Rep banned, fined over client conflicts

A former mutual fund rep has been fined and permanently banned after admitting to soliciting money from clients and being named in their wills without informing his dealer.

A hearing panel of the Canadian Investment Regulatory Organization (CIRO) accepted a settlement between the self-regulatory organization’s enforcement staff and George Yamamoto, formerly a rep with Investia Financial Services Inc. in Toronto.

Under the settlement, Yamamoto was permanently prohibited from working in the industry, fined $100,000 and ordered to pay $5,000 in costs.

The sanctions follow admissions that he violated the SRO’s rules by failing to disclose that he was named in the wills of two clients (they planned to leave him $500,000) and that he had solicited money from those same clients. Yamamoto also admitted to disclosing information about their finances to the son of one of the clients without the client’s consent.

According to the settlement, the clients were friends and he often accompanied them to business meetings and served as their translators, as they were not completely fluent in English.

Yamamoto did not inform the clients that he could not accept the money allocated to him in their wills, and he didn’t disclose to his firm that he’d been named in the wills.

After they sold their home for $5 million in July 2020, he asked them for the $500,000 that was promised in the wills upfront, so that he could buy a house.

They declined to give him the money, and in August 2020 he renounced the proposed bequests. But at the same time, he provided invoices to his clients demanding that they pay him over $650,000 for unspecified services.

They declined to pay and rewrote their wills, deleting the proposed payments to Yamamoto.

An assistant reported the dealings to the firm, which launched an investigation.

Yamamoto resigned from the firm in 2020 amid the internal investigation into the alleged conflicts of interest and misconduct.

That review found no other instances of similar personal financial dealings with clients.

The regulator alleged that both being named in clients’ wills and soliciting money from them represented conflicts of interest that weren’t disclosed to the dealer or resolved in the best interest of the clients.

The settlement noted that Yamamoto ultimately didn’t receive any financial benefit. It also said the clients didn’t suffer any losses because they refused to pay him and executed new wills that didn’t include him.