A Mutual Fund Dealers Association of Canada (MFDA) hearing panel has sanctioned Ottawa-area dealing representative, Hon Ting (Patrick) Yung, fining Yung $300,000, plus costs in the amount of $10,000 and permanently banned him from conducting securities related business with any MFDA member in the future.
The sanctions were handed down after the panel agreed that Yung misappropriated or failed to account for more than $300,000 taken from clients and other individuals – clients of the bank where he was also employed. He also failed to cooperate with the MFDA when it investigated his conduct.
Specifically, between February 2017 and October 2019 Yung was registered in Ontario as a dealing representative with Royal Mutual Funds Inc. and employed by the bank that is affiliated with that MFDA member firm. October 4, 2019, the firms terminated Yung after it was found that he was misappropriating funds by processing early redemptions of guaranteed investment certificates (GICs) or by obtaining access to client bank accounts and making withdrawals without the client’s knowledge or authorization.
All told, Yung obtained at least $309,956.99 from two clients and four individuals at the bank. In one example, Yung recommended that the client invest in securities through a brokerage outside of Canada that he said he would manage on her behalf. Three months later when the client asked Yung to sell some of the purported foreign investment, he transferred $15,066.79 to the client’s bank account using monies previously misappropriated by another client altogether. Yung then stopped responding to the client’s attempts to contact him.
According to the MFDA’s notice of hearing, Yung also used the misappropriated funds to buy GICs in his spouse’s name ($45,000), he deposited $125,033.35 into her tax-free savings account (TFSA) and $2,000 into her bank account. He withdrew and used $124,856.84 for his own benefit. The bank was able to seize approximately $92,000 from the TFSA owned by Yung’s spouse. Both Royal Mutual Funds and the bank subsequently compensated the two clients and four individuals affected.
When the MFDA was notified, enforcement staff were also informed that Yung engaged in unusual account activity – specifically, they say Yung may have opened at least 31 accounts to qualify for a promotional offer to earn the new account holder a free iPad.
When the MFDA investigated, Yung responded to one letter sent to his last known address but failed to respond to questions concerning the misappropriation. Following that, emails to Yung went unanswered and mail was returned with handwriting on the envelope which stated “no such person.”
As a result of his failure to cooperate, the MFDA says staff were unable to determine if there was any further misappropriation, the whereabouts of the money or why he opened the accounts and what happened to the promotional awards.
The MFDA says it will issue its written reasons for the decision in due course.
