W. H. Stuart Mess Costs MFDA IPC More Than $6 Millionpar Andrew Rickard | November 09 2015 02:07PM
The Mutual Fund Dealers Association (MFDA) Investor Protection Corporation (IPC) has paid more than $6 million in claims to investors affected by the insolvency of the W.H. Stuart mutual fund dealership (WHS).
The MFDA suspended WHS's membership on allegations that the firm's owners, husband and wife team Walter Howard Stuart and Marilyn Dianne Stuart, had solicited and accepted approximately $6 million from more than 180 clients; the Stuarts said they were investing these funds as part of their "note program", but the MFDA claims that the money was actually used for their own benefit. The regulator also alleges that the Stuarts made off with an additional $800,000 that was taken from client accounts.
The MFDA deemed WHS to be insolvent in 2013; customer accounts were transferred to Keybase Financial Group and clients have been filing claims with the MFDA IPC for the money they have lost.
The MFDA IPC released its financial statements on Nov. 4, and they show that during the year ended June 30, 2015 the corporation paid out $6,330,946 to WHS claimants as well as another $546,075 in related administrative costs. The IPC financial statements also show that the organisation’s cash reserves are down significantly, dropping from the $2,976,526 reported as of June of 2014 to $422,341 as of June 2015.
The WHS proceedings are ongoing and the next hearing date is scheduled to take place on Nov. 9, although Howard Stuart appears reluctant to take part. "Although he has acknowledged MFDA Staff’s attempts to contact him during the course of its investigation, Howard Stuart has not attended an interview or facilitated his participation in an interview to provide a statement and give information about the matters under investigation," reads the MFDA notice of hearing.