Dealing rep who took more than $39,000 from clients should have been fined as well as banned
A Mutual Fund Dealers Association of Canada (MFDA) hearing panel should have fined a dealing rep who admitted to misappropriating $39,270 from a client, the Ontario Securities Commission (OSC) has ruled.
The OSC upheld an appeal filed by MFDA staff, stating that Omar Enrique Rojas Diaz, a former rep with Royal Mutual Funds Inc., should have been fined, not just banned, for his misconduct.
At the initial hearing, Diaz admitting to misappropriating money from a client’s line of credit and using the money for his own benefit. However, the two sides couldn’t agree on a penalty. The MFDA hearing panel, therefore, ruled he should be permanently banned but declined to impose a fine on the basis that this would amount to punishing past conduct.
MFDA staff appealed the ruling, arguing that the panel erred, seeking a fine of $52,270. The OSC said: “By permitting the respondent to retain the benefit of his misconduct, the MFDA panel ordered a penalty that failed to satisfy the protective and preventative objectives of securities regulation and that failed to achieve the desired level of specific and general deterrence that is required when applying sanctions.”
The Commission ordered that Diaz be fined $52,270 — comprising $32,270 in disgorgement - he repaid $7,000 of the $39,270 that was misappropriated - and an additional $20,000 as an administrative penalty.