A disciplinary hearing in the matter of Russell Brower-Berkhoven was held today in Alberta before a three-person hearing panel of the MFDA’s Prairie Regional Council.
Brown was registered in British Columbia as a mutual fund salesperson with Sterling Mutuals Inc. from November 2006 to December 2006, and from November 2007 to November 2009. He was then terminated.
The hearing panel found the allegations set out in the notice of hearing dated December 2, 2011 had been established. These included:
Allegation #1: Between August 14, 2006 and November 24, 2009, He led LM, an individual, to believe that:
a) he opened an account for LM at Sterling;
b) he was dealing with them in their capacity as a client of the member; and
c) he was processing transactions for them in an account at Sterling in accordance with company instructions. None of these assumptions were true.
Allegation #2: Between July 15, 2006 and November 24, 2009, he solicited and accepted $40,000 from LM purportedly to invest on their behalf in Phoenix Financial Services, a company he owned or controlled, and failed to repay or otherwise account for $35,000 of the monies, contrary to MFDA 2.1.1.
Allegation #3: Between July 15, 2006 and December 29, 2006 and then again from November 23, 2007 to November 24, 2009, he engaged in securities related business that was not carried on for the account and through the facilities of Sterling by selling or facilitating the sale of securities in Phoenix Financial Services, a company owned or controlled by him, to LM, RC and HC outside of Sterling, contrary to MFDA Rules 1.1.1(a) and 2.1.1.
Allegation #4: Between July 15, 2006 and December 29, 2006 and then again from November 23, 2007 to November 24, 2009, he continued in another gainful occupation that was not disclosed to and approved by Sterling by selling or facilitating the sale of securities in Phoenix Financial Services to LM, RC and HC, contrary to MFDA Rules 1.2.1(d) and 2.1.1.
Allegation #5: Commencing November 27, 2009, he failed or refused to provide documents, information, and attend for an interview requested by the MFDA for the purpose of investigating his conduct, contrary to s. 22.1 of MFDA By-law No. 1.
The panel imposed the following penalties and costs at the conclusion of the hearing, and advised it will issue written reasons for its decision in due course:
- A permanent prohibition from conducting securities related business in any capacity while in the employ of or associated with any MFDA Member;
- A fine of $200,000 and costs of $7,500.