The Mutual Fund Dealers Association (MFDA) has suspended Rodney M. Warren and permanently prohibited him from selling leveraged investments after he made unsuitable recommendations to clients.
In a decision released last week, the MFDA ordered Rodney M. Warren to pay a fine of $100,000 and costs in the amount of $10,000 after he recommended that clients purchase leveraged investments without taking their risk tolerance into account, including their ability to afford the ongoing costs of the arrangement and withstand investment losses.
The regulator has suspended Warren from doing any kind of securities-related business for 90 days, after which he will be placed under strict supervision for 12 months, followed by another 12 months of close supervision. He has been permanently prohibited from offering leveraged investments to clients.
Registered with AEGON, Investia, and most recently with Portfolio Strategies Corporation
Warren worked as an advisor in British Columbia and was registered with AEGON, Investia, and most recently with Portfolio Strategies Corporation. The MFDA found that he failed to ensure that several of the leveraged investments he recommended were appropriate for the clients, who subsequently realized losses and faced margin calls when the underlying assets lost value. He also tried to come to a personal arrangement with clients to prevent them from filing a formal complaint, and concealed the problem from his dealer.
While Warren's lawyer argued that he should not be prohibited from working as a financial planner for any length of time since he would be unable to pay his bills (including payroll for his four, full-time administrative staff members), the hearing panel relied on previous decisions in which the MFDA had ordered penalties with prohibitions and large fines despite the presence of financial difficulties.