A hearing panel of the Mutual Fund Dealers Association of Canada (MFDA) has permanently banned former Royal Mutual Funds Inc. advisor, Christopher John Davies, from conducting securities-related business in any capacity with any MFDA member firm.
The regulator also assessed a fine of $709,252.35 and hearing costs of $20,000 after Davies misappropriated $434,252.35 from four clients and solicited $25,000 from two clients to make joint investments with the clients in an unapproved investment.
To misappropriate the money, Davies allegedly changed the distribution option on his client’s accounts from reinvest to cash, and entered his own bank account information to receive the funds. In one case he stopped client account statements from being mailed to the client. In several instances he also signed client signatures on transactions forms, redeeming mutual funds from client accounts and directing the proceeds to his own bank account. After soliciting funds from clients to invest in a film production related investment, meanwhile, he invested the funds under his name only, and invested another $50,000 in his wife’s name using money he misappropriated from clients.
Davies has also admitted to entering false or misleading notes in Royal Mutual Funds’ back office system to cover up some of the thefts. The MFDA’s reasons for decision also detail allegations that Davies made false or misleading statements to Royal Mutual Funds during the course of its investigation and failed to cooperate with MFDA staff during its investigation into his conduct.
Registered as a dealing representative since August 2001 and registered with Royal Mutual Funds since July 2006, the St. Thomas and London, Ontario-area advisor was terminated August 2017. The fine levied by the MFDA was made up of the misappropriated amount plus a fine of $50,000 for each of the four misconducts described in the MFDA’s statement of facts (misappropriation, soliciting funds for an unapproved outside investment, entering false notes and misleading his firm during the course of its investigation), and a fine of $25,000 for failing to cooperate with the MFDA’s investigation.
