A former Victoria-based mutual-fund dealer has been barred from the industry, fined $210,000 and ordered to pay back $115,000 he stole from a vulnerable client.
Ken David Derksen did not appear before an administrative hearing panel of the Mutual Fund Dealers Association last December when he was found to have committed the professional misconduct during his time at Investors Group Financial Services Inc.
Now, in a recently published decision, the panel has levied its penalties, saying Derksen’s “misconduct was rife with aggravating factors.”
Between 2016 and 2019, the client was out of the country, but directed Derksen to transfer money from savings and retirement savings accounts to a personal account that could be accessed abroad with a bank card.
Derksen also agreed to take the client’s online banking information, which constituted forbidden personal transactions and conflict of interest, according to the ruling.
Derksen then made 70 withdrawals totalling $155,800, but only gave the client $35,049.
He used the remaining $114,950.57 “for his own personal benefit or has otherwise failed to account for it,” the ruling says. “It is difficult to imagine conduct more detrimental to the public interest than stealing from a client.”
While in Thailand, the client did not receive any financial statements and was unaware of the balances in his accounts, in part due to not knowing how to bank online and in part due to health complications.
The ruling does not indicate the client’s age, but says he suffered vision problems and had kidney failure, for which he was hospitalized in 2019.
After the client returned to Canada, Derksen lied to the client about how much money was in his account. In April 2020, Derksen admitted to the client the funds were far lower than what he had initially indicated, and the client filed a complaint with Investors Group.
An investigation was launched by the Mutual Fund Dealers Association, but Derksen did not co-operate and never showed up for his hearing last December.
“Stealing a client’s money and failing to cooperate with an MFDA investigation are forms of misconduct that are both defined by deliberateness,” the ruling says. “The profoundly dishonest nature of [Derksen’s] misconduct is necessarily corrosive of public confidence in the mutual fund industry.”
The regulator’s executive recommended a fine of $150,000 but the panel bumped that up to $200,000.
Derksen is also permanently prohibited from conducting any securities-related business while employed by or associated with any registered mutual fund outlet.
Investors Group, which faced no discipline, has since paid the money back to the client, the ruling said.
The Mutual Fund Dealers Association is now part of the Canadian Investment Regulatory Organization, which incorporates mutual fund dealers and stock brokers under one regulatory umbrella.
Last fiscal year, the organization issued $8.05 million in penalties and costs to individuals and collected 21 per cent of the fines, according to its 2023 enforcement report. It’s unclear what the collection rate is for former dealers, such as Derksen.
Last year, 14 dealers were permanently barred across Canada.
The Canadian Investment Regulatory Organization may refer cases to local police departments for criminal probes.
Glacier Media asked CIRO and the Victoria Police Department if Derksen’s misconduct is under investigation.
On Wednesday, Victoria police spokesperson Terri Healy said police can’t provide information or confirm an investigation into a named individual unless charges have been sworn.
