Fund rep fined, banned for borrowing from clients

Specifically, the panel found that between November 2021 and February 2022, Minhas borrowed a total of $400,000 from three clients via promissory notes.

The unsecured loans were not disclosed to his dealer and they “gave rise to unreported and unaddressed material conflicts of interest,” the panel said — adding that the arrangements also violated the firm’s policies.

After the loans were discovered by his dealer, Minhas was terminated by the firm and they were reported to the SRO.

The panel also noted that a couple of the loans were repaid.

There is “clear evidence,” including bank records, that showed that one of the clients was repaid, with interest and fees, it said. A second client told a CIRO investigator in an email that their loan was repaid too, while a third lender never responded to the SRO’s inquiries about the status of their loan.

As for the failure to cooperate, the panel noted that Minhas was interviewed by CIRO staff on May 24, 2023, when he claimed to have repaid all of the loans and promised to provide documentation to support that claim — yet that hasn’t happened, the panel found.

“Despite several requests by CIRO staff that he provide the promised documentation; the respondent has failed to do so,” it said, in concluding that he “failed to cooperate with an investigation into his conduct.”

Minhas also didn’t participate in the hearing and didn’t defend the allegations.

Given his lack of participation, instead of a separate sanctions hearing, the panel immediately ordered sanctions in the case — permanently banning Minhas, imposing a $425,000 penalty, and ordering $10,000 in costs against him.

The monetary sanction was comprised of a $150,000 fine and $275,000 in disgorgement, representing the loan that may not have been repaid.

On sanctions, the panel said that Minhas “committed serious misconduct — he borrowed a total of $400,000 from clients, thereby putting himself in a serious conflict of interest and breaching his employer’s policies designed to ensure regulatory compliance.”

It noted that he had no previous history of regulatory discipline. “At the same time,” the panel said, “there is no evidence that he acknowledged his wrongdoing, and his failure to cooperate with the investigation or to participate in this proceeding suggests that he is unwilling to comply with regulation of the securities industry.

“Given Mr. Minhas’s failure to cooperate with the investigation, and his misconduct, there is no room for doubt that he should be prohibited from conducting securities related business in any capacity,” it said.

“To permit him to resume such business would put at risk investors and capital markets in the jurisdiction. This should be a permanent prohibition,” it concluded.