New SRO panel rejects proposed settlement

In an unusual move, a regulatory hearing panel has rejected a proposed enforcement settlement in a case against a former mutual fund rep.

Back in October, the Mutual Fund Dealers Association of Canada (MFDA), which has since become part of the new industry self-regulatory organization, brought allegations against George Yamamoto, a former rep with Investia Financial Services Inc. in Toronto.

Following a hearing, the new SRO’s Ontario district hearing committee has rejected a proposed settlement between Yamamoto and SRO enforcement staff — a first for the new SRO.

The details of proposed enforcement settlements are only made public if they are approved by a hearing panel.

After rejecting the proposed deal, the panel made no orders in the case. It’s not yet clear how the case will proceed from here.

According to the SRO’s vice-president of enforcement, Charles Toth, when a proposed settlement is rejected, the case can either go to a contested hearing or the two sides can try to negotiate a new settlement and present it to a new hearing panel.

“It is not yet known whether the hearing panel that rejected the settlement will issue or publish reasons for its decision,” he said.

The case involves alleged conflicts of interest.

In its original notice of hearing, the MFDA alleged that Yamamoto violated the SRO’s rules by failing to resolve conflicts in clients’ best interest and not disclosing these conflicts to his dealer — specifically, that he was being named a beneficiary in the wills of two clients and had solicited money from those same clients (allegedly requesting that they leave him $500,000 in their wills).

The allegations have not been proven.

Yamamoto resigned from the firm in August 2020 after it launched an investigation into the alleged misconduct.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.