An advisor and his firm accused of mismanaging nearly $700,000 in First Nation reserve funds may support calls for a fiduciary standard applied to all financial planners in this country.
“The questions that the Plaintiffs want Mr. Ram Mudalier, the defendant, and owner of Viti Investments Limited, to answer have to do largely with financial information and transactions,” court documents read in citing Supreme Court Justice Virginia Schuler’s ruling. “Mudalier objects and says that such questions are not relevant prior to judgment as they go to the tracing of his assets, which is inappropriate because he is not a judgment debtor.”
Schuler appeared to reject that assertion in ordering Mudalier to hand over his personal income tax returns, credit card statements and other financial information as part of an ongoing lawsuit brought against Mudalier by Salt River First Nation. For his part, Mudalier argues the lawsuit is really just a case of harassment.
The action, brought forward by Chief Frieda Martselos, stems from an independent audit highlighting the mismanagement of Salt River funds. The results were then handed to the RCMP, although no criminal charges have yet been laid.
Still the case and the allegations at its centre raise questions about what protection would the application of fiduciary standard for all advisors in Canada provide.
The call for a fiduciary standard comes from many advisors in Canada who feel that while the new CRM2 rules will regulate a number of advisors, it doesn’t ensure that an advisor will act in the best interest of the clients until they are legally required to.
In the letter, Martselos alleges that when she resigned as chief in September of 2011, the First Nation had almost $7 million in the bank. When she returned as chief 18 months later, she found $16,000 in the bank and $1.2 million in unpaid bills; she also discovered a $200,000 line of credit and a maxed out credit card.