From the Regulators

The Thunder Bay, Ont., advisor raised more than $500,000 from clients off-book

By James Langton |

 

An Investment Industry Regulatory Organization of Canada (IIROC) hearing panel has fined and permanently banned a former rep, after finding he raised more than $500,000 from clients off-book for private investments, and misappropriated some of that money for his personal use.

The panel ruled that Vance Virgil Hoshizaki, a former rep with Assante Capital Management Ltd. based in Thunder Bay, Ont., be permanently banned from the industry, fined $500,000, and ordered to pay $20,000 costs.

The sanctions follow a liability hearing in August, which found that Hoshizaki engaged in personal financial dealings and undisclosed outside business with clients, starting in 2002 and continuing as late as 2013.

Specifically, Hoshizaki collected approximately $536,000 from multiple clients to invest in private businesses, including an auto service business, and a personal online trading business. These investments were done off book. "He has neither returned nor accounted for the money that was entrusted to him by clients," the panel states in its reasons for decision on sanction.

IIROC staff sought to impose a permanent ban on Hoshizaki, and a fine of at least $550,000. However, the panel imposed the slightly smaller fine, stating it does not expect him to be able to pay any fine, and that it's not clear how much of the money he misappropriated.

"The conduct here involves misappropriation of funds. We do not know, however, how much of the amount given by clients actually went into the automotive service business and how much went into the respondent's pocket, so our fine is slightly less than that suggested as a minimum by IIROC," the panel's decision states. "We have chosen a round figure as have many of the other cases we examined. Imposing a fine is not an exact science."

In agreeing to the ban, the panel notes that Hoshizaki's conduct was premeditated; involved numerous clients over a long period of time, some of whom were unsophisticated and vulnerable; and the clients lost money that he diverted for his personal benefit.

As well Hoshizaki, "misled IIROC until IIROC was able to obtain bank records with the assistance of the Ontario Securities Commission," the panel states, and "is a person who should clearly not be in the securities industry."

Photo copyright: aruba2000/123RF