Former Red Deer investment adviser fined $500,000 for fraud, breach of trust

A former investment adviser from Red Deer has agreed to a $500,000 fine after admitting he solicited nearly $700,000 from clients for "attractive investment opportunities" but put the money directly into his own bank account.

Shaun Wayne Howell, who was terminated from his employment with RBC Dominion Securities Inc. in March 2015, has also admitted borrowing $50,000 from a client without the knowledge of his firm.

A three-member hearing panel of the Investment Industry Regulatory Organization of Canada (IIROC) accepted a settlement agreement between IIROC staff and Howell on Nov. 21. IIROC issued a news release about the settlement Friday.

'A breach of their trust'

"Many of the clients were long-term personal friends of Howell's, and as a result they reposed a great deal of trust in him as their investment adviser," the settlement agreement says. "They relied on him to act in their best interests.

"Howell's acts … constitute a fraud on the clients as well as a breach of their trust."

Howell agreed to the $500,000 fine and a permanent ban from registration with the investment industry in any capacity. He also agreed to pay $10,000 in costs.

According to the settlement agreement, Howell had been employed by RBC Dominion Securities in Red Deer since 1999.

An investigation found that between November 2008 and February 2015, Howell solicited funds from clients "by representing to them that he had access to certain attractive investment opportunities such as initial public offerings and new issues of securities."

Eight clients provided personal cheques or bank drafts, payable to Howell personally, totalling $692,584. The amounts each client gave Howell ranged between $11,000 and $285,654.

Instead of investing the money for his clients, Howell "misappropriated the funds by depositing them into his personal bank account and using them for his own benefit," the settlement agreement says.

Falsified account statement

Over the seven-year period, he paid $290,021 to five of the eight clients, telling them the money represented an investment return.

The client who gave Howell more than $285,000 was a 60-year-old woman. He encouraged her to withdraw funds from her RRSP and to draw against a personal line of credit. She gave him $50,000 she borrowed from her line of credit.

Howell also admitted to providing a falsified account statement to two clients who had requested documented evidence of their investment.

He further admitted to borrowing $50,000 from a client in March 2013 without the knowledge of his employer, violating an IIROC rule that prohibits personal financial dealings with clients.

IIROC is a national self-regulatory organization that oversees all investment dealers and their trading activity in Canadian debt and equity markets.