A financial advisor has been handed a stiff fine of $525,000 and has been permanently banned from conducting securities-related business with any member of the Mutual Fund Dealers Association (MFDA) after a hearing panel found she made five major contraventions to MFDA rules involving clients.
A hearing panel of the MFDA said that between August 2002-February 2017, Marja Grobbink Harmer was registered in Saskatchewan as a dealing representative with Investors Group Financial Services Inc.
The panel ruled that Harmer made serious breaches between June 2012 and February 2017, including jointly investing with clients in real estate investments through a company Harmer owned or operated. The hearing panel also found that during this time, Harmer engaged in securities-related business that was not carried on for the account or through the facilities of Investors Group as well as engaging in outside business activities not disclosed to Investors Group.
In making its decision, the hearing panel noted that the primary goal of all securities regulation is investor protection and that the sanctions imposed should be protective and preventative to prevent likely future harm to the markets.
“The seriousness of the Respondent’s misconduct relating to conflict of interest in this case was compounded by the fact that it involved securities-related business which was conducted outside the Member and which involved outside business activities that the Respondent did not disclose to the Member,” said the panel in making its decision. “MFDA panels have found that such conduct, because it prevents Members from supervising transactions to ensure the suitability of investment recommendations made for clients, falls within the category of the most serious type of misconduct which an Approved Person can commit.”
In total clients gave about $1,145,841 towards four joint ventures and received interest payments or other compensation totalling about $81,500 from those investments.
Although the panel found that some of the clients retained their interests in the joint ventures, it said the clients’ money remained at risk.
Harmer said she never received compensation from the joint ventures, so she could not be seen as having benefited from her conduct. But the panel said “that significant penalties must be imposed when the misconduct at issue involves clients funding a project in which a respondent has a material interest, as was the case in this matter.”
On top of the fine, Harmer was told to pay $20,000 in costs.
