A Mutual Fund Dealers Association of Canada (MFDA) hearing panel has permanently banned a former advisor and fined him $50,000 for failing to co-operate with an investigation into his role in falsified loan applications.
Jay Kim, a dealing representative from March 2015 to August 2016 with Shah Financial Planning Inc. in Oakville, Ont., ignored numerous MFDA requests, starting in November 2016, to provide information and attend an interview during the investigation into his conduct.
Kim admitted to his failure to co-operate, the reasons for decision, dated Jan. 6, 2020, said. It describes the failure as a “very serious misconduct” that demonstrates a “fundamental breach of a registrant’s obligations and illustrates that the registrant is ungovernable.”
As a result, “he would pose a significant risk to investors and the market at large if he is allowed to return to the industry,” it said. “A permanent prohibition is necessary to protect investors.”
The MFDA started an investigation in 2016 into falsified loan applications being submitted to an approved person at Investors Group Financial Services Inc., after the firm filed a report to the MFDA, the notice of hearing said.
The report indicated that, among other things, Kim had referred Neil Kumar, also a registered representative at Shah Financial Planning during the relevant period, to the approved person at Investors Group.
Kumar submitted and/or arranged for other individuals to submit falsified documents to the approved person at Investors Group, the notice of hearing said. The falsified documents were used to apply for loans and lines of credit at Solutions Banking.
Earlier this year, the MFDA permanently banned and fined Kumar.
During its investigation, the MFDA discovered that Kim had submitted a $200,000 loan application in November 2015 on behalf of a client. The supporting documents for the loan falsely indicated that the client had assets at two specific firms.
Because of Kim’s failure to co-operate, the MFDA said in its reasons for decision that it couldn’t determine the full nature of his conduct, including whether he knew that the supporting documents were fabricated, as well as his role in producing the fabricated loan documents and whether he knew about the falsified loan applications being arranged by Kumar.
The reasons for decision said the fine of $50,000 was lower than in many of the cited cases but was appropriate given that Kim eventually participated in the proceedings and that it aligned with the MFDA’s sanction guidelines.
In addition to the fine, Kim must pay costs of $5,000.
He’s no longer securities-registered.
For full details, read the reasons for decision.