A pair of former mutual fund reps have been fined and banned from the industry after a regulatory hearing panel found that they breached several rules, including engaging in personal financial dealings with clients.
Following a hearing, a tribunal of the Canadian Investment Regulatory Organization (CIRO) ruled that the reps — Ken Lui and Devina Master, who are spouses and both worked at CIBC Securities Inc. in Toronto — violated the self-regulatory organization’s rules by participating in outside business activity that wasn’t disclosed to their dealer. Personal dealings with clients gave rise to conflicts of interest that weren’t disclosed or resolved in their clients’ best interests. It also found that they failed to cooperate with the SRO’s investigation.
As a result, the panel permanently banned both former reps, imposed a $770,947 fine on Lui, a $150,000 fine on Master, and ordered them to pay $25,000 and $15,000 in costs, respectively.
The panel didn’t issue the reasons for its findings, however the details of the alleged misconduct were spelled out in CIRO’s allegations against the pair.
Specifically, the SRO alleged that, in 2015, Lui became a partner in a purported real estate investment venture, Clearwest Capital, without his dealer’ approval. Between June 2018 and March 2020, a couple of clients and a third person invested a combined $957,000 in the venture — dealings that weren’t disclosed to the dealer either.
The SRO also alleged that Master facilitated certain transactions, including the return of some money from Clearwest, and from Lui, to a couple of the investors — although approximately $470,947 invested by one of the clients in Clearwest was not repaid or accounted for.
Lui resigned from the firm in March 2020, and Master was terminated in February 2023.
In March 2023, the SRO began an investigation into their conduct, after the bank alerted the dealer that it had an internal investigation underway.
According to the allegations, the former reps didn’t respond to the SRO’s investigators, and never attended an interview — actions that, if true, amounted to failing to cooperate.