A former Abbotsford mutual fund dealer who was pushing a dubious bond investment has been handed a $15,000 penalty and five-year ban from securities-related business by regulators.
Matthew Elliott de Haan’s employment at Sun Life Financial Investment Services ended on Dec. 12, 2018, after they became aware he was soliciting investments into a bond off their books and launched an investigation.
A hearing was conducted by the Mutual Fund Dealers Association of Canada (MFDAC) on Aug. 10, 2021, with the decision published on Sept. 27.
“The purported bond offering can only be characterized as dangerously implausible. It follows that the Respondent’s promotion of the offering exposed prospective investors to a truly severe risk of harm,” said regulators.
“This was more than an example of extraordinarily poor judgment.”
Elliott de Haan had entered into a sales agreement with Impact International Secured Investments Corporation, a B.C. corporation, in October, 2018, agreeing to solicit investors for a 10 per cent commission.
This was done without the knowledge or consent of Sun Life, violating MFDAC’s regulations.
Throughout November, he unsuccessfully tried to get at least seven people to invest, including a client of Sun Life.
Impact provided him with promotional material, which claimed to be structuring a bond to fund a U.S. wind-farm project. To participate, a minimum investment of $500,000 was required.
Impact projected a return of 7468 per cent over seven years, including a $1 million return within a month, an average of $2 million per year in royalties, and $7.5 million per year for three years from royalties from another source.
Impact’s promotional material “should have provoked immediate alarm,” regulators said, because the returns defied “every normal expectation of investment economics.” Even the investment-return calculations on the promotional material were mathematically incorrect.
“Such carelessness in a financial offering is a very bad sign, and it is all the more so when the projected returns are beyond incredible.”
Elliott de Haan’s penalty was mitigated by his full admission of liability and misconduct, and his “constructive attitude” towards the discipline process, which he did without a lawyer.
He testified that he entered into the sales agreement with Impact because he was not earning enough income and was financially desperate.