MONTREAL – The Investment Industry Regulatory Organization of Canada will hold a hearing this week to decide whether to accept a settlement agreement with RBC Dominion Securities Inc. dealers accused of improper oversight of fraudster Earl Jones.
The agreement states that Jean-Pierre Ménard and Serge Leclaire failed to live up to dealer standards from August 2003 to December 2008.
It says they allowed Jones to hold multiple trading authorizations for unrelated clients and did not question withdrawals in some of his accounts, violating a dealer rule.
The hearing is slated for June 14 at IIROC’s boardroom in Montreal. If the agreement is accepted, it will be made available to the public.
IIROC began the investigation into RBC Dominion Securities Inc.’s conduct in 2010. Both Ménard and Leclaire are still members of IIROC-regulated firms.
Much of the $50 million Jones’ clients lost was held at a Royal Bank of Canada branch on Montreal’s West Island.
They filed a class action lawsuit against the bank in 2010, alleging it was responsible for their financial losses.
The fraud victims argue RBC (TSX:RY) was aware of irregularities in the Jones account but did nothing.
RBC has offered $12.5 million in compensation but the victims want $40 million, and argue the bank has been purposefully delaying the lawsuit.
Jones was sentenced to 11 years in prison for defrauding more than 150 clients over a 25-year period.
He was arrested in July 2009 after the fraud case was discovered.
IIROC is the national self-regulatory organization that oversees all investment dealers and trading activity on debt and equity marketplaces in Canada.
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