MFDA fines advisor who tried to settle complaint privatelyBy Andrew Rickard | January 04 2016 11:49AM
An advisor who tried to persuade a client to withdraw a complaint has been fined $100,000 by the Mutual Fund Dealers Association (MFDA).
Edward Andrew Rempel was an advisor in Ontario with Armstrong & Quaile. In 2011, he contacted a client without his dealer's knowledge or consent and attempted to persuade him to withdraw a complaint he had made about the “Smith Manoeuvre” leveraged investment strategy he had been sold.
Rempel offered to compensate the client, who was also Rempel's former employee, for the deferred sales charges he would incur if the scheme were wound up. Rempel also tried to impose conditions that would keep the proposal secret. When the client asked if Rempel would send his proposal by email, he refused.
“I can’t email it to you," said Rempel. "In fact, we have to be careful what we do. If either one of us sends an email that mentions this phone call, then we have to report it to the MFDA and all discussions of money are gone.”
The client subsequently contacted the dealer and initiated a formal complaint. When questioned by the MFDA Rempel denied that he had attempted to negotiate a settlement, but the client had recorded his telephone conversation. In its reasons for decision, the MFDA said that the recording showed "deplorable conduct" on Rempel's part and ruled that the proposal for compensation was made for the advisor's own benefit and was not in the client's best interests.
On December 18 the MFDA fined Rempel $100,000 and also ordered him to pay costs of $25,000. Rempel is banned from conducting securities related business in any capacity until August 5, 2018. If he does attempt to regain securities registration in 2018, Rempel will be subject to twelve months of strict supervision by his dealer.