lived and worked overseas, but continued to use a Canadian bank account and her Canadian bank access card at ATMs. From overseas, she complained to her bank that a withdrawal for about $1,100 was made at a nearby ATM without her knowledge.

  • Overpayment scam

    A customer advertised stereo equipment for sale on the Internet and was contacted by an overseas purchaser in Amsterdam, who agreed to buy it for $1,600.

    For payment, the purchaser suggested that his American client, who owed him money, pay the customer $7,800 and the customer could then wire the $6,200 difference to the purchaser. A Canadian business associate of the purchaser would pick up the stereo equipment. The customer agreed to this proposal and asked to be paid with a certified cheque.


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