The Mutual Fund Dealers Association of Canada (MFDA) has decided against levying monetary penalties against a former dealing representative convicted of fraud, but has banned the representative permanently from conducting securities-related business with any MFDA member firm.
The former representative, Mitchell Sumka, was terminated by his employer, TD Investment Services Inc., after it was discovered that Sumka misappropriated $659,233 from two mutual fund clients and 12 other bank clients between March 2013 and March 2018. The Winnipeg, Manitoba representative misappropriated the money by creating new bank accounts for TD Canada Trust clients without their knowledge or approval. He then transferred the money from the client’s existing bank accounts to the fake accounts, and used a bank card to then access the money held in the fake accounts. The MFDA’s decision states that Sumka used the misappropriated funds for gambling.
TD Canada Trust discovered the conduct as a result of an anonymous verbal report from another employee who worked at the branch. “The member terminated the respondent as an approved person and TD Canada Trust terminated the respondent as an employee of the bank after confirming that the respondent had engaged in the misappropriation of client money as described,” the MFDA writes in its agreed statement of facts.
Sumka reportedly reimbursed six clients by transferring $244,689.82 that he misappropriated from other clients. TD Canada Trust subsequently reimbursed clients for the remaining amount that Sumka did not repay. In June 2018 Sumka entered into a consumer proposal agreement where he agreed to pay $18,000 over the course of five years to TD Canada Trust and other creditors impacted by his misconduct. In September 2019 he also pleaded guilty to charges of fraud in criminal proceedings before the Provincial Court of Manitoba. The court sentenced Sumka to a 27-month jail term and ordered him to pay restitution in the amount of $471,625. Sumka has since been granted early release from his prison sentence.
In addition to misappropriating the money, the MFDA also says it is permanently banning Sumka for failing to cooperate with the MFDA’s investigation. “The respondent’s failure to cooperate with staff’s investigation into his conduct interfered with staff’s ability to confirm the full scope and extent of his misconduct,” they write. The MFDA adds that it will issue its written reasons for the sanction in due course.