July 13, 2017 / 7:01 PM / 2 years ago

Exclusive: TD Bank investment advisor departs after Blackbird shares probe - sources

TORONTO/CALGARY (Reuters) - A senior investment advisor at Toronto-Dominion Bank left the company after an internal investigation found that he had placed Blackbird Energy Inc shares with clients not suited to investing in high-risk stocks, two sources familiar with the matter told Reuters.

A Toronto-Dominion Bank (TD) sign is seen outside of a branch in Ottawa, Ontario, Canada, May 26, 2016. REUTERS/Chris Wattie

The sources said that advisor Jeff Ber received an unauthorized payment from the junior oil and gas explorer after the placing was completed.

TD Securities acted as co-lead on a public offering of shares in Blackbird Energy in March, through which the company raised C$84.8 million, more than the C$80 million it had planned.

Ber, who joined the bank in November 2016, received a check from Blackbird for around C$100,000 about a week after the financing closed, said a source familiar with the situation.

In a press statement on Thursday, Blackbird Energy said: “Approximately 10 days following the completion of the offering, the company did make a payment in the amount of approximately $104,000 to an individual that was involved in the offering, however, such payment was unrelated to the offering.”

It did not name the individual.

Blackbird said in the statement that the March payment was for consulting services provided over a three-year period and that the individual was told to disclose the payment to their investment firm.

The two sources said TD was not aware of the payment.

Blackbird said the payment was accounted for in its third-quarter results and it would continue to investigate the matter.

Blackbird Chief Executive Garth Braun declined to comment beyond the statement when contacted by Reuters on Thursday.

“We can confirm that Jeff Ber no longer works with TD Bank Group,” TD said in an emailed statement in response to a Reuters request for comment. TD is Canada’s second-biggest lender.

TD said in its email: “While we cannot comment on any outstanding (regulatory) investigation, TD has made all required regulatory reporting as it relates to this matter, and we have taken steps to ensure there was no impact to clients.”

TD’s business practices have been under increased scrutiny this year following reports that staffers were pressured to meet targets. Canada’s financial watchdog is conducting a review of sales practices at the country’s banks.

One of the sources said TD suspended Ber after its compliance team identified Blackbird shares were being placed with clients that did not have the required risk tolerance to hold them. He resigned in April.

The source said TD subsequently identified customers with whom Ber had had contact, compensated those who lost money on the stock placement and stopped trades that had not yet been made.

The bank confirmed that it compensated customers. It did not say how much money was involved.

Ber did not respond to messages left at a telephone number listed in his name and at his new workplace nor to a message sent via LinkedIn. TD said it was not able to pass on contact details for Ber.

Calgary-based Blackbird’s shares were placed at C$0.55 per share but are trading at C$0.32 after disappointing drilling results on three wells in May and sliding oil prices pressured energy stocks across the board. It has output of about 868 barrels of oil equivalent per day in the Montney play.

The sources said Ber faces an investigation by the Investment Industry Regulatory Organization of Canada, which oversees trading activity in Canadian equity markets. The agency declined to comment and Reuters was unable to confirm this.

Reporting by Matthew Scuffham and Nia Williams; Editing by Amran Abocar and Toni Reinhold

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