Representative fined, banned 18 months for setting up false PACs to qualify for bonus

After setting up pre-authorized contributions in the accounts of clients without their knowledge or authorization to meet sales targets and qualify for a bonus, the Mutual Fund Dealers Association of Canada (MFDA) has banned Qanoot Subzwari for 18 months and fined the former dealing representative $4,000.

The MFDA says it agreed to the penalty after Subzwari demonstrated that he is unable to pay a greater fine – after being terminated by his firm and the bank he worked for, Subzwari went on to work several jobs in unrelated industries. He is the sole earner for his family and his parents, and his employment income is less than the expenses which he incurs for his own family and parents. As such, the MFDA’s settlement agreement and reasons for decision say he has over $140,000 in debt, minimal assets and no savings. “As a result of these unique circumstances, staff has agreed to the penalty that is reflected in this settlement agreement,” they write.

Registered in Ontario as a dealing representative with Scotia Securities Inc. between April 2018 and October 2019 in Milton, Ontario, and also formerly employed by the Bank of Nova Scotia which operated a bank branch at the same premises, both terminated Subzwari after discovering that he entered 22 pre-authorized contribution (PAC) transactions into Scotia’s back-office system for 20 different clients, without their knowledge or authorization. He then cancelled each transaction before any contributions began.

“The respondent established the false PACs in client accounts in order to obtain additional sales revenue credited towards achieving his sales targets and which would also be used to calculate his annual bonus,” the MFDA’s reasons for decision states.

In 19 of the 22 instances, Subzwari created investment direction form (IDF) client notes that falsely indicated clients approved the PACs. In three additional instances, he met with clients in person and added the forms to a set of unrelated forms for signing. “The clients were unaware that they had signed the IDF or the implications of doing so.” 

In addition to the fine and the prohibition from conducting securities related business in any capacity with any MFDA member firm for 18 months, the MFDA also ordered Subzwari to pay costs of $2,500.