THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING

Mass. claims impropriety by RBC firm

By Doug Alexander
Bloomberg News / July 21, 2011

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TORONTO - RBC Capital Markets, the securities unit of Royal Bank of Canada, inadequately supervised sales of leveraged and inverse-leveraged exchange-traded funds to clients, Massachusetts’ chief financial regulator said.

The firm made the funds available without training employees or ensuring they understood the products’ function and risks from at least January 2007,

William Galvin, the secretary of state, said yesterday in a statement, announcing an administrative complaint against the company and a former broker.

“The dishonesty here is that the investors, and indeed the agent soliciting their investment, did not understand the workings of these funds,’’ Galvin wrote. “The firm failed in its responsibility to train and supervise its agent, and this failure led to investor harm.’’

The state is seeking restitution for Massachusetts investors and a fine, Galvin said. Katherine Gay, a spokeswoman for Royal Bank, said she could not comment.