Vernon and North Okanagan News
Vernon Mutual Funds dealer fined
A former mutual fund salesman from Vernon will never again be allowed to sell securities, following a ruling by the Mutual Fund Dealers Association of Canada (MDFA).
Robert Bruce Rush was employed by Sun Life Financial Services from 2005-2007, until it was found he was selling interests in two investment schemes that were not sanctioned by his employer.
It’s alleged that Rush sold his clients on “Gold-Quest”, promising that a $5,000 US investment could earn 87.5 per cent in one year. Two of his clients, known only by their initials KC and DC, assumed that Gold-Quest was a Sun Life product – it was not.
They used a line of credit to fund their investment and their purchase order was wired to a bank account in California, not Sun Life.
The pair went on to receive letters from Gold-Quest, periodically reporting how much the investment had earned, but never receiving any payment. This continued up until May 2008, when the company finally sent an email advising that it could no longer conduct business, on orders of the Securities Exchange Commissions (SEC) in both the US and Canada.
Around that same time, the SEC issued a press release against Gold-Quest International alleging, in short, that the company was operating a Ponzi scheme involving $27-million and more than 2,100 investors.
In November 2007, Rush proposed a second investment to KC and DC. This was done after they had made their investment in Gold-Quest, and during the period they were receiving statements that showed great returns on their previous investment.
This second investment was for “The Hear Now”, a Calgary company that manufactured dog collars with two-way radio technology. The hook was this investment required the purchasing of 1,000 shares in another named company at $7.00 each, and this venture would also generate dividends.
Rush then resigned from Sun Life four days later on Nov. 28, 2007. However, in December he met with KC and DC, who agreed to purchase 2,000 shares for $14,000.
Again, the funds for the purchase did not go through Sun Life and they lost their investment.
KC and DC sued Rush, who agreed to settle the suit, but failed to make the required payment of settlement funds.
There are also allegations that Rush was engaged in recommending, referring, selling or facilitating the sale of securities to possibly two other clients and eleven other individuals.
Rush chose not to show up for his hearing, which went on without him. The panel found evidence was proven against four violations of the MFDA by-laws, rules and polices.
Earlier this month he was slapped with a permanent prohibition from conducting securities related business in any capacity while in the employ of or associated with any MFDA Member. He was also fined $90,000 and given a $10,000 bill for the cost of the investigation and hearing.
In their decision, the MFDA noted that Rush’s misconduct was quite serious. He was recommending and selling investments not authorized by Sun Life and those investments were later found to be fraudulent or illegally distributed. He then chose not to cooperate with the MFDA’s investigation, further undermining their ability to protect the public.
KC testified that he and his wife lost their entire $19,000 investment and since they had to borrow funds, the cost of borrowing was lost too.
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