OSC fines fraudster's wife +$500,000

OSC fines fraudster's wife +$500,000

OSC fines fraudster

The Ontario Securities Commission (OSC) has reached a settlement with the common-law wife of a convicted fraudster who had lost over $3.6 million in investor funds, banning her from the markets for seven years and ordering she pay over $500,000 in monetary sanctions.

Juliet Winget, an Ontario resident and common-law wife of Arvind Sanmugam, was the sole registered director of Bunting & Waddington, the firm involved in the fraud. Under the settlement, Winget shall pay an administrative penalty of $50,000 to the commission, shall disgorge $500,000, and shall pay the costs of the Commission’s investigation in the amount of $25,000.

Winget opened the bank accounts for Bunting & Waddington – the firm involved in the fraud – and was the sole signatory over those accounts. During the material period, she received a net amount of more than $500,000 in transfers into her personal bank account from Bunting & Waddington directly or via Sanmugam.

Sanmugam, the directing mind and de facto director of Bunting & Waddington, in September 2012 pleaded guilty in the Superior Court of Justice to and was convicted of three counts of fraud over $5,000. He was sentenced to a five years imprisonment and ordered to pay restitution of over $1 million.

The firm held itself out as providing “market commentary” to clients in Ontario, other provinces and the US. This included advice on buying and selling specific securities at particular prices on a specific date.

Sanmugam directed investors to open “trading accounts with margins and options” at an online discount brokerage service. He exercised control over these accounts in two ways: investors would provide the login identification and passwords to their trading accounts to Sanmugam or he would direct investors to execute specific trades within their accounts.

According to the settlement, Sanmugam told some or all of the investors that they could expect a monthly return of $8,000 on a total investment of $100,000. Provided this 8% return was achieved in any given month, investors would pay Bunting & Waddington a monthly retainer of $3,500. The firm exercised control over more than $4 million investors’ funds

Misreprsentations made to investors included that Sanmugam was a successful trader with over 75 advisors working for him at Bunting & Waddington, and that investors would always retain full control over their invested funds.

Trough his trading and advising activities, Sanmugam lost over $3,600,000 of Investors’ funds between February 2006 and June 2010. There was no evidence of Sanmugam having any advisors working for Bunting & Waddington. He was the only market commentator at the firm and there is no evidence of Sanmugam having a proven track record of generating high rates of return, the OSC said.