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by Mike Caswell

The Canadian Investment Regulatory Organization has filed a case against PI Financial Corp. employees Teymur Englesby and Cale Nishimura, citing them for failing to spot suspicious activity in the accounts of a group of clients. The clients unloaded millions of dollars worth of shares in Canadian Securities Exchange listings, often doing so in transactions that appeared uneconomic, CIRO says. In the process, the sales generated commissions that CIRO calculates to have been $147,081.

The allegations are contained in a notice of hearing that CIRO released on Wednesday, Oct. 25. The case arises from activity in a group of client accounts between December, 2017, and October, 2018. CIRO claims that the accounts generated several red flags during that period, including the deposit of high quantities of shares that the clients sold within days. In many instances, the clients made large withdrawals shortly after the sales, CIRO says.

As CIRO sees things, Mr. Englesby and Mr. Nishimura failed in their "gatekeeper responsibilities." Among other things, they did not ask about how the clients obtained the shares and whether the clients had any relation to the companies. They also failed to ask any questions even as one of the clients, identified as "YK" in Wednesday's hearing notice, was documented as a "student/homemaker" with $2-million in liquid assets, a $200,000 annual income and an account worth $2.5-million.

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