Panel finds advisor broke Mutual Fund Dealer Rules by misrepresenting investments and falsifying records
The Canadian Investment Regulatory Organization (CIRO) released its reasons for decision on April 15, following a March 17, settlement hearing involving disciplinary proceedings against Henry Griffioen.
The case falls under the Mutual Fund Dealer Rules.
According to the hearing panel, Griffioen engaged in securities related business outside the account or facilities of his Dealer Member by facilitating the sale of promissory notes.
He also created false notes on account forms and within the Dealer Member's system.
Griffioen admitted that between November 2017 and September 2020, he facilitated promissory note sales to six clients and one other individual totalling approximately $1.16m.
These notes, which were presented as investments in Advantagewon Capital Corp., were actually with Palify Lending, a company associated with Advantagewon.
The clients were unaware that their investments were made through Palify rather than Advantagewon directly.
Griffioen made several representations to the investors. He claimed the opportunity was limited to friends and family and said the principal investment could be returned at any time.
He also stated that the investment was backed by mechanics liens ranking above other credit, and that a fixed interest rate of 15 percent per annum was payable monthly.
Some clients used proceeds from mutual fund redemptions at Quadrus Investment Services Ltd., the Dealer Member, to fund these purchases.
Griffioen processed the redemptions himself and recorded false purposes such as home renovations or travel, despite knowing the funds were intended for promissory note purchases.
The misconduct occurred while Griffioen was a dealing representative in London, Ontario.
He had been registered with Quadrus from November 29, 1996, to June 20, 2021, but he is no longer registered in the securities industry in any capacity.
The hearing panel accepted the settlement agreement and imposed a permanent prohibition on Griffioen from conducting securities related business with any CIRO Dealer Member.
He must also pay a $75,000 fine and $5,000 in costs.
According to the panel, while Griffioen did not receive a direct financial benefit, he stood to benefit indirectly as an investor in Advantagewon, having invested about $600,000 of his own funds.
Investors experienced losses of both principal and, in some cases, interest.
