The Toronto-based Mutual Fund Dealers Association of Canada (MFDA) has fined Richard Bangyay, a former salesperson in Ontario, $250,000.
An MFDA hearing panel levied the fine against Bangyay for engaging in personal financial dealings with a client, pursuing other gainful occupation without disclosing the fact to his dealer member, failing to comply with conflict of interest procedures and failing to cooperate with an MFDA investigation.
According to MFDA documents, in June 2008, Bangyay solicited $100,000 from an elderly client to invest in his company, Bangyay Capital Management Inc., which he had incorporated in March of that year. The client had to mortgage her house in order to give the money to Bangyay. In a document, Bangyay agreed to pay back the loan in May 2009 with interest paid monthly. However, according to the MFDA, a part from a few small payments the loan has never been repaid.
Bangyay was an employee of Interglobe Financial Services Inc. from July 2005 until May 2008. During interviews with the MFDA, Bangyay argued that as he was not an employee of Interglobe and at the time of the transaction he was not obliged to reveal the conflict of interest. However, the MFDA hearing panel found that because Bangyay first approached the client about the money and she made the decision to give him the loan while he was still an employee, Bangyay should in fact have told Interglobe of the conflict.
As well, Bangyay did not inform Interglobe of his business, Bangyay Capital Management Inc., created for a factoring and bridge financing business, and as such, the hearing panel found that he pursued gainful occupations without properly disclosing the fact to his dealer firm.
While Bangyay did participate in two interviews with MFDA he did not produce a list of documents requested by the regulator. As such, the hearing panel ruled that Bangyay did not cooperate with the MFDA investigation.
In addition to the fine, Bangyay is permanently banned from registering with the MFDA and must also pay $10,000 in costs.