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Mutual Fund Dealers Association fines salesman $1.5 million

TORONTO - A $1.5-million professional disciplinary fine has been levied against a former mutual fund salesman, who at times worked in the Ottawa area for Aegon Dealer Services and its successor Investia Financial Services until his employment there was terminated in early 2011 for an unrelated matter.

In addition to the fine, the Mutual Fund Dealers Association of Canada has also barred Jacques James Scribnock from doing any securities-related business while employed by, or associated with, any of the MFDA's member firms.

An MFDA disciplinary panel found that Scribnock had misappropriated about $860,000 of client money over two years ending March 1, 2011, when his employment at Investia ended, and that he failed to co-operate with the association's investigation of his activities.

According to the panel's decision, the investigation began in August 2011 after Investia received a client complaint that Scribnock had made unsuitable recommendations, engaged in outside business activities with the client and processed unauthorized trades in the client's accounts.

The MFDA said that Scribnock, who did not appear at the panel's disciplinary hearing and wasn't represented there by a lawyer, had set up a company called Stone Securities while working at Investia but without its knowledge. It also says that Scribnock convinced clients that it was related to another investment fund company called Stone & Co. Limited.

The MFDA said that Scribnock recommended that four clients — identified only as AC, NR, BG and GW — purchase investment products offered by his company Stone Securities or invest in Stone Securities.

The panel said Scribnock continued selling Stone Securities to the clients after his employment with Investia was terminated. The MFDA says the money collected after Scribnock left Investia is outside its jurisdiction as the self-regulating organization for the Canadian mutual fund industry.

The panel decision said in the spring of 2013, Scribnock was charged with a number of counts under the Criminal Code by Ottawa police and that the criminal charges have not been resolved and are still pending.

It said the panel had discretion to adjourn because of a pending criminal matter, but decided a stay or adjournment should not be granted in the circumstances of the present case, noting a "regulatory body like the MFDA has a strong interest in proceeding expeditiously in regulating persons connected with the industry." The hearing was held Aug. 13, 2014.

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