A Mutual Fund Dealers Association of Canada (MFDA) hearing panel has permanently banned a former mutual fund rep after the panel found he engaged in more than $2 million worth of ooutside business activities involving syndicated mortgages, the MFDA announced Monday.
In its decision and reasons dated Oct. 19, the panel determined that Hong Lam, a former rep and branch manager with Investia Financial Services in Richmond Hill, Ont., conducted outside business activities, mislead his dealer about that activity and failed to co-operate with the MFDA’s investigation.
In addition to the ban, the panel ordered Lam to pay a $250,000 fine and 10,000 in costs.
Specifically, Lam was accused of carrying out more than $2 million in outside business activities with 24 clients, entering into unapproved referral arrangements with three other reps, and lying to his dealer about referring clients to invest in a real estate and development company. He did not participate in the hearing and was not represented by counsel at the hearing.
The MFDA alleged that beginning in 2012 Lam referred clients to three companies, Titan Equity Group Ltd., Fortress Real Capital, and Tier 1 Mortgages, to invest in syndicated mortgages without his dealer’s knowledge or approval. It also alleged that he worked with a couple of other companies without his firm’s approval, and that he failed to disclose transferring his mortgage license to a new mortgage broker.
“We agree with counsel for the MFDA that the conduct in this case was egregious,” the panel states in its decision. “The respondent has been registered in the mutual fund industry since 2001 and surely knew that he should not deal in these securities outside the member, although he claimed in an e-mail exchange with an Investia compliance officer in December 2015 that he did not think it was necessary to do so.”
“It is especially egregious in that he was a branch manager. As a branch manager he should have been supervising others in the branch and not involving them in participating in wrongful conduct,” the panel added.