An Ontario mutual fund dealer and the two brothers who ran the firm have been banned after they admitted to several violations of the Mutual Fund Dealers Association of Canada’s (MFDA) rules, the self-regulatory organization announced on Thursday.
An MFDA hearing panel approved a settlement on June 29 with International Capital Management Inc. (ICM), John Paul Sanchez and Javier Andreas Sanchez, following a hearing in Toronto.
Under the settlement, the MDFA terminated ICM’s membership and permanently banned the Sanchez brothers. John Sanchez, the firm’s president and ultimate designated person, was fined $100,000, while Javier Sanchez was fined $50,000.
The respondents also agreed to pay $25,000 in costs to the regulator.
In the settlement, the respondents admitted to numerous violations of MFDA rules including:
- failing to properly resolve conflicts of interest when they raised $27.4 million from their clients for a couple of companies they also controlled;
- failing to comply with due diligence and know your clients obligations when they recommended the investments in those companies to their mutual fund clients; and
- engaging in unapproved outside business activity.
They also admitted to not complying with the terms of a previous settlement with MFDA staff, and failing to co-operate with MFDA compliance exams and enforcement investigations by deleting emails and other electronic data before turning it over to MFDA investigators.
In January, ICM agreed to a voluntary suspension as a condition of regulators approving the sale of its client list and the transfer of their accounts to another portfolio manager. That suspension took effect in April.