Ex-rep fined, banned for duping clients

A former mutual fund rep was fined $600,000 and permanently banned after admitting to misappropriating several hundred thousand dollars from her clients, with claims that she needed money to free up a fake, overseas inheritance.

A hearing panel of the Canadian Investment Regulatory Organization (CIRO) ordered that Josephine Sudario, a former rep with PFSL Investments Canada Ltd. in Woodbridge, Ont., is permanently banned from the industry and must pay a monetary penalty of $600,000, along with $15,000 in costs, for violating the self-regulatory organization’s rules.

The panel’s decision on sanctions followed a one-day virtual hearing, after CIRO staff and Sudario submitted an agreed statement of facts, in which she admitted to the violations alleged by the self-regulatory organization’s enforcement staff.

Specifically, she admitted to misappropriating more than $260,000 from three clients through various schemes, between Dec. 9, 2022 and Oct. 3, 2025. She also admitted to failing to cooperate with the regulator’s investigation.

According to the panel’s decision, Sudario admitted to misappropriating clients’ money by making false claims to them to induce them to lend her money — including falsely claiming that she needed to send money overseas to secure a $6-million inheritance. A claim that she backed up in a fake will and other falsified documentation.

She promised one client that she would pay him $200,000 in a few weeks, if he would lend her $80,000 to secure the purported inheritance. She told another client that she had to pay $200,000 to the International Monetary Fund to free up the money.

Along with the money the clients lost to her, they also had to pay $57,204 in withholding taxes and deferred sales charges to cash out investments so that they could lend her money.

Apart from $1,000 that was repaid, she didn’t pay any of the loans from her clients back. Instead, the clients were compensated in full by her dealer.

The panel set the monetary sanction at $600,000, representing $260,972 in disgorgement, and a fine of $339,028.

“[Sudario’s] misconduct involved lying, deception, fraud, abuse of clients’ trust in her and significant misappropriation of funds to the detriment of her clients and her [dealer] who reimbursed her clients for the misappropriated funds,” the panel said in its decision.