An Investment Industry Regulatory Organization of Canada (IIROC) hearing panel has fined and permanently banned Jeffrey Edward Gebert, a former advisor with BMO Nesbitt Burns Inc. and Manulife Securities Inc. in Toronto, for arranged undisclosed personal loans with a client, his wife’s 93-year old grandfather, among other violations
Specifically, the IIROC hearing panel found that Gebert had engaged in personal financial dealings with a client without disclosing the arrangement to his firm; used pre-signed forms from several clients; and failed to co-operate with IIROC’s investigation. As a result, the IIROC hearing panel ordered that Gebert, who is no longer with an IIROC-licensed firm and did not appear at the disciplinary hearing, should be banned permanently from the investment industry, fined $275,000 and ordered to pay $20,000 in costs.
The IIROC hearing panel found that Gebert borrowed more than $500,000 from his wife’s 93-year-old grandfather, who was also his client at BMO. Much of the money came from the liquidation of his investments at Nesbitt, which he recommended, “so that his client could fund the loans to him,” the hearing panel said.
IIROC determined that some of that money has been repaid, but that about $243,000 remains outstanding. Furthermore, it found that his wife’s grandfather was relying on those repayments to fund his living expenses. When Gebert defaulted on repayments, the grandfather ended up, “depleting his savings … forcing him to rent out his house and move in with his daughter.”
When Gebert’s mother-in-law inadvertently discovered a bounced cheque that ultimately led to a complaint to IIROC, the decision notes: “Borrowing from his wife’s aged grandfather is particularly troubling. The respondent’s client was at an age where he could have had increased vulnerability and was in a situation where he could have been susceptible to implicit or express family pressure. The respondent put his client in a position where his financial security, instead of being largely based upon long-time investments, is now based upon the credit of a person who has treated him unethically.”
The use of pre-signed blank forms occurred after Gebert moved from Nesbitt to Manulife. The hearing panel notes that he used these forms with at least 12 of his clients, although none of them suffered any financial harm as a result. Still, the panel says, “The use of pre-signed forms is detrimental to the public interest.”
As for the failure to co-operate with an IIROC investigation, the hearing panel’s decision says that this “strikes at the heart of a self-governing industry’s ability to police itself.”
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