Wooden gavel used by a judge or auctioneer

A former rep has been fined almost $2.5 million and permanently banned after a regulatory hearing panel found he misappropriated over $2 million from clients and failed to cooperate with the investigation.

Following a hearing, a disciplinary panel of the new, yet-to-be-named industry self-regulatory organization permanently banned Jeffrey Rutledge, a former rep with PI Financial Corp. in Vancouver. The panel also ordered him to pay a fine of $2.47 million and costs of $10,000.

In its decision, the panel noted that, while the sanctions hearing was held in October, it delayed the release of its decision to “allow Mr. Rutledge additional time to provide evidence that he had repaid the misappropriated amount.”

Repayment may have reduced the size of the fine. However, it said that “Mr. Rutledge has not done so.”

As a result, “The panel has determined that it is in the public interest to issue its decision now and that it should not reduce the amount of the financial penalty based on the possibility that Mr. Rutledge may repay some or all of the misappropriated amount in the future.”

For failing to cooperate with the regulator’s investigation, the panel imposed a fine of $50,000 and the permanent ban.

The bulk of the fine, however, related to the misappropriation, which involved 35 wire transfers over a 27-month period.

In setting the size of the fine, the panel ruled that it should exceed his ill-gotten gains by $300,000.

“The panel considers this fine to be appropriate given the extent of the misappropriation, including the number and value of the dishonest transactions and the length of time over which they occurred, as well as the lack of mitigating circumstances,” it said.

Despite not cooperating with the regulator’s investigation, Rutledge ultimately admitted to the misappropriation in an agreed statement of facts.

He sought more time from the panel before it imposed sanctions — to give him time to sell a property and repay the ill-gotten gains, he said — but the panel refused.

“There is no evidence that Mr. Rutledge has returned any of the money he misappropriated in the four years since the misappropriation occurred,” it said in its decision.

“While Mr. Rutledge’s former firm or the insurer has apparently repaid the clients, Mr. Rutledge has not repaid the firm or the insurer,” it added.