The Mutual Fund Dealers Association of Canada has permanently banned and fined a former registrant $50,000 for misappropriating funds from senior clients, processing an unauthorized switch in one of the senior’s accounts and borrowing money from clients — all to satisfy a margin call in March 2020.
Jeong Heon Shin was registered in Ontario as a dealing representative with Royal Mutual Funds Inc. and was an employee of the Royal Bank of Canada in the Toronto area during the time of misconduct, the settlement agreement says.
In March 2020, as markets tanked during the onset of the Covid-19 pandemic, Shin redeemed more than $54,000 from a 74-year-old client’s account and $60,000 from a 90-year-old client’s account without the clients’ knowledge, the agreement says.
Shin also processed an unauthorized switch of more than $330,000 in the latter client’s account, which resulted in losses of about $52,450.
Later that year, Shin reimbursed the account amounts, including unrealized gains for the 74-year-old client. The bank compensated the 90-year-old client for unrealized gains, the agreement says.
Also in March 2020, Shin borrowed $100,000 from a client using a written loan agreement. Shin later repaid the amount using misappropriated funds from the 74-year-old client’s account and his own money.
That same month, Shin borrowed $100,000 from his sister, who was his client. He repaid most of the amount about a year later, and his sister forgave the remaining $10,000, the agreement says.
Shin used the misappropriated and borrowed funds to satisfy a margin call on his brokerage account, the agreement says.
The agreement noted Shin’s repayment of the funds he misappropriated, borrowed or obtained (except the forgiven $10,000). Further, he fully cooperated with the regulator’s investigation, admitted the misconduct and sought to settle the matter.
“By entering into this settlement agreement, [Shin] has saved the MFDA the time, resources and expenses associated with conducting a full hearing on the allegations,” the agreement says.
In addition to the ban and fine, Shin must pay costs of $5,000.