MFDA bans, fines salesperson for misappropriating client funds

A former mutual fund salesperson has been permanently banned and fined $225,000 for misappropriating funds from multiple clients, an MFDA hearing panel said Tuesday.

Until 2014, Ronald Schwartz was registered with both HUB Capital Inc. and FundEX Investments Inc. in Ontario, and operated from a sub-branch in his home in the Kitchener-Waterloo area under the trade name Assure Financial, MFDA says in a 2017 notice of hearing. He allegedly misappropriated at least $69,035 from six clients between 2009 and 2014, the MFDA’s reasons for decision document says.

Over the five-year period, Schwartz was accused of processing a number of unauthorized redemptions and creating fictitious account statements to conceal the misappropriated money, the reasons for decision says.

Schwartz processed several redemptions from multiple clients’ RRSP accounts, the notice of hearing document states. In several cases, the document says, clients received notice of reassessment documents from the CRA about unauthorized withdrawals from RRSP accounts and contacted Schwartz, who misled them about his activities.

Schwartz did not file a reply to the notice of hearing and did not appear at the hearing, either in person or through counsel, MFDA says.

A press release says the MFDA panel permanently prohibited Schwartz from conducting securities-related business for any MFDA member. He must pay costs of $10,000 and, broken down, the $225,000 fine is for:

• unauthorized redemptions and misappropriation ($125,000);
• creating and distributing fictitious statements and misleading clients ($25,000); and
• failure to cooperate ($75,000).

Read the reasons for decision document here.

Read the notice of hearing document here.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.