The Mutual Fund Dealers Association (MFDA) has fined and suspended an advisor in Manitoba after he falsified a client's signature. He thought he was doing the client a favour by processing a redemption in an emergency, but in fact the client's email had been hacked.
In a decision released last week, the MFDA suspended Craig MacDonald from conducting securities-related business for a period of one year and ordered him to pay a $10,000 fine and costs of $2,500 after it was found that he had falsified a client's signature on a redemption form.
In April of 2013, MacDonald received a number of emails which appeared to be coming from his client, indicating that she urgently required $8,220. The messages said she was out of town at a family funeral, and asked that the money be wired to her brother's bank account. In reality, there was no funeral, and no emergency: the client's email account had been hacked.
The advisor falsified the client's signature
MacDonald was with Investors Group, which had recently changed its policies and procedures to address concerns over this kind of fraud. Head office told MacDonald that email requests for wire transfers would not be accepted unless they had been authorized by client signatures on the investment instructions. Advisors were also required to confirm in writing that they had validated the email request with the client either by phone or in person.
The advisor disregarded these directions, falsified the client's signature on a redemption form, and then wired $8,220 to the scam artist’s bank account. Investor’s Group reimbursed the client after the fraud was discovered. The MFDA documents reveal that MacDonald had left the securities industry by the time the case was heard; if he wants to re-enter the industry, the regulator says he will have to complete an ethics course.