Regulator fines former mutual fund rep $40K for misappropriating funds

A Mutual Fund Dealers Association of Canada (MFDA) hearing panel has issued its decision (penalty) and reasons in the case of former Investors Group Financial Services Inc. dealing representative, Viet Ton-That.

The Brampton, Ontario area former representative agrees that he deposited $13,412 sent to his email address for investment in two client accounts, into his own personal bank account instead, before telling the clients that the firm’s malfunctioning online systems were the reason they had not received statements or tax receipts. When the client complained to Investors Group 20 months later, it was added that Ton-That had also borrowed $500. 

On or about the same day the client complained, Ton-That sent the client $18,500, following which the client withdrew his complaint. When the MFDA began an investigation into his conduct, Ton-That attended one interview before ignoring all subsequent demands for documentation that he undertook to deliver during his initial interview. 

In determining an appropriate penalty, the MFDA and Ton-That both agreed that a permanent prohibition from being registered as a mutual fund salesperson (now known as a dealing representative) was acceptable, but disagreed on the amount Ton-That should be fined. While the MFDA originally sought a $50,000 penalty, MFDA management made a late submission that Ton-That should instead be fined $40,000.

“Staff would ordinarily seek a fine of at least $50,000 in instances of failure to cooperate alone. In this case, Mr. Ton-That did attend an interview with staff,” the MFDA’s senior enforcement counsel, Francis Roy stated at the start of the hearing panel’s deliberations on an appropriate penalty. “It was only a partial failure to cooperate. He did admit to the misconduct in both the interview and in the agreed statement of facts.” Roy also stated that the MFDA also took into consideration the fact that Ton-That eventually reimbursed his victims. 

In addition to permanently banning Ton-That for misappropriation, personal financial dealings and for failing to cooperate with the MFDA in its investigation, the hearing panel ultimately assessed a fine of $40,000 plus costs in the amount of $5,000.