court gavel regulatory

A former fund rep has been permanently banned after admitting to misappropriating over $650,000 from clients to finance a gambling habit.

Following an electronic hearing, a Mutual Fund Dealers Association of Canada (MFDA) hearing panel ordered Mitchell Sumka, a former rep with TD Investment Services Inc. in Winnipeg, permanently banned.

The panel has yet to issue its reasons for the ruling, but it did publish an agreed statement of facts outlining the underlying misconduct.

According to that filing, between August 2015 and March 2018, Sumka misappropriated $659,233 from 12 bank clients and two mutual fund clients.

Sumka cooperated with the TD when his activity was discovered, but didn’t cooperate with the MFDA’s investigation.

According to the agreed statement of facts, Sumka took the bulk of the misappropriated funds from bank clients, while $28,000 was misappropriated from his mutual fund clients.

The scheme involved creating fake accounts in clients’ names. According to the statement, Sumka transferred funds out of clients’ existing accounts into accounts he had set up, and then took the money from those accounts to finance his gambling.

An anonymous internal whistleblower tipped off TD, which investigated and ultimately fired Sumka. He had repaid about $244,689.82 of the misappropriated money, and the bank repaid the remaining $414,543.16.

In 2019, Sumka pleaded guilty to fraud charges. He was sentenced to 27 months in jail and ordered to pay $471,625 in restitution. He has since been granted early release, but has not yet paid the restitution ordered by the court, the MFDA said.

The MFDA also noted that, as part of a consumer proposal, Sumka agreed to pay $18,000 over the course of five years to TD and various others impacted by his misconduct.