The Mutual Fund Dealers Association of Canada (MFDA) has permanently banned a former representative and fined her $50,000 for falsifying a client’s initials and failing to cooperate with an investigation into the matter.
Saveth Law was registered in Alberta as a mutual fund salesperson with BMO Investments Inc. (BMO) from October 2011 to December 7, 2016, when she was terminated, the MFDA said in its reasons for decision.
According to the document, BMO notified the MFDA on December 2, 2016, and again on January 25, 2017, that Law had falsified client initials on a mutual fund redemption form to alter the client’s “know your client” information without the client’s knowledge in September 2016.
The document says Law changed the client’s risk tolerance to “medium” from “low to medium,” and the time frame to “medium” from “short term.” BMO said Law admitted she had changed the redemption form and forged the client’s initials on December 1, 2016. BMO also told the MFDA that the affected client confirmed the changes to the form were not authorized.
The MFDA commenced an investigation into the matter in May 2017, but Law failed to cooperate or respond to multiple attempts made by MFDA staff to contact her. She also failed to respond to a Notice of Hearing, which, according to the MFDA Rules of Procedure, requires a reply within 20 days.
A hearing on the matter was scheduled in Calgary on Feb. 5, 2019, which neither Law nor anyone on her behalf attended, the MFDA said. As prescribed by MFDA rules, the hearing proceeded without further notice in the absence of Law, and the allegations were accepted as proven.
In addition to the $50,000 fine and a permanent prohibition on conducting securities-related business with any MFDA member, Law was ordered to pay $7,500 in costs for failing to reply to the Notice of Hearing.
“Due to the Respondent’s failure to cooperate with Staff’s investigation, the Respondent has demonstrated that she is ungovernable and would therefore pose a risk to investors and the capital markets were she to continue to operate in the capital markets,” the MFDA said in its reasons.
“Despite her lack of prior disciplinary history, and the absence of evidence of client harm, the serious misconduct associated with subverting the ability of the regulator to fully investigate the Respondent’s conduct and to determine, in an expeditious manner, all of the relevant facts, is an aggravating factor,” the MFDA added.