A hearing panel of the Investment Industry Regulatory Organization of Canada (IIROC) has accepted a settlement agreement, with sanctions, with a former broker who admitted that he made improper use of client funds and forged copies of client documents and signatures.
In the settlement, Brian Kumar admitted that between February 2013 and April 2014, while he he was a registered representative with the Oakville, Ont. branch of National Bank Financial Ltd., he made improper use of $1,450,980 in client funds by transferring these funds from the brokerage accounts of four clients into his own personal brokerage account without the clients’ consent or authorization.
In addition Kumar admitted that he forged copies of cheques and client signatures to facilitate the unauthorized transfer of client funds into his personal account.
The panel found that Kumar transferred the clients’ funds using forged cheques and falsified letters of authorization. He then used the funds to invest in a trading strategy involving the use of options, exchange traded funds and foreign currency contracts. In at least one instance, he created a falsified portfolio statement which he provided to one of his clients.
Prior to the commencement of any investigation of his misconduct in September 2014, Kumar began repaying his clients for the monies taken. By May 2015, he had repaid a total of $1,608,902 to the four clients. These repayments represented the full amount of the funds transferred from the client accounts along with returns ranging from 2% to 35%, the settlement notes, which Kumar advises were generated by trading in his personal brokerage account.
Kumar agreed to a permanent prohibition on registration with IIROC and a $50,000 fine. He also agreed to pay costs of $5,000.
Kumar is no longer a registrant with an IIROC-regulated firm.