EDMONTON -- The Alberta Securities Commission has ruled a former pastor and police officer made what it calls "unsuitable" investment recommendations to some of his elderly clients.
The commission says while working for WealthTerra Capital Management Inc., Kenton Rustulka breached "know your client" rules while selling $6,500,000 in investments.
"He was found to have reported false and misleading information ... and to have failed to properly identify his clients’ investment needs, objectives, financial circumstances and risk tolerances," reads the commission's ruling, noting many of his clients were seniors or close to retirement.
"They believed he was 'trustworthy and honest, based on his previous employment as an Edmonton police officer and as a senior pastor.'"
Know your client rules require advisors "to learn about the client, their personal financial situation, financial sophistication and investment experience, investment objectives and risk tolerance."
The commission found the recommended investments were "patently unsuitable" for his clients and worsened the situation by over-estimating and over-emphasizing the potential upside.
One investor told the commission told they hadn't received any returns on more than $26,000 in investments. This set them back "for a few decisions in life", including the adoption of a second child.
Another investor told the commission Rustulka promised a series of investments totalling $80,000 would produce an 18 to 25 per cent return within three years. She said losing her money would delay her retirement.
She also expresssed guilt at referring her adult daughter to Rustulka, who invested her life savings on his recommendations.
The sanctions Rustulka faces will be determined at a hearing management session on June 25.
