Enforcement
MFDA imposes lifeftime ban and $200,000 fine on Robin Andersen
Mutual Fund Dealers Association of Canada
Association canadienne des courtiers de fonds mutuels
121 King Street West, Suite 1000, Toronto, Ontario, M5H 3T9
TEL: 416-361-6332 FAX: 416-943-1218 WEBSITE: www.mfda.ca
Contact: Hugh Corbett
BULLETIN #0201 – E
Director of Litigation
June 23, 2006
Phone: 416-943-4685
Email: hcorbett@mfda.ca
MFDA Bulletin
Enforcement
For Distribution to Relevant Parties Within your Firm
MFDA imposes lifetime ban and $200,000 fine on Robin Andersen
Nature of
A Hearing Panel of the Prairie Regional Council of the Mutual Fund Dealers
Proceeding
Association of Canada (“MFDA”) has imposed disciplinary penalties on
Robin Andersen, a former Approved Person of the MFDA.
By-Laws,
Following a hearing on November 23, 2005, the Hearing Panel found that:
Rules, Policies
Violated
1. Andersen failed to deal fairly, honestly and in good faith with
clients by misappropriating approximately $113,527 from
them, contrary to MFDA Rule 2.1.1; and
2. Andersen processed redemptions in the accounts of clients
without obtaining instructions or authorization from the
clients, contrary to MFDA Rules 2.1.1 and 2.3.4 and the terms
of Andersen’s registration as a mutual fund salesperson.
MFDA Rule 2.1.1 states that:
Standard of Conduct. Each Member and each Approved Person of a
Member shall:
(a) deal fairly, honestly and in good faith with its clients;
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(b) observe high standards of ethics and conduct in the transaction of
business;
(c) not engage in any business conduct or practice which is unbecoming
or detrimental to the public interest; and
(d) be of such character and business repute and have such experience
and training as is consistent with the standards described in this Rule
2.1.1, or as may be prescribed by the Corporation.
MFDA Rule 2.3.4 states that:
No Discretionary Trading. A limited trading authorization shall not in any
way confer discretionary trading authority upon a Member, an Approved
Person or any person acting on behalf of the Member.
Penalty
The Hearing Panel imposed the following penalties on the Andersen:
1. A permanent prohibition of the authority of Andersen to conduct
securities related business in any capacity; and
2. A fine in the amount of $200,000.
Summary of
From December 8, 1992 to January 7, 2004, Andersen was registered in
Facts
Alberta as a mutual fund salesperson for Investors Group Financial Services
Inc. (“IG”).
Between July 1998 and November 2003, Andersen misappropriated
approximately $362,000 from seven mutual fund clients that he failed to
return or otherwise account for, by:
(a)
Redeeming mutual fund investments without instructions or
authorization from the clients and directing the redemption cheques
to his branch office. Andersen then forged the signature of the clients
on the redemption cheques and deposited them in the bank account of
his personal corporation (the “Corporate Account”);
(b) Obtaining funds from clients that were supposed to be used to
purchase mutual fund investments on their behalf but which he
instead deposited in the bank account of his personal corporation;
(c) Persuading a client to provide him with $125,000 that was supposed
to be used to purchase investment products for the client that were not
approved for sale by IG but which he instead deposited in the bank
account of his personal corporation; and
(d)
Redeeming mutual fund investments without instructions or
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authorization from the clients and directing the redemption proceeds
to be deposited in the clients’ bank accounts. Andersen then led the
clients to believe that the redemptions had been processed in error
and persuaded the clients to provide him with cheques to re-purchase
the investments for them. He then deposited the clients’ cheques in
the bank account of his personal corporation.
In January 2004, IG discovered Andersen’s misconduct and terminated him.
IG conducted an investigation and agreed to compensate the affected clients.
The Hearing Panel determined that during the period that Andersen was
subject to the jurisdiction of the MFDA – March 2002, when IG became a
Member of the MFDA, to January 2004, when IG terminated Andersen – he
misappropriated $113,527. The Hearing Panel stated however that the total
amount of $362,000 misappropriated by Andersen was a relevant
consideration in determining the appropriate penalty to impose on him.
The Hearing Panel imposed a fine of $200,000 on Andersen, representing the
difference between the total amount of $362,000 that Andersen
misappropriated and the amount that he has reimbursed IG, or has been set
aside from his assets to reimburse IG, for the compensation paid on his
behalf.
The Hearing Panel stressed the importance of imposing a penalty on
Andersen that would deter him and others from stealing from vulnerable
clients and would restore public confidence in the mutual fund industry. As a
result of Andersen’s cooperation during the disciplinary process, no costs of
the proceedings were ordered against him.
For greater detail, see the Decision and Reasons posted on the MFDA’s
website under “Enforcement”.
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