Ex-fund salesperson handed lifetime ban, $50,000 fine for not disclosing conflicted relationship
The MFDA has imposed a permanent ban on My Phuong “Vicky” Luong Dao, a former mutual fund salesperson with WFG Securities in Ontario, for engaging in outside business activities and personal financial dealings with a client.
According to a settlement agreement, Luong Dao and a client, MH, purchased two condo properties in 2013 and 2014. To pay for the purchases, they had to jointly obtain mortgages amounting to $223,119 and $396,500, as well as a line of credit secured against one of the properties. They also opened a joint bank account.
Because Luong Dao had agreed to purchase one of the properties directly from the condo developer, she received a discount of $91,530 from the purchase price that was to be deducted from the balance owing upon closing. She did not inform MH of the discount – it was only later that MH agreed to become a joint purchaser of that property – and did not share the benefit with the client.
The condos were intermittently rented out to tenants, with payments made to Luong Dao and subsequently deposited into the joint bank account. The rental income was less than the full cost of the mortgage payments and maintenance and insurance expenses for the condos, so she asked MH to make additional monthly contributions to cover the difference. She claimed that she paid more than half the additional funds required to service the properties, though she didn’t provide any receipts or formal accounting to MH.
At one point in September 2017, people representing MH asked Luong Dao for information relating to the value of the condo properties. She claimed that, because MH had complained about her conduct to WFG, she understood that she was not to contact MH or her representatives. The client initiated a civil lawsuit against Luong Dao in December 2017 with respect to the condo properties along with other concerns.
Between November 2012 and November 2016, Luong indicated on five Annual Representative Compliance Certificates (ARCCs) that she had fully disclosed all information relating to outside business activities to WFG. In fact, she never told WFG that she’d got the money from her client to finance the purchase of the condos or opened the joint bank account. She also did not advise MH that their joint financial dealings gave rise to a conflict of interest.
Aside from a permanent prohibition from conducting securities-related business in any capacity under an MFDA firm, Luong Dao faces a fine of $50,000 and must pay costs of $10,000.
