New SRO dishes out eight-year ban and hefty fine
A former representative was hit with an eight-year suspension and a fine for failing to disclose that his wife had been appointed as the executor of one client's will and that he had been given a bequest from the estate of another client.
The Mutual Fund Dealers Association of Canada (MFDA) hearing panel reached a settlement with Roger Eldred Gebhardt, a former representative of IPC Investment Corp. in Hanover, Ontario, that included an eight-year suspension from the fund industry, a $70,000 fine, and a payment of $7,500 for costs.
The New SRO, in its settlement documents, said that, in September 2018, when an elderly customer nominated Gebhardt's wife as the sole executor and beneficiary of his estate, Gebhardt allegedly neglected to report a conflict to his dealer. Except for his estranged sister, the client had no relatives. There was no evidence Gebhardt or his wife, who was ultimately left $649,000 by the client, were involved in the preparation of the will.
Later that same year, Gebhardt also omitted to mention that he had received a $25,000 gift from the estate of another customer.
In both instances, the clients asked Gebhardt to serve as the executor of their estates, but he informed them that he was not authorized to do so. No proof that he contributed to the later creation of the clients' wills was included in the settlement, and no complaints were filed in either case.
Nonetheless, the settlement stated that he was compelled to disclose the possible conflict in both situations as soon as it arose.
The Hearing Panel's majority concluded that, given Gebhardt’s particular misconduct, the recommended sentence was within an acceptable range of appropriateness in light of past regulatory decisions. It should serve both as a direct and indirect deterrent.
It said: “An aggravating factor for us in considering the penalty was the fact that the Respondent appears to have taken steps to make it less likely that the member [firm] would discover that his spouse was an executor and beneficiary of client #1’s estate and that he was a beneficiary of client #2’s estate by: a) not submitting paperwork to the member that was submitted directly to the fund companies to redeem assets in client #’s accounts; and b) falsely denying to the Member that he had been named as an estate trustee or beneficiary of a client’s estate when he had been named but declined to serve as client #1’s estate trustee and had accepted a $25,000 bequest from client #2.”
