July 19, 2021 (Toronto, Ontario) – A settlement hearing in the matter of Tuomo Tapio Kostamo (“Respondent”) was held by electronic hearing on July 16, 2021, before a three-member Hearing Panel of the Pacific Regional Council of the Mutual Fund Dealers Association of Canada (“MFDA”).
The Hearing Panel accepted the settlement agreement dated July 7, 2021 (“Settlement Agreement”), between Staff of the MFDA and the Respondent, as a consequence of which the following sanctions were imposed on the Respondent:
- a prohibition from conducting securities related business in any capacity while in the employ of or associated with any MFDA Member for a period of five years;
- a fine in the amount of $15,000;
- costs in the amount of $5,000; and
- shall in the future comply with MFDA Rules 1.1.2, 2.1.1, 2.2.1, and 2.5.1.
In the Settlement Agreement, the Respondent admitted that:
- commencing in 2016, he recommended that approximately 25 clients concentrate all, or a substantial portion, of their account holdings in precious metals sector mutual funds at a level of concentration that exceeded concentration limits permitted by the Member, contrary to the policies and procedures of the Member and MFDA Rules 2.1.1, 2.2.1, 2.5.1, and 1.1.2;
- commencing in 2016, he inaccurately recorded purchases by clients of precious metals sector mutual funds as unsolicited when, in fact, the Respondent had recommended the purchases to the clients, contrary to the policies and procedures of the Member and MFDA Rules 2.1.1, 2.2.1, 2.5.1 and 1.1.2; and
- between August 2016 and November 2018, he recommended that client JG invest a substantial portion of client JG’s investable assets in precious metals sector mutual funds without using due diligence to ensure that:
- investment recommendations that he made to client JG were suitable having regard to the client’s essential Know-Your-Client information; and
- he adequately informed client JG about the risks of holding investments concentrated in precious metals sector mutual funds;
contrary to the policies and procedures of the Member and MFDA Rules 2.2.1, 2.1.l, 2.5.1 and 1.1.2.
A copy of the Settlement Agreement is available on the MFDA website at www.mfda.ca. During the period described in the Settlement Agreement, the Respondent conducted business in the Prince George, 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 80,000 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.