Winnipeg Free Press - PRINT EDITION

Ex-mutual-fund sellers fined, suspended

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Four former Winnipeg mutual-fund salesmen were fined and suspended last week by the industry's self-regulating body for leveraged investment schemes that blew up on their clients when the market crashed in 2008.

The four salesmen all worked for WFG Securities of Canada Inc., which changed its name to Transamerica Securities Inc. in 2013.

The allegation against all four involve falsification of loan-application documents, failure to explain the risks to their clients and failure to ensure the investment strategy that was being recommended was suitable for the clients and in keeping with their investment objectives and their ability to be able to pay the loans back.

All the activities cited in the MFDA findings took place between 2006 and 2008.

Dennis Villarin received the harshest sanctions of the four. He received a "permanent prohibition" from the industry, a $250,000 fine and was ordered to cover $10,000 in costs.

The others -- Donato Gragasin, Collin Sulkers and Arsenio Sobrevilla -- received three-year suspensions, fines ranging between $20,000 and $30,000 and costs of $5,000 each.

Villarin was the ringleader of sorts, and instructed the other three in how to go about signing clients up to the scheme. As well, he did not co-operate with the MFDA investigation.

He was also more active than the others, signing up 14 clients for loans totalling $1.62 million.

The other three all signed off on agreed statement of facts in each of the proceedings against them, and each of their cases involved fewer clients and much less than $1 million in loans.

Hugh Corbett, managing director of enforcement for the MFDA, said all four of the former salesmen are out of the business now.

Each of them played fast and loose with MFDA rules regarding the risk tolerance of clients and the relevant "know-your-client" information and financial circumstances.

As well, they exaggerated or falsified the clients' relative financial assets in applying for loans to make the investments.

Although officials from WFG/Transamerica could not be reached for comment, Corbett said the company has paid out compensation to many of those clients who complained.

martin.cash@freepress.mb.ca

 

Republished from the Winnipeg Free Press print edition April 29, 2014 B5

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