MFDA bars advisor two years for falsifying client information

The Mutual Fund Dealers Association (MFDA) of Canada announced this week that is has approved a settlement agreement between MFDA staff and former WFG Securities Inc. advisor, Dorothy Gabrysz.

In the settlement agreement, Gabrysz admitted that she prepared and submitted client account forms and a loan application for a client which she knew contained false and misleading information, she failed to perform the necessary due diligence to ensure that a leveraged investment recommendation she made to the same client were suitable and in line with WFG’s policies and procedures. After receiving a written complaint from the client, Gabrysz then failed to report the complaint to her firm, contrary to the firm’s policies and MFDA rules.

Gabrysz was registered as a mutual fund sales person with the company for more than 11 years before retiring and voluntarily terminating her registration with WFG in May 2019.

According to the settlement agreement, Gabrysz recommended and facilitated the implementation of a leveraged investment strategy whereby her client would borrow $100,000 to purchase mutual funds. Both the loan application and the new client account forms overstated the client’s income and assets and failed to disclose the full amount of the client’s liabilities. Gabrysz also sent the client a copy of the loan application which differed from the one submitted to B2B Trust. All told, Gabrysz inflated the client’s assets by $342,500, reduced the value of the client’s liabilities by $21,000 and inflated the client’s income by $10,000 per year to create a profile that would satisfy WFG’s leverage suitability requirements.

When the same client later complained that the strategy “had set her back financially,” Gabrysz did not report that she had received the complaint. “The respondent states that she did not believe this amounted to a formal complaint, but now realizes that her understanding was incorrect and that this amounted to a complaint which ought to have been reported.”

According to the terms of the settlement agreement, Gabrysz is banned from conducting any securities related business with any MFDA member for two years. The MFDA has also fined Gabrysz $20,000 plus costs in the amount of $5,000.