A Mutual Fund Dealers Association of Canada (MFDA) hearing panel has approved a settlement agreement with Timothy Dunlop, a former advisor, in which he agreed to be banned permanently from the investment industry and to pay $5,000 in costs.
According to the settlement, Dunlop, who was a rep with IPC Investment Corp. (IPC) in Midland, Ont., admitted to regulatory violations, including engaging in undisclosed outside business activity, failing to report client complaints to his dealer and possessing signed blank forms.
The disciplinary action centres around an unsecured loan that Dunlop arranged from a client to a renovation contractor. According to the settlement, he arranged for a client to borrow $45,000 from her home equity line of credit to lend to a contractor, ostensibly to fund a renovation project.
However, the settlement notes that the contractor used the money instead to start a new business. Ultimately, the contractor was convicted of fraud and sentenced to two years in prison.
The loan was never disclosed to Dunlop’s dealer. According to the settlement, Dunlop was also licensed as an insurance agent and mortgage broker and “mistakenly believed that the activities fell under the auspices of the Financial Services Commission of Ontario (FSCO) and did not need to be disclosed to [IPC].”
The settlement also says that Dunlop discouraged the client from reporting the incident to the police and that he facilitated a couple of loan repayments to prevent her from calling police.
This approach to the client’s complaints “could reasonably be perceived as giving rise to a conflict of interest, which the respondent failed to address by the exercise of responsible business judgment influenced only by the best interests of the client,” the settlement says.
Finally, a dealer compliance review following a complaint from the client involved found that Dunlop had seven blank pre-signed account forms for four clients.
In settling the case, Dunlop admitted to the violations. The settlement also notes that, in 2016, IPC paid the client $50,000 to settle the case and that Dunlop paid $25,000 to the firm.
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