CIRO fines and bans advisor after short-term investment needs clash with long-term fund selection
A client’s short-term home-buying plans unravelled after her advisor recommended mutual funds designed for medium- to long-term investors—resulting in a significant loss and a regulatory settlement.
On September 25, the Canadian Investment Regulatory Organization (CIRO) accepted a settlement agreement with Carlos (Ricardo) Gonzalez-Ticas, following his admission that he failed to accurately record a client’s essential facts, understand the investments he recommended, and determine their suitability.
The case centred on client CC, who had little investment knowledge and relied on Gonzalez-Ticas for advice after selling her home.
She made clear her need to invest proceeds for a short period, with access to funds “at any time” to purchase a new home, and a desire to avoid losses.
Despite these instructions, Gonzalez-Ticas recommended the Fidelity Tactical High-Income Fund and Fidelity Global Growth Portfolio Fund, both rated “low to medium” risk but intended for investors able to handle equity volatility and invest for the medium to long-term.
The client invested $580,000 across a non-registered account and a TFSA. Within three months, market declines left her unable to purchase a new home and facing a loss of approximately $32,941.
The Dealer Member ultimately compensated her $34,375, covering her loss and the amount she would have gained in a money market fund.
The settlement agreement notes that Gonzalez-Ticas did not review the Fund Facts, failed to update the client’s Know-Your-Client (KYC) information when prompted by compliance, and recorded objectives and risk tolerance that did not reflect the client’s stated needs.
He also completed account forms outside the client’s presence, contrary to firm policy.
Sanctions include a one-year prohibition from securities-related business with any CIRO Dealer Member, a $20,000 fine, and $2,500 in costs.
Gonzalez-Ticas is not currently registered in the securities industry.
