The Mutual Fund Dealers Association of Canada (MFDA) has fined and banned a former rep for violating the self-regulatory organization's rules after he misappropriated client funds, failed to co-operate with investigators and fled the country.
An MFDA hearing panel has issued its reasons for sanctioning Adam Kryn Vandermey, a former Sun Life Financial Investment Services (Canada) Inc. rep who conducted business in the Kitchener-Waterloo, Ont. area. For violating MFDA rules, the hearing panel permanently banned Vandermey, fined him $200,000 and ordered costs of $10,000.
The sanctions stemmed from the panel's ruling that, among other things, Vandermey: misappropriated $30,000 in life insurance money from a widow who's husband had died after falling off a ladder; fraudulently deposited another client's payroll cheque into a bank account he controlled; and misappropriated more than $10,000 from an account set up to finance a charity golf tournament sponsored by his dealer.
The panel also found that Vandermey did not co-operate with the MFDA investigation, after he "misleadingly advised the MFDA that he would."
The big issue in determining sanctions was deciding on the size of the fine, the panel says in its reasons for decision. While the permanent ban will protect other investors from being victimized, Vandermey has left the industry and the country, the panel says, so a ban is likely to have little impact on him.
"It is unlikely he intends to return to the industry. Accordingly, the prohibition order, while being protective of the investing public, will likely have minimal impact on him. In this case, a significant fine is also warranted," it says.
In ruling on the proper size of the monetary penalty then, the panel says, "This was not a case of a dealing representative having good intentions that went wrong, or negligence. The respondent misled and deceived his clients… and his associate… and left his associate (or his associate's sister) and his [dealer], unreimbursed. The respondent showed no remorse. He left the country for Nicaragua."
Given the facts of the case, "We determined that a fine of $200,000 (being approximately three times the monies he misappropriated, plus $50,000 because of the failure to cooperate) was appropriate," the panel ruled.
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