The MFDA has permanently banned a former rep and fined him $250,000 for false loan applications and for failing to cooperate with investigations.
Neil Kumar was a registered rep at Shah Financial Planning Inc. in Mississauga, Ont. from 2012 to 2016. In its decision and reasons for the penalty, the MFDA alleged that Kumar submitted loan and line of credit applications for himself and for clients that contained false information about assets and liabilities.
To secure a $70,000 RRSP loan through Investors Group, Kumar submitted a proof of assets document indicating he had $462,700 at Hampton Securities, the MFDA said. However, documents Hampton provided to the Investment Industry Regulatory Organization of Canada showed he had only $202.48 in assets with the firm.
The MFDA alleged Kumar used a similar method in applying for loans for clients, as well.
“Not only is the conduct involving the loan applications fundamentally dishonest, it prevents the Member and/or lender from assessing the suitability of the loan application, exposes the lender to significant financial harm should the borrower default on the loan, and undermines the reputation and integrity of the securities industry,” the decision document said.
The loss to lenders and borrowers in the case is not clear, it said.
Because Kumar did not cooperate with the investigation, the MFDA said it was unable to determine the full extent of his misconduct. This included another allegation of misappropriated funds and facilitating the sale of off-book investments.
In addition to the $250,000 fine and permanent ban, the MFDA ordered Kumar to pay costs of $10,000.
Read the full decision and reasons document here.