A total of $325,000 in penalties have been handed to a former Victoria mutual fund dealer who took advantage of a client who was in ill health, according to a recent Mutual Fund Dealers Association of Canada ruling.
The Oct. 25 ruling by the association’s regulatory panel wrote that between November 2016 and May 2020, Ken David Derksen, who was registered as a dealing representative with Investors Group Financial, “engaged in personal financial dealings with a client which gave rise to a conflict or potential conflict of interest that he failed to disclose to the Member or otherwise address by the exercise of responsible business judgment influenced only by the best interests of the client.”
Derksen, who did not participate in the panel’s hearing, was ruled to have committed professional misconduct, according to the ruling, after being asked by a client to transfer money from various accounts to a personal account that could be accessed while the client was living overseas.
Derksen, according to the ruling, acquired the client’s personal banking information and made 70 withdrawals of more than $155,000 – but the client only received a little over $35,000.
“The Respondent (Derksen) used the remaining $114,950.57 for his own personal benefit or has otherwise failed to account for it,” the ruling said.
“While he was abroad, JB did not receive any financial statements and was unaware of the balances in his Accounts,” said the ruling. “JB also had significant health issues that interfered with his ability to inform himself of his financial situation.”
The health issues included liver and kidney ailments that caused the client to be hospitalized in Thailand.
Derksen told the client that his accounts were worth about $450,000, when it was really only $326,000, the ruling said.
Derksen has now been permanently prohibited from conducting any securities-related business while employed by or associated with any member of the MFDA.
Derksen must also pay a total financial penalty of $315,000, comprised of: $115,000, representing disgorgement of the respondent’s ill-gotten gains; $150,000, representing a fine in respect of the respondent’s conflict of interest and misappropriation; and $50,000, representing a fine in respect of the respondent’s failure to co-operate; plus $10,000 in costs.