Former advisor fined and banned

A Mutual Fund Dealers Association of Canada (MFDA) hearing panel has issued its reasons for decision in the case of Toronto-based, former mutual fund advisor, Arman Pekel. 

The former Investors Group Financial Services Inc. representative was fired by Investors Group in January 2018 after it was discovered that he’d opened a new account for his client, falsely recording his own address. He deposited four checks payable to the client, the proceeds of redemptions from the client’s investment account totalling approximately $14,000, to his own personal bank account. Pekel was also sanctioned for being engaged in an outside business activity without reporting that business to Investors Group.  

“The respondent colluded with AU (the client) to hide from the member that AU was not a resident of Canada, but was a resident of Turkey and as such, was not eligible to have an account with the member,” the MFDA writes in its reasons for decision. “By recording AU’s address as his own on two occasions (Pekel changed the client’s address when he moved) the respondent undermined the member’s ability to supervise the respondent’s conduct and protect the interest of AU and the public. It is serious misconduct which can, and in this case did facilitate additional misconduct.” 

Pekel, meanwhile, says he did not benefit financially, but had simply acted on the client’s instructions, with her consent.  

Throughout the hearing Pekel and his lawyer asked for last minute adjournments and disclosed documents late in the hearing. “The evidence relied on by the respondent does not tell a consistent story that corroborates his testimony at the hearing or his statements to staff during the investigation. To the contrary, rather than add clarity, these documents serve to raise more questions about what really happened,” the MFDA writes, before taking the unusual step of outlining other evidence Pekel and his council could have produced in the case. “Rather than call the best evidence, the respondent relies on documents that contradict each other and asks the hearing panel to pick and choose elements of the evidence that support his case.” 

In addition to the five-year prohibition – Pekel is banned from conducting securities related business in any capacity with any MFDA member firm – he must also pay a fine of $15,000 and costs totalling $10,000.