MONTREAL — A national investment watchdog has fined RBC Dominion Securities and two brokers $700,000 for "failing in their duty to protect the financial markets" from Earl Jones' Ponzi scheme.

The Investment Industry Regulatory Organization of Canada (IIROC) approved the fines on July 23.
Jones, an unlicensed financier from Montreal, is serving an 11-year prison term for masterminding a $35-million fraud that saw 158 people bilked of their life savings.

The victims, including Jones' own brother, were mainly elderly English-speaking Montrealers.
RBC agreed to pay a $500,000 fine while brokers Serge Leclaire and Jean-Pierre Menard will hand over $100,000 each.

In addition to the fines, RBC and its two employees will pay $20,000 in expenses.

The deal addresses longstanding allegations from Jones' victims, who say RBC should have stopped Jones from gaining signing power over estates and emptying bank accounts for 25 years.

Leclaire and Menard will also see their IIROC licences suspended for six months.

RBC and the two brokers admitted that between August 2003 and December 2008, they didn't make detailed checks before allowing Jones to withdraw money from clients' accounts.

IIROC says Menard and Leclaire relied on Jones to provide the required information to open accounts and authorize transactions.

The watchdog says the bank employees also failed to monitor account activity and the bank "failed...to protect financial markets by failing to question the fact that an individual (Earl Jones) had...authorization to operate a large number of clients' (accounts)."

RBC agreed earlier this year to pay $17 million to Jones' victims, who had rejected an initial offer of $12.5 million.

IIROC is a self-regulatory organization that oversees investment dealers and trading activity.