Christopher Singer has been fined more than $60,000 over failure to use due diligence and to ensure an investment was suitable for one client.

Singer has been registered in the mutual fund industry since 2001 and as a dealing representative with FundEX investments since 2004, says MFDA in a reasons and decisions document that details its allegations and findings against the rep.

In that document, MFDA lists the following allegations, which Singer admitted to:

  1. between June 2011 and March 17, 2014, Singer failed to use due diligence to learn the essential facts relative to the client and to accurately fill out page five of nine of the client’s new account application form;
  2. between June 2011 and March 17, 2014, Singer failed to ensure that an investment recommendation he made to the client was suitable based on the client’s investment objectives, investment knowledge, risk tolerance and time horizon; and failed to ensure appropriate diversification of the client’s investment portfolio;
  3. between June 2010 and March 2014, Singer failed to adequately explain the risks, benefits, material assumptions and features of exempt securities he recommended to the client, thereby failing to present the investment to the client in a fair and balanced manner; and
  4. between November 17, 2011 and March 17, 2014, Singer failed to review or reconsider his recommendation to the client in light of criteria for assessing the suitability of the ROI Funds provided to him by the Member, FundEX, in December 2011.

In its decisions document, MFDA says the issue began shortly after Singer took on a client in March 2011 who was single, 62 years old, had “a novice level of investment knowledge, intended to retire in three to five years and had a moderate risk tolerance.

The client sold her home in June 2011 for total proceeds of $1.15 million. MFDA says Singer recommended she invest most of those proceeds (a total of $1.135 million) in two ROI Capital funds that were “exempt securities and marketed as open-end investment funds consisting primarily of higher-yielding private placements of capital in debt obligations and/or equity securities issued by businesses seeking non-bank financing.”

The two funds were meant to provide long-term capital appreciation, says the MFDA, whereas the client had requested “a low risk, short-term investment” for up to $900,000 of the home proceeds, and an income-producing investment for the remaining $300,000 to $400,000. Also, MFDA adds, FundEX “classified the funds as ‘medium risk,’” a fact that Singer says he was not advised of.

MFDA says the client followed Singer’s advice. Afterward, Singer received two compliance memorandums from FundEX, one of which requested portfolio reviews and suitability analysis for clients holding ROI funds, among other things. MFDA says, “The respondent does not appear to have done any of these things in so far as this client was concerned.”

When redeeming her investments in the ROI funds between April 3, 2014 and May 9, 2014, says MFDA, the client incurred a loss of $92,657 on her investment, which FundEX has reimbursed.

MFDA held a settlement hearing regarding Singer in Vancouver on February 22, 2017. In its reasons for decision document, dated March 7, 2017, the hearing panel confirmed the sanctions imposed on the respondent are as follows:

  • a fine in the amount of $63,500;
  • costs in the amount of $10,000; and
  • he shall, in future, comply with MFDA Rules 2.2.1 and 2.1.1.

Read the Reasons for Decision. During the period described in the document, the respondent carried on business in White Rock, B.C., under the trade name Singer Olfert Financial Group.