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Mutual fund dealer paying for off-book sales

Image Credit: Sun Life Financial
February 20, 2014 - 8:40 AM

YES, IT WAS TOO GOOD TO BE TRUE

VERNON - Selling unauthorized investments to clients has cost a former Vernon salesman his career and thousands of dollars out of his own pocket.

The Mutual Fund Dealers Association of Canada has stripped Robert Bruce Rush, a former employee at Sun Life Financial Services, of the right to sell securities and ordered him to pay a penalty totaling $100,000. The decision was published on the association's website earlier this month. 

The association alleges that Rush engaged in “off-book” business in 2007 and 2008 by advising clients to invest in two companies not approved by Sun life Financial: Gold Quest and The Hear Now (a dog collar company boasting two-way radio technology). Two clients identified only by their initials (KC and DC) said they invested $19,000 into the companies.

In 2010, the Alberta Securities Commission found that Gold-Quest was a “sham investment” and Ponzi scheme involving $27 million and over 2,100 investors. The same year, The Hear Now admitted it violated the Alberta Securities Act.

While KC and DC received statements from Gold-Quest about the great returns they were earning, they never received any payment. They were under the impression that Rush was getting a commission for facilitating the sales.

In response to the association's accusations, Rush denied selling Gold-Quest and The Hear Now to his clients. The association took “extensive lengths” to give him the chance to testify or cross exam the clients—but he never showed up to the hearing.

The panel said Rush’s lack of cooperation with the association’s investigation was an aggravating factor. It also said it would have been apparent to any trained and qualified investment professional that the investments were entirely inappropriate and should not to have been sold to anyone.

The minimum fine for engaging in outside business activity is $10,000 and $50,000 for failing to cooperate. To communicate to the public that this type of misconduct won’t be tolerated, and to ensure public confidence in the association, the panel opted to fine Rush $90,000 and prohibit him from conducting securities related business while employed or associated with an MFDA member. He is also ordered to pay costs of $10,000.

To contact the reporter for this story, email Charlotte Helston at chelston@infotelnews.ca, call (250)309-5230 or tweet @charhelston.

News from © InfoTel News Ltd, 2014
InfoTel News Ltd

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