A former mutual fund dealer representative and executive who engaged in personal financial dealings with clients, including arranging a loan between clients — allegedly to repay a debt to a “gang” — has been sanctioned by a regulatory hearing panel.
A hearing panel of the Canadian Investment Regulatory Organization (CIRO) permanently banned Antony Kin San Chau, a former rep and founder of TeamMax Investment Corp. It also imposed a $400,000 fine and ordered him to pay $15,000 in costs after finding that he breached the self-regulatory organization (SRO)’s rules and failed to co-operate with its investigation.
According to the SRO, Chau breached the conflict of interest rules when, in 2018, he induced one of his clients to lend $250,000 to another client, ostensibly so that they could repay a debt to an unnamed gang.
“[The client] told Mr. Chau that he owed money to a ‘gang’ and that if the gang were not paid, [the client] would be ‘exposed’ and [the client’s] wife would be embarrassed,” the panel noted in its decision.
At the time, Chau and certain clients had already given almost $1.2 million to the client with the gang debt for various investments in parking spaces and other property, the panel said — and helping him get out of trouble was intended to preserve their ability to get paid back on their investments.
The panel found that by arranging the loan between clients, Chau violated the SRO’s rules.
“In inducing [a client] to lend $250,000 to [another client], Mr. Chau arranged a transaction involving an obvious conflict of interest,” the panel said, adding that the conflict wasn’t disclosed to TeamMax’s chief compliance officer.
“More significantly, he did not disclose to the client, the risks of the loan or the conflict between his and [her] interest, namely, that the loan was required to enable [the client] to pay the ‘gang’ in order to protect the possibility of Mr. Chau’s being repaid the $1.2 million that [the client] owed him and his clients,” it said. “Instead, he misrepresented the purpose and risk of the loan.”
The panel also found that Chau breached the SRO’s rules by failing to co-operate with its investigation.