An appeal of a Mutual Fund Dealers Association of Canada (MFDA) decision against Paul Anthony Dwyer was dismissed by the Alberta Securities Commission (ASC) after it was found that Dwyer ignored his branch manager’s instructions, and processed trades in the account of a client who died.
In January 2022 the MFDA hearing panel found that Dwyer, while registered as a mutual fund dealing representative with Investors Group Financial Services Inc., submitted two trades for processing for which he would earn substantial commissions, despite being informed by his branch manager that the trades would not be approved. The regulator sanctioned Dwyer, suspending him for three months, ordering a fine of $12,500 and costs in the amount of $20,000.
“Dwyer appealed both decisions to the ASC which has oversight over self-regulatory organizations, including the MFDA (now the New Self-Regulatory Organization of Canada),” the ASC writes in its announcement about the decision. “An ASC panel determined that the MFDA panel’s findings and sanctions were reasonable in the circumstances.”
Registered from October 2007 until July 2018 when he was terminated by Investors Group, Dwyer processed trades for a client known as KM, based on instructions from her guardian and trustee, SE. Although KM ceased to be an Investors Group client in October 2014, SE agreed to transfer KM’s assets back to Investors Group in February 2018. SE signed documents to open two accounts for KM and instructed Dwyer to purchase income mutual funds in each of the accounts once the money arrived from her previous institution. The funds were delayed, and the paperwork was reportedly lost by the company. The next month Dwyer was informed by SE that KM had died. It was the branch manager’s opinion that once KM died SE lost his authority under the trustee order and that no trades could occur in her accounts.
Dwyer, meanwhile, was of the view that her assets could not be held in cash because the terms of the trustee order, signed before KM died, required them to be invested. He submitted two mutual fund purchases anyway, investing more than $1.1-million and $40,000 in accordance with SE’s February 2018 instructions. Dwyer claims he thought SE was playing a prank about KM’s death but a death certificate later confirmed the news. The MFDA panel concluded that Dwyer “acted in accordance with what he wanted to believe and not what he knew to be true, concerning both KM’s death and the fact that Judd (the branch manager) had not approved the trades.”
Investors Group reversed the trades and commissions in June 2018 and terminated Dwyer that July. As of September 2020 he was registered with Global Maxfin Investments Inc., according to the ASC’s decision.
In his appeal, Dwyer brought up the existence of an internal Investor’s Group policy he didn’t know about at the time, which permit a one-time trade after a client’s death if the client gave written instructions prior to death. “Given the guide’s requirement for written instructions, Dwyer acknowledged that none were in evidence,” the ASC decision states. Dwyer maintains that the instructions were part of the paperwork lost by the company’s head office. “He said he did not raise the issue of missing documents earlier because he did not turn his mind to their significance until he became aware of the guide in May 2021.”
Dwyer also appealed the decision’s timing and the finding that his misconduct was extremely serious when he suggests it was actually at the low end of the range of seriousness. “Dwyer argued that the panel erred in suspending him, especially by imposing a suspension longer than the one month sought by staff. In his submission, including a suspension made the total package of sanctions unreasonable and disproportionate.
The ASC concluded that the guide was irrelevant, as it does not address the actual allegation – that Dwyer disobeyed his manager. Calling the requirement to comply with a branch manager’s instructions critical to the regulatory regime, MFDA staff also submitted that the guide did not address trades in situations where the client is represented by an attorney, guardian or trustee. “The sanction ordered by the panel was not excessive or disproportionate,” the ASC concludes. “We are satisfied that the panel appropriately considered the evidence and the relevant authorities and that its conclusions were reasonably supported.”