The Financial Services Regulatory Authority of Ontario (FSRA) announced April 17 that it imposed administrative penalties totalling $30,000 against Michael Stoddart after Stoddart continued to hold out as an insurance agent to his clients after his license had been revoked. He was also found to have violated Ontario regulations when he knowingly made false or misleading statements in order to obtain payments and provide services to insured clients.
According to FSRA’s notice of proposal in the case, Stoddart and his partner, Susan Keshen, continued managing his book of business together after Stoddart’s license was revoked in August 2008 for failing to provide requested information to the regulator.
“After Stoddart’s insurance agent license was revoked in 2008, Keshen took over Stoddart’s book of business,” the notice states. “Neither Keshen nor Stoddart advised clients that their insurance agent had changed.” Keshen did not pay Stoddart for the transfer. Keshen then created Standard Wealth Management (SWM), an unincorporated entity. “Keshen advised investigators that she was not aware that SWM had to be licensed.”
Stoddart’s emails, meanwhile, identified him as the managing partner of SWM. He continued to be involved in significant transactions and met with his clients, often alone and without supervision, to discuss insurance products. “The language and format used in Stoddart’s communications with clients reasonably gave the impression that he was their insurance agent.” Nine different clients reported meeting alone with the unlicensed representative. At least one former client stated that she was not aware that Keshen had become her registered advisor.
The arrangement was discovered after an estate trustee reported to Manulife that Stoddart had potentially misappropriated funds. In a minutes of settlement entered into by Stoddart and the Financial Services Commission of Ontario (FSCO), the former insurance regulator in Ontario, the minutes confirm that Stoddart failed to respond to a request by FSCO compliance staff for an accounting of client funds. “Despite multiple follow-up requests, Stoddart never provided the requested accounting to FSCO and instead allowed his license to expire,” the notice states.
The notice of proposal goes on to discuss the misappropriation of client funds, describing how Stoddart purported to set up a Cash Accumulation Fund (CAF) for a client, creating false documentation for both the client and later for the client’s estate executor. While the client was alive, Stoddart and on one occasion, his daughter deposited $500 a month from their own accounts into the client’s account, telling the client that the payments were from the CAF. In June 2019 Stoddart made two transfers totalling $128,240 back to the client’s spouse.
“Administrative penalties in the amount of $30,000 are hereby imposed on Michael Stoddart, for the reasons set out in the notice of proposal,” FSRA concludes in its order sanctioning the former agent.
