MFDA permanently bans two advisors and imposes heavy finesBy The IJ Staff | July 06 2018 11:30AM
The Mutual Fund Dealers Association of Canada (MFDA) announced on July 5 that it has approved a settlement agreement in the matter of International Capital Management Inc. (ICM), John Paul Sanchez (John Sanchez) and Javier Andreas Sanchez (Javier Sanchez).
As part of this agreement, the MFDA has permanently banned both John and Javier Sanchez. ICM’s MFDA membership has also been terminated. John Sanchez has also received a fine in the amount of $100,000 and Javier Sanchez was fined $50,000.
At a settlement hearing on June 29, John Sanchez paid $30,000 of his fine and shall pay the remainder of his fine in equal monthly installments of $5,833.33 per month, says the MFDA. Javier Sanchez paid $20,000 of his fine and shall pay the balance in equal monthly installments of $2,500 per month, says the regulator. The respondents have also paid costs in the amount of $25,000.
In the settlement agreement, the respondents admitted that between 2006 and 2016, they “engaged in securities related business that was not carried on for the account of ICM, through the facilities of ICM or recorded on the books and records of ICM,” says the MFDA.
Since 2006, John and Javier Sanchez “solicited at least $27.44 million from ICM clients for investment in two non-arm's length companies, thereby engaging in conduct that gave rise to conflicts of interest which the respondents failed to address by the exercise of responsible business judgment influenced only by the best interests of the clients,” added the regulator.
Inadequate due diligence
Between 2006 and 2016, the respondents recommended that about 170 ICM clients “purchase investments distributed by two non-arm's length companies, without conducting adequate due diligence to know the products and did not maintain sufficient records to demonstrate that they complied with the obligation Know-Your-Client and to ensure that the products recommended and the orders obtained from clients were suitable,” stated the MFDA.
They also failed to cooperate with the MFDA’s investigations into their conduct by providing inaccurate or misleading statements; withholding information about some of their business activities in response to questioning by MFDA compliance staff during compliance examinations and by MFDA enforcement staff during investigations of their conduct; and by initially withholding access to electronic records including emails on ICM's systems during an on-site inspection at ICM's office, says the regulator.
To learn more, consult the settlement agreement on the MFDA’s website.