MFDA throws the book at Ontario advisor

MFDA throws the book at Ontario advisor

MFDA throws the book at Ontario advisor Between 2006 and April 2011, Gabriel Richard Frank recommended and implemented leveraged investments in the accounts of 10 clients without obtaining the approval of Investors Group compliance contrary to MFDA Rules 1.1.2 and 2.5.1 and 2.1.1.
 
The advisor wasn’t done.

In addition to unapproved leveraged investment activity, Frank also borrowed approximately $245,000 from client AF, of which the advisor repaid just $73,100, creating a conflict or potential conflict of interest with the client contrary to MFDA Rules 2.1.4 and 2.1.1.
 
The hearing panel’s reasons for decision fined Frank $400,000, permanently prohibited him from any industry activity and ordered $5,000 in costs.
 
“The conduct in the case before us is one of the most egregious that we have dealt with. The word ‘egregious’ has sometimes been used in overkill in other MFDA cases to refer to less seriously abusive and unacceptable conduct than that of the Respondent’s in our case. In this case, we are not using the word in overkill,” writes the MFDA hearing panel. “This Respondent is ungovernable. This Respondent, by his conduct with his employer, engaged in undisclosed conflict of interests, personal financial dealings, borrowing from clients, lying to clients about the use of proceeds, and using the proceeds for his own personal business and benefit.”
 
MFDA staff recommended a minimum fine of $200,000 but the hearing panel was so outraged by the facts of this case that it doubled the fine. It’s unlikely that the MFDA will recover the fine, but industry players are pointing to the due diligence of the dealer in this case (IG), which appeared to bend over backwards to ensure the advisor followed the rules, although ultimately those efforts would fail.

 
16 Comments
  • Brad Jardine 2015-08-31 12:38:54 PM
    Some firms STILL use leverage on an excessive basis vs traditional financial planning logic. i.e. pay down high interest debt, judicious use of RRSP, RESP's, TFSA's etc. 30 years in the industry... still see it all the time...shame
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  • Chris Chakmakian 2015-08-31 4:07:16 PM
    I support the decision fully.
    It Is guys like this that give the industry a bruised reputation, damages our image and more dramatically financially hurts clients, who place their trust in crooks like these, who betray them and hurt innocent individuals.
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  • Ken 2015-08-31 4:14:56 PM
    This case begs the question- how did such a person get through all the interview screens, probation period , supervision and compliance checks to cause so much harm? And throwing the book means nothing as the Panel itself admits collection of the fine is highly unlikely.This sends a message to others that even the worst behaviour won't cost you a dime. Deterrence value= ZERO and that is why these financial assaults continue.
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