A Mutual Fund Dealers Association of Canada (MFDA) hearing panel has imposed sanctions on Marja Grobbink Harmer, fining Harmer $525,000, assessing costs in the amount of $20,000 and permanently banning the former Investors Group Financial Services Inc. representative from conducting securities related business in any capacity with any MFDA member firm in the future. 

The MFDA’s notice of hearing allegations against Harmer include that she jointly invested with clients in real estate investments through a company she owned and operated, she maintained a joint bank account with at least one client, engaged in securities related business that was not carried on through her firm and engaged in outside business activities that were not disclosed to Investors Group. Beginning in July 2019 she then failed to cooperate with the MFDA’s staff who were investigating her conduct.

Registered from August 2002 until February 2017 when she resigned, Harmer entered into various joint venture agreements with clients and other investors for the purchase and operation of rental properties through a company she owned and operated, known as H&H Real Estate Investments Ltd. The company incorporated in June 2013 without disclosure about its existence to Investors Group.

Another company, 3D Real Estate Investments Ltd., owned and operated by Harmer’s friend, identified only as EK in the MFDA’s notice, also entered into the various joint venture agreements.

In each case, Harmer approached clients, recommended they invest and provided them with marketing materials. In one case, several clients each contributed $100,000 for a 10 per cent ownership in the property while H&H received a 12.5 per cent interest and EK received a 47.5 per cent ownership interest. Clients funded their investments using lines of credit secured against their own homes, based on Harmer’s recommendation, and also by redeeming mutual funds or using cash savings.

October 2018 the clients ceased receiving repayments according to the terms of their joint venture agreements and Harmer ceased responding to inquiries. It was discovered that EK had obtained a mortgage on the property, kept the proceeds and did not repay it.

In April 2020 the pair reached an agreement with the clients where H&H and 3D transferred their shares and liabilities in the company to the clients.

In a second deal, clients each contributed $100,000 in exchange for a 5.714 per cent ownership interest, H&H received at 12.5 per cent interest and EK received a 38.78 per cent interest. Again, the clients funded their investments using lines of credit, cash savings and redeemed mutual funds.

In this case, clients received cash calls that required them to contribute additional payments to cover cash shortfalls pursuant to the terms of their agreements. Investors in that particular property commenced a civil claim for damages against Harmer and EK. 

The notice of hearing also details a number of other similar joint ventures the pair entered into with clients and other investors.

The MFDA’s notice of hearing details at least five separate deals that Harmer was allegedly part of.

In addition, Harmer is being sanctioned for securities related business conducted outside of her firm when she presented and recommended exempt investment products offered by Walton International Group Inc. The products had not been approved for sale by approved persons at the firm.

Both EK and Harmer attended seminars with clients and Harmer went to the client’s home to discuss the investments and facilitated the redemption of approximately $100,000 of their registered retirement savings (RRSP) holdings for the purpose of purchasing the Walton investments. The MFDA’s documents state that as of September 2020, the product’s combined value had declined to approximately $24,966.

Harmer is also being sanctioned for working as an independent distributor for a skin care company, Nucerity International without disclosing her activity to Investors Group. Beginning in July 2019, they also say she failed to cooperate with MFDA staff after failing to respond to several attempts to contact her by regular mail, registered mail, email and personal service.

“Due to the respondent’s failure to cooperate with staff’s investigation, staff was unable to determine the full nature and extent of the respondent’s conduct in relation to her outside business activities with Nucerity, the identity of parties involved in the Kensington Development and details of how she obtained an interest in the Robinson Street Property,” the MFDA writes.