A hearing panel of the Canadian Investment Regulatory Organization (CIRO) has accepted a settlement agreement with Matthew Ewonus after the dealing representative offered compensation to a client in response to that client’s complaint, without informing his firm. He is also being sanctioned for personally guaranteeing a specific result that she would receive from her investments, and for misleading both his firm, Sun Life Investment Services (Canada) Inc., and the regulator’s staff during an investigation into his conduct.
The Kelowna, British Columbia representative, registered with Sun Life since November 2001, first received instructions from his client, CM, on March 19, 2020, instructing him to cash out all of her accounts immediately and switch her holdings into a high interest savings cash fund.
The order could not be processed immediately because Ewonus had not updated the client’s know-your-client (KYC) information within the past 24 months, as required by the firm’s policies. The transaction could not be processed until the next business day: Monday, March 23, 2020.
March 20, in response to Ewonus’ email advising her that the transaction would be settled on March 23, the client complained by way of email – a complaint that he did not report to Sun Life, despite the firm having policies that such complaints should be reported within two days.
On March 22, the client sent a further email informing Ewonus that she expected the settlement of her account to reflect her closing balance on March 19. Between March 19 and March 23 that year, the value of CM’s account declined by approximately $5,000.
In voicemails left for the client, Ewonus then personally guaranteed to provide compensation to restore the value of her account. He further told the client that if she continued to invest in the accounts he serviced for a full year, if the value of her account did not exceed an average market return by at least $5,000, he would personally top up her account to that value.
In an email sent on March 25, the client expressed her disappointment with his voicemail messages and demanded compensation for her losses. She also reported Ewonus to Sun Life. During the firm’s investigation into his conduct, Ewonus denied three times, including once in writing, that he ever offered to compensate CM. (The settlement agreement includes transcripts of the voicemail messages he left the client over the course of those days.)
In addition to a fine of $20,000 that he paid to Sun Life, Ewonus was ordered to pay a CIRO fine in the amount of $30,000 and costs in the amount of $5,000. He has also served a suspension of six months.
