The former rep took advantage of a widow, the panel found
A regulatory hearing panel has fined and permanently banned a former mutual fund rep after finding that he misappropriated several hundred thousand dollars from a client and failed to cooperate with regulators.
A hearing panel of the Mutual Fund Dealers Association of Canada (MFDA) permanently banned “Alfredo P.”, a former rep with Investors Group Financial Services Inc. in Ottawa, and fined him $400,000. He was also ordered to pay costs of $25,000.
The penalties follow the panel’s finding in November 2018 that “Mr. P” misappropriated approximately $267,000 from a widowed client to fund Trova Capital, a company he set up to invest in U.S. real estate, and that he didn’t disclose the outside business to his firm.
In its penalty decision, the panel characterizes “Mr. P’s” conduct as “egregious,” noting the victim was a widow. “The respondent took advantage of her. The facts are shocking.”
It also ruled that “Mr. P” “failed to cooperate with and misled the MFDA during its investigation.” In fact, it found that he was “uncooperative, misled staff, and manipulated the system.” The panel notes that “Mr. P” “unreasonably sought” repeated adjournments in the case, and that “he was untruthful and manipulative in seeking several of the adjournments.”
As a result, the panel ruled that a permanent prohibition “is necessary to protect the public” and to prevent future harm.
In setting the monetary penalty, it said that, “The fine will ensure that the respondent does not benefit from his wrongdoing and that there is a painful consequence where misappropriation occurs. Something more than just giving back the amount taken will be a consequence.”
While the panel could have ordered a fine that represents three times the amount that was misappropriated, it indicates that it didn’t impose the maximum penalty because the misconduct involved only one client. “Mr. P” didn’t have a prior disciplinary history, and there is an ongoing civil case against him involving the same conduct.
“The sanctions are significant,” the panel said. “They are sufficient to send the appropriate message as a specific deterrent to the respondent and a general deterrent to others in the industry.”