A former rep has been fined and permanently banned after a regulatory hearing panel found that he falsified client signatures and failed to cooperate with an investigation.
Following a hearing on sanctions, an Investment Industry Regulatory Organization of Canada (IIROC) hearing panel ordered that Mohammad Movassaghi, a former rep with Harbourfront Wealth Management Inc. in Vancouver, pay $100,000 in penalties and $60,000 in costs, and that he’s banned from the industry.
The sanctions follow the panel’s finding that Movassaghi falsified client signatures and misled IIROC enforcement staff. He was fined $50,000 for each offence, along with the permanent ban and the costs order.
The panel ordered tougher sanctions than IIROC enforcement counsel sought. It noted that the self-regulatory organization’s staff requested a $30,000 fine for the forgeries, $50,000 for misleading the SRO, along with $40,000 in costs and a permanent ban.
Movassaghi did not participate in the disciplinary hearings against him.
According to the panel’s decision, the reason that the signatures were falsified, which it inferred from the facts of the case, was because, “If the clients were aware of the fees they may not have transferred their accounts, or all of their account assets, to his new firm.”
In particular, the panel said that, as a result of forged transfer documents, clients incurred deferred sales charge (DSC) fees on proprietary funds they held at his previous firm when their accounts were transferred to the new firm.
The panel found that Movassaghi misled IIROC staff by admitting to forging one client’s signature, but denying that there were others, or that there were other client complaints of alleged forgery.
It noted that he’d already been disciplined for forging one client signature, and “he did not want additional instances to come to IIROC’s attention as this would expand the investigation and result in more serious consequences.”
“The respondent’s omissions and half-truths during the interviews misled IIROC,” the panel ruled. “The respondent’s conduct was deliberate, ongoing, was meant to deceive, and did deceive IIROC for his personal benefit, at the expense of his clients, the firm, the regulatory authorities, and the public.”
In addition to the IIROC proceedings, Movassaghi was banned by FP Canada and ordered to pay costs of $15,000 after it found that he engaged in forgery.
He also faced disciplinary action from the Mutual Fund Dealers Association of Canada (MFDA) for forging a client’s documents and engaging in discretionary trading in that client’s account while he was a mutual fund rep with Investors Group Financial Services Inc. until 2016, when he transferred to Harbourfront Wealth.
The MFDA hearing panel has not yet held a hearing on sanctions.