The man sent emails containing unfounded, exaggerated, and false investment advice
The Mutual Fund Dealers Association of Canada (MFDA) has announced a disciplinary proceeding against an advisor who allegedly misinformed or withheld information from his clients.
From August 2011 to November 2015, Gregory Burke sent separate emails to seven clients of Equity Associates, an MFDA-registered firm he’s worked for since December 2009. The communications involved investments that the clients already held or that Burke was recommending to them.
According to an MFDA notice of hearing dated May 24, the emails contained statements such as:
The MFDA said that the communications were either untrue or misleading; neglected to explain risks, potential costs, or losses associated with the advice; made claims that either were exaggerated or were not backed up with explicit material assumptions; or failed to indicate the source of the information.
Based on the statements, Burke could be found guilty of violating MFDA rules 2.8.2 and 2.1.1, which govern client communications and the expected standard of conduct for MFDA members, respectively.
According to the MFDA, it has the power to impose penalties such as a reprimand, a fine amounting to either $5 million per offence or three times the profit gained or loss avoided by an advisor because of his acts, a suspension from the industry, and a permanent ban.
The MFDA has not said whether the clients incurred any losses or paid any unnecessary compensation to Burke as a result of his statements.
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From August 2011 to November 2015, Gregory Burke sent separate emails to seven clients of Equity Associates, an MFDA-registered firm he’s worked for since December 2009. The communications involved investments that the clients already held or that Burke was recommending to them.
According to an MFDA notice of hearing dated May 24, the emails contained statements such as:
- “I have hired the best portfolio managers in Canada to manage our funds…”
- “…in 2008 when the TSX went down to 7,200 points, a decrease of -52% on the TSX. Our portfolio fell -22%. The TSX came up -25% and we came up a plus 7%.”
- “…in 2013 the market climbed 7%, but we gained 28%”
- “…I can assure you that with all the volatility we will double our investments in 10 – 12 years”
- “The projected future of this net investment in ten years nearing your retirement would be estimated at an 8% compounded interest at approximately $800k allowing a net annual income of approximately $64,000…”
The MFDA said that the communications were either untrue or misleading; neglected to explain risks, potential costs, or losses associated with the advice; made claims that either were exaggerated or were not backed up with explicit material assumptions; or failed to indicate the source of the information.
Based on the statements, Burke could be found guilty of violating MFDA rules 2.8.2 and 2.1.1, which govern client communications and the expected standard of conduct for MFDA members, respectively.
According to the MFDA, it has the power to impose penalties such as a reprimand, a fine amounting to either $5 million per offence or three times the profit gained or loss avoided by an advisor because of his acts, a suspension from the industry, and a permanent ban.
The MFDA has not said whether the clients incurred any losses or paid any unnecessary compensation to Burke as a result of his statements.
For more of Wealth Professional's latest industry news, click here.
Related stories:
Former Morgan Stanley broker charged with hiding losses
What protections are in place for at-risk senior investors?
