The ex-advisor misappropriated funds from clients, borrowed money from another, used pre-signed account forms, and failed to cooperate with MFDA investigations
An ex-advisor allegedly misappropriated almost $200,000 from clients, borrowed approximately $10,000 from another client, used pre-signed account forms, and failed to cooperate with MFDA investigations into his conduct, according to an MFDA hearing panel.
Between March 2016 and May 2017 Robert Eugene Palumbo allegedly misappropriated roughly $195,525.51 from three clients while working as a registered representative with IPC Investment Corporation in Sault Ste. Marie, Ontario. The MFDA panel alleges that Palumbo misappropriated these funds by falsifying the clients’ signatures on withdrawal forms, instructing that the amounts arrive by cheque to his office.
Upon receipt of the cheques, Palumbo allegedly falsified his clients’ signatures on the cheques, endorsing them to himself or his holding company. The cheques were allegedly deposited into bank accounts he controlled.
Palumbo’s bank informed IPC about his behaviour. When IPC contacted Palumbo’s clients, they were found to be unaware of the withdrawals and claimed they hadn’t authorized Palumbo to make those withdrawals.
Almost a year earlier, between September 2015 and December 2016, Palumbo solicited a loan from a client of approximately $10,000. He didn’t tell his branch manager or head office that he’d solicited a loan from that client, who is also his cousin.
Between May 2014 and June 2017 Palumbo is also alleged to have submitted 13 pre-signed account forms for 10 clients, contrary to MFDA rule 1.1.
In August 2017, the MFDA sent a letter to Palumbo notifying him that IPC had reported his alleged misappropriation of funds and requesting a response. Palumbo did not reply. He replied to some of the subsequent letters by email, but allegedly failed to adequately answer the MFDA’s questions in a timely or complete manner. He allegedly did not respond to staff requests for an interview.
In a disciplinary hearing on December 13, the MFDA “found that the four allegations…had been established.”
The hearing panel has reserved its judgement and will provide reasons “in due course”.