August 13, 2018 (Toronto, Ontario) – The Mutual Fund Dealers Association of Canada (“MFDA”) commenced a disciplinary proceeding in respect of Harold Magnus Backer (“Respondent”) by Notice of Hearing dated September 12, 2017, as amended on July 12, 2018.
A disciplinary hearing in this proceeding was held on August 8 and 9, 2018 in Vancouver, British Columbia before a three-member Hearing Panel of the MFDA’s Pacific Regional Council. After receiving evidence and hearing submissions from Staff of the MFDA, the Hearing Panel found that the four allegations concerning the Respondent had been established. In particular, the Hearing Panel made the following findings of misconduct against the Respondent:
- between May 15, 2002 and November 17, 2015, he failed to repay or otherwise account for approximately $719,853.78 that he solicited from at least six clients and one individual to invest in a fictitious mutual fund, thereby failing to deal fairly, honestly and in good faith with clients and engaging in conduct that is unbecoming and detrimental to the public interest, contrary to MFDA Rule 2.1.1;
- between May 15, 2002 and November 17, 2015, he fraudulently induced at least 10 clients and three individuals to invest in non-existent mutual funds, thereby failing to deal fairly, honestly and in good faith with clients and engaging in conduct that is unbecoming and detrimental to the public interest, contrary to MFDA Rule 2.1.1;
- commencing June 28, 2017, he failed to cooperate with an investigation into his conduct by Staff of the MFDA, contrary to section 22.1 of MFDA By- law No. 1; and
- on July 4, 2018, he pled guilty and was convicted of a single count of fraud, contrary to section 380(1) of the Criminal Code, S.C, 1985, c. C-46 and thereby failed to observe high standards of ethics and conduct in the transaction of business, engaged in business conduct or practice which is unbecoming and detrimental to the public interest, and failed to be of such character and business repute as is consistent with the standards prescribed by MFDA Rule 2.1.1.
After hearing submissions from Staff of the MFDA as to penalty, the Hearing Panel imposed the following sanctions on the Respondent and advised that it will issue written reasons in due course:
- a permanent prohibition from conducting securities related business in any capacity while in the employ of, or in association with, any MFDA Member;
- a fine in the amount of $2,745,261.34;
- the amount of the fine shall be reduced by any amounts paid by the Respondent by August 9, 2020 to clients BK, EK, TK, SV, NP, and DG, and individuals included in the restitution order in Victoria Court File No. 170775-1; and
- costs in the amount of $17,875.
A copy of the Amended Notice of Hearing is available on the MFDA website at www.mfda.ca. During the period described in the Notice of Hearing, the Respondent carried on business in the Victoria, British Columbia area.
The MFDA is the self-regulatory organization for Canadian mutual fund dealers, regulating the operations, standards of practice and business conduct of its Members and their approximately 82,000 Approved Persons with a mandate to protect investors and the public interest. For more information about the MFDA’s complaint and enforcement processes, as well as links to ‘Check an Advisor’ and other Investor Tools, visit the For Investors page on the MFDA website.