The Mutual Fund Dealers Association of Canada (MFDA) has banned former Royal Mutual Funds Inc. advisor, Md Ashanur Rahman for five years after Rahman admitted he engaged in personal financial dealings with clients, helped another client pretend he had money that he did not when securing a mortgage and made several deposits to his own accounts, in separate transactions, to circumvent the Financial Transaction and Reports Analysis Centre of Canada (FINTRAC) large cash transaction reporting requirements.
Rahman is also being penalized for making false or misleading statements to Royal Mutual Funds during the course of its investigation into his conduct. Currently residing in Bangladesh, the Toronto-area advisor resigned from Royal Mutual Funds in October 2018.
According to the MFDA’s settlement agreement, Rahman borrowed $54,000 from one client – also his friend and his realtor – to fund part of the deposit on the purchase of a new home, to repay money he owed to another client and to pay personal expenses. “In each case, the respondent promised to repay client AA from the proceeds of the eventual sale of his condominium. None of the loans were recorded in writing.”
Rahman did not disclose to Royal Mutual Funds that he borrowed the funds. Around the same time, Rahman had borrowed $20,000 from another client, identified as SH in the settlement agreement, to pay down his spouse’s line of credit. He deposited the amount in three separate transactions of less than $10,000 each to avoid FINTRAC reporting requirements. Rahman later repaid the $20,000 loan using money from the $54,000 loan he borrowed from his friend, client and realtor, known as AA. He is also accused of comingling some of AA’s money with his own on another occasion when a business associate visited Rahman’s branch and asked him to pass the money along to his friend.
In a separate incident, one of Rahman’s clients, dubbed BT in the decision documents, then asked the advisor if he would make two deposits totaling $14,900 and provide BT with two checks worth the same amount. “The purpose of the transaction was to make the money falsely appear to be a gift, so client BT could build up a down payment and meet the bank’s requirements to secure a mortgage for the purchase of a new home,” the MFDA writes. The same client also asked Rahman for a loan of $25,000 which the client ultimately repaid.
“The respondent engaged in personal financial dealings with clients by borrowing monies from clients (clients AA and AH), lending monies to a client (client BT) and depositing monies belonging to clients (clients AA and BT) to his personal bank account, all of which gave rise to conflicts or potential conflicts of interest that the respondent failed to disclose to the member,” the MFDA adds. When interviewed by Royal Mutual Funds, Rahman then told investigators that some of the money was his own and he loaned it to BT.
In addition to his five-year ban – Rahman is prohibited from conducting any securities related business with any MFDA member firm – the MFDA also ordered the former advisor to pay a $20,000 fine and investigation costs totaling $5,000.
