A former Simcoe mutual fund dealer received an $80,000 fine and a lifetime ban after a hearing panel found she misappropriated more than $5,000 and failed to co-operate with a regulator’s investigation.
The Mutual Fund Dealers’ Association of Canada began looking into Krystal Jean Vanlandschoot after officials at the CIBC branch in Simcoe where she worked learned of allegations that at least $5,489 had been misappropriated from two clients in May 2018. The incidents were brought to light when the clients raised concerns with bank officials who then launched an investigation. At the time, Vanlandschoot was registered with the association in Ontario.
“The hearing panel was satisfied that the misappropriation of client monies is fundamentally dishonest conduct which strikes at the very nature of the adviser-client relationship,” the association said in its reasons for the decision released Jan. 29. “Such conduct not only caused harm to the client and members, but it also undermined the reputation and integrity of the securities industry as a whole.”
Following the investigation, the bank compensated the clients. A CIBC spokesperson has confirmed Vanlandschoot is no longer an employee.
The association announced Feb. 17 that Vanlandschoot has applied to the Ontario Securities Commission for a hearing and review of the MFDA hearing panel’s decision.
Attempts to reach Vanlandschoot for comment were unsuccessful.
The association began its investigation in September 2018 and made numerous requests of Vanlandschoot to provide information and documentation and to be interviewed by staff, the panel was told. However, Vanlandschoot failed to provide the requested documentation and didn’t attend an interview.
The panel also took a strong stance on Vanlandschoot’s alleged failure to co-operate with investigators. The decision says Vanlandschoot did not file a response to the allegations and did not attend or have counsel appear at the hearing.
“The respondent’s conduct is so outrageously inconsistent with the standard of conduct applicable to an approved person that significant penalties against the respondent (Vanlandschoot) are warranted in order to prevent similar misconduct from occurring again in the future,” the panel said. “Further, in failing to co-operate, the respondent (Vanlandschoot) has confirmed that she is ungovernable.”
“It is a longstanding practice to impose substantial penalties on approved persons who fail to comply with their obligation to provide information and documentation relevant to an investigation,” the panel said.
In its decision, the panel said Vanlandschoot is “prohibited from conducting securities related business in any capacity while in the employ of or associated with any MFDA Member.”
The association is a regulatory body that sets standards of practice and business conduct of its members and representatives. The three-member panel imposed the fine, the lifetime ban and ordered Vanlandschoot to pay $7,500 in legal costs following a December 2020 hearing into her conduct.