Canada's mutual fund industry regulator has imposed its largest-ever fine against a former Investors Group mutual fund salesman accused of stealing almost $12-million from clients in Toronto.
A hearing panel of the Mutual Fund Dealers Association of Canada ruled Thursday that Paul Yoannou is banned for life from working in the industry and must pay a $6-million fine related to the thefts as well as a further $50,000 fine for failing to co-operate with an investigation and $7,500 in investigation costs.
The fine is the largest the MFDA has ever imposed against an individual. It is unlikely to be paid, however, because Mr. Yoannou has declared bankruptcy and is serving a six-year jail sentence in connection with the fraud.
MFDA lawyer Francis Roy told the hearing panel it was important to award a substantial fine to reflect the seriousness of the case and to act as a deterrent to others.
Mr. Yoannou was accused of misleading clients by telling them their funds were being invested in Investors Group products. Instead he took the money, deposited it in his own bank accounts and sent falsified account statements.
Although the MFDA alleged Mr. Yoannou stole $11.6-million from 55 clients, he was charged criminally with a subset of cases involving 32 clients who lost $6.6-million. He pleaded guilty in the case and was sentenced Feb. 28 to six years in jail. As a result of the guilty plea, the MFDA based its hearing Thursday - and calculated its fine - on the amount cited in the criminal case.
The MFDA fine comes on top of a court order in the criminal trial requiring Mr. Yoannou to repay $6.6-million stolen from victims.
© 2007 The Globe and Mail. All rights reserved.
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