The former owner of a failed fund dealer has pleaded guilty to a fraud charge and been ordered to pay $1.1 million in restitution to an industry contingency fund.
The Mutual Fund Dealers Association of Canada (MFDA) announced that Dianne Stuart, the former principal of W.H. Stuart Mutuals Ltd., pleaded guilty to a charge of fraud over $5,000 last December.
On Dec. 19, 2019, an Ontario court of justice ordered that Stuart serve a two-year conditional sentence followed by two years of probation, and pay $1.1 million to the MFDA Investor Protection Corp., the contingency fund that covers investors who suffer losses due to dealer failures.
The MFDA noted that the circumstances that led to the fraud charge were also the subject of a regulatory disciplinary hearing in 2016.
In that hearing, a disciplinary panel found that Stuart and her firm “solicited and accepted approximately $6 million for investment from more than 180 clients and used the money to their own benefit; actively concealed the above conduct from external auditors, the MFDA and other regulators; and misappropriated or failed to account for over $800,000 of client investment monies obtained from more than 30 additional clients.”
The MFDA ordered that Stuart pay a $7-million fine and permanently banned her from the industry.
The MFDA referred the case to law enforcement, which led to the RCMP’s Toronto Integrated Market Enforcement Team (IMET) charging Stuart with fraud in April 2019.