A pair of mutual fund reps have been suspended and ordered to pay over $500,000 in fines and disgorgement after a regulatory hearing panel found that they breached the rules in their dealings with a client.
A hearing panel of the Canadian Investment Regulatory Organization (CIRO) sanctioned a pair of former reps with PFSL Investments Canada Ltd. — Paul Vincent Ongcapin Encarnacion and Mari Sophia Mendoza Encarnacion — after finding that they breached the self-regulatory organization’s rules by failing to resolve a couple of conflicts of interest in the best interests of a client, and misleading their dealer during an investigation.
Specifically, the panel found that, in 2023, Paul Encarnacion was named as the sole beneficiary of a client’s will, and that they received $1 million from that same elderly client.
Following a hearing on sanctions, the panel suspended Paul Encarnacion for six years, fined him $300,000, and ordered disgorgement of $15,130. It also suspended Sophia Encarnacion for two years, and imposed a fine of $100,000 against her. And it ordered them to jointly disgorge $104,131 and pay costs of $35,000.
According to the panel’s decision, CIRO staff sought stiffer sanctions — they requested permanent prohibitions, a $500,000 fine against Paul and a $250,000 fine against Sophia — along with the disgorgement and costs ordered by the panel.
The respondents argued that the sanctions sought by CIRO staff were “excessive and disproportionate to the unique facts of this case,” the decision noted.
Ultimately, in deciding on sanctions, the panel said that the primary factor was the “seriousness and scope of the misconduct.”