A former advisor has been accused of a conflict of interest by borrowing $600,000 from a client to buy an investment property in the Turks and Caicos Island.
The MFDA has commenced disciplinary proceedings against Derek Chapman, who worked for Quadrus Investment Services in Ontario from August 2, 2002 to November 1, 2016, and in Alberta from July 25, 2007 to November 1, 2016. The business in question was carried out in the St Catharines, Ontario area.
The first allegation set out claims the loan to Chapman from his client gave rise to actual or potential conflict of interest and that he failed to exercise responsible judgement “influenced only by the best interests of the client”. The second allegation outlined by the MFDA accuses Chapman of failing to co-operate with the investigation into his conduct.
The respondent was responsible for the investment account of the client as well as being their life insurance agent. The $600,000 loan was allegedly borrowed from the client’s own whole life insurance policy, which Chapman had sold to them. A signed promissory note dated December 30, 2014, acknowledged that he would pay his client 12% annual interest on the loan, which was due to be repaid on August 15, 2015.
Chapman, the allegations claim, did not disclose to Quadrus that he borrowed the money from the client or that he was involved in the purchase and resale of investment properties in Turks and Caicos
The first hearing will take place in Toronto on June 11.
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