Nfld. & Labrador

Former N.L. investment advisor fined $1M by regulator for bilking clients

In addition to financial sanction, the Investment Industry Regulatory Organization of Canada has permanently barred Joan McCarthy from working in industry.

Joan McCarthy also faces 24 criminal charges

Fines totalling $1 million have been imposed on Joan McCarthy by the Investment Industry Regulatory Organization of Canada. (Brent Lewin/Bloomberg)

A former Newfoundland investment advisor has been fined $1 million by an industry regulator for taking cash from client accounts.

In addition, Joan McCarthy has been permanently barred from working in the industry.

The Investment Industry Regulatory Organization of Canada also says McCarthy must pay more than $100,000 for costs associated with her disciplinary hearing.

"In an industry that has trust as its most fundamental principle, theft is a repudiation of the most basic industry value," the IIROC panel said in its decision on sanctions for McCarthy.

"Theft from several clients, carried out over a lengthy period, by numerous acts of forgery, and various forms of deceit, adds to the magnitude of this violation. Simply put, it cannot be tolerated."

Last fall, the panel concluded McCarthy was liable for falsifying signatures and appropriating funds from client accounts. 

According to IIROC, she declined to co-operate with the regulator's investigation, refusing to provide documents or answer questions.

She had been accused of taking $775,000 from the accounts of six elderly clients over a 13-year period, from 2006 through 2019.

Over that time period, she was employed by MD Management Limited at its St. John's branch. Her employment there ended in March 2019, according to IIROC. She did not work for a regulated firm after that.

McCarthy is also facing two dozen criminal charges that span the same 13-year time frame, and the same number of alleged victims.

The former investment advisor has been charged with six counts each of fraud over $5,000, forgery, using a forged document, and possession of property obtained by crime.

Her case was due to be called at provincial court in St. John's this week, to enter a plea.

But new COVID-19-related restrictions pushed that appearance back to later this month.

N.L. government recently gave regulator power boost

Last spring, a CBC News investigation found that Newfoundland and Labrador was the only jurisdiction in Canada that hadn't given IIROC any teeth to actually enforce penalties against rogue investment advisors.

Months later, the provincial government plugged that legislative gap, giving the regulator enhanced abilities to investigate and sanction those who break the rules.

Newfoundland and Labrador now appears to rank near the top of the national heap in terms of powers granted to IIROC, instead of the bottom.

However, it wasn't immediately clear whether the powers granted by the new law will apply in McCarthy's case.

According to IIROC, the powers are not retroactive, and proceedings against McCarthy straddled its passage in the House of Assembly. She was found liable before it passed, but the matter did not conclude until afterward.

CBC News asked the provincial government for clarification. Officials there steered questions back to IIROC.

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