He put roughly $280,000 of the client’s money in an account connected to a private company he owned
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In line with its ongoing priority to protect vulnerable seniors, the Mutual Fund Dealers Association of Canada (MFDA) has announced its decision and reasons in connection with a permanent prohibition and $400,000 fine it issued against former fund dealing representative Alfredo Pino.
Alfredo Pino was accused of accepting $280,000 from a client, identified by the MFDA as BC. According to the association, Pino deposited the amount in the bank account of Trova, a private company under his ownership and control. Around $267,000 of the money was never repaid.
“Staff submitted that the Respondent’s conduct was egregious,” the MFDA said in a document explaining its decisions. Describing BC as a “vulnerable senior citizen, a widowed person with no previous investment experience,” it noted that she had few savings and limited understanding of what she was doing when Pino convinced her to trust him with her money.
Despite her inexperience as an investor, he characterized BC as having moderate investment knowledge; this was reflected in a Know-Your-Client form that had her signature, though she did not remember signing it. In response, Pino maintained that he had explained everything to the client, that she was a sophisticated investor, and that she knew what she was doing.
“We determined that this was untrue,” the MFDA said. “We determined that his statements purporting to connect the loan agreement with the monies he misappropriated from her were unbelievable.”
BC was eventually able to get reimbursement from Investor’s Group, the member firm under which Pino had been working. But he did not pay BC or his member firm; the MFDA noted that Pino ended up benefitting “at least to the extent of $263,000” as a result of his misconduct.
He had also not informed his employer firm of his outside activities with three Trova companies, nor gotten approval to conduct those activities. In failing to do so, MFDA staff noted, he had taken away the firm’s ability to determine the existence of issues relating to conflicts of interest, client servicing, and standards of conduct, among other things.
Pino also failed to cooperate with and misled MFDA staff in the course of their investigations. He requested that hearings on the matter be adjourned at least four times, each time immediately before the scheduled commencement of the hearing or on the date of the hearing. Among his reasons were poor health resulting from a car accident and that his house had been completely destroyed by fire.
“[T]he Respondent has manipulated the regulatory process by making repeated adjournment motions based on his health while … conducting business facilitating the investments of clients in cryptocurrency and gold,” the MFDA noted, adding that he violated an order to let MFDA staff know of any change in his condition.
Noting that his actions had affected only one client and that he had no other complaints or history of misconduct, Pino argued that a $400,000 was too much. But the MFDA determined that he is “ungovernable and should not be permitted to participate in the capital markets.
“The fine will ensure that the Respondent does not benefit from his wrongdoing and that there is a painful consequence where misappropriation occurs,” the association said.
