An MFDA hearing panel has permanently banned a former advisor and fined him $100,000 for misappropriating client funds, engaging in discretionary trading and failing to cooperate with the investigation into his misconduct.
Leo Thach Quang Lam, a mutual fund representative from 2001 to 2013 with Portfolio Strategies Corporation in Calgary, Alta., processed unauthorized redemptions from his client’s accounts between 2013 and 2015, and misappropriated the funds, says a notice of hearing. Lam had the redemptions, which totalled $28,000, deposited into his and his spouse’s joint account.
The client was a “vulnerable, unsophisticated investor,” says the notice of hearing. She was also Lam’s sister-in-law.
The client was unaware of the activity in her accounts because the address on file for the accounts was Lam’s, says the notice. In August 2015 the client received a letter from Lam stating that her holdings had diminished due to the 2008 recession and various global economic factors. The client subsequently obtained copies of trade documentation and filed a complaint.
When the MFDA began investigating Lam’s misconduct in July 2016, he failed to cooperate: he disregarded a request for information, failing to respond to five letters the MFDA sent to his last known address, the notice says.
Some or all of the redemptions were used for Lam’s own benefit, says the notice. The client received some compensation from the bank that deposited cheques into Lam’s joint account, and from one of the mutual fund companies that accepted the unauthorized trading directions.
Lam was fined $50,000 for unauthorized trading and misappropriating funds, and $50,000 for failing to cooperate. He was also ordered to pay costs of $7,500.
For full details, read the notice of hearing.