A former mutual fund salesman from Mill Bay, B.C. allegedly defrauded hundreds of people by advising them to purchase exempt market securities, according to the British Columbia Securities Commission (BCSC).
The BCSC published a notice of hearing on Thursday. The notice alleges that David Michael Michaels advised 484 clients to purchase exempt market securities, or private placement securities, between June 2007 and December 2010. The clients, many of whom were retired, invested roughly $65 million in the securities, which are now virtually worthless. Michaels earned approximately $5.8 million in commissions and marketing fees from the issuing company, according to the BCSC.
In 2004, Michaels was fired from a firm after the company discovered he had done several off-book transactions with clients. The termination led to an investigation into the matter by the Investment Dealers Association of Canada (now the Investment Industry Regulatory Organization of Canada). Michaels has not been registered to sell securities since 2006.
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The notice of hearing states that Michaels was licensed as a life insurance agent nominee by the Insurance Council of British Columbia between 1996 and 2011.
Over the course of the alleged fraud, Michaels advertised his business, Michaels Wealth Management Group, through radio infomercials where he claimed that he gave up his securities registration because he foresaw the stock market crash,according to the BCSC. It is because of those claims that the BCSC believes that Michaels perpetrated a fraud in addition to breaching securities laws by advising clients to purchase exempt market securities.
A hearing has been set for July 9.