A Mutual Fund Dealers Association of Canada (MFDA) hearing panel has sanctioned Hyun Chul Lee, a former financial advisor in British Columbia, with a fine of $150,000 and permanent prohibition from conducting securities-related business for engaging in personal financial dealings with clients and lying during the course of investigations into the matter.
Lee has also been ordered to pay costs in the amount of $10,000 for his infractions, which mostly took place between 2012 and 2013 when he was an advisor at PFSL Investments Canada Ltd. in Surrey, B.C. and Lac La Hache, B.C. The firm terminated Lee’s employment in 2013 as a result of his conduct, which also included engaging in other gainful occupations without PFSL’s knowledge and approval, according to the MFDA hearing panel’s decision and reasons released Friday.
“We are of the opinion that [the] respondent’s conduct shows a disregard for the MFDA and member rules and procedures and the client harm has been set out and, of course, the respondent has received the benefit of the funds,” states the hearing panel in its explanation for how it determined the sanctions in this case. “Deterrents to the respondent and others [are] necessary.”
Lee admitted to engaging in personal financial dealings with some of his clients. He entered into a written loan agreement with two clients referred to as “BF” and “EF,” a married couple, which would result in the redemption of $60,000 from the clients’ portfolio. Lee told BF and EF that the funds would be an investment in his car wash business. The former advisor failed to repay the principal amount and any interest that was due from the loan to the couple.
Lee also recommended to a client known as “LA” that she redeem mutual funds held with PFSL and put those funds in an alternative investment that he said would provide better returns. LA, an elderly client, would invest $17,999 into a wholesale food delivery business that was owned by Lee. In this case, Lee would repay $11,250.00 to the client.
The former advisor is also being sanctioned for not disclosing or seeking the approval of his firm in engaging in businesses outside of his financial advisory practice, which is contrary to rules established by both PFSL and the MFDA. The alternate occupations came to PFSL’s attention in February 2013, when two clients came forward and complained after being approached by Lee and denying his request for a loan or investment for one of his businesses.
Lee also admitted to misleading his firm and the MFDA in their separate investigations into his conduct. In both investigations, Lee was not completely forthcoming in identifying all of the clients who had been approached for a loan or an investment into his businesses.
Lee was a registered mutual fund salesperson, known as a dealing representative, with PFSL in B.C. between June 2003 and February 2013. He is not currently registered in the securities industry in any capacity.
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