The Investment Industry Regulatory Organization of Canada (IIROC) has fined Gary Man Kin Ng $5-million, assessed costs in the amount of $194,000 and permanently banned Ng from registration in any capacity after it was found that he engaged in fraudulent activity related to loan financing, and for failing to cooperate with IIROC enforcement staff who were investigating his conduct.
According to IIROC’s statement of allegations, Ng was the founder of Chippingham Financial Group Limited and had a 100 per cent controlling interest in PI Financial, a Vancouver-based firm he acquired in November 2018 through a $100-million all cash purchase.
The purchase was financed by two outside, unrelated lenders who put up $80-million and $20-million respectively. As security for the loans, IIROC’s statement of allegations states that Ng purportedly granted separate, unencumbered security interests to the lenders over collateral – Chippingham and PI Financial accounts – which were owned by him.
“Despite his representations, Ng did not actually own, control or have trading authority over the securities accounts pledged as collateral. Instead, the ownership and control of the collateral was falsified,” the statement of allegations reads.
IIROC’s allegations include that Ng falsified account statements and summaries to borrow additional funds from the two lenders, an investment firm based in the United States, and an asset management firm based in Canada. He also secured funding from a third lender, a private company. All told, Ng reportedly borrowed $172-million based on false representations that he owned financial assets. PI Financial became aware of the issues concerning Ng’s purported ownership of the securities accounts at the end of January 2020 and reported the matter to IIROC.
In a statement made June 1 following a penalty hearing, IIROC stated that “Ng was found to have engaged in fraudulent conduct with respect to loan financing, and to have failed to cooperate with enforcement staff.”
