Peter Power/The Globe and Mail
The Ontario Securities Commission has imposed permanent bans on mutual fund salesman Paul Yoannou after he was sentenced to six years in jail for fraud, ruling he cannot work in the financial sector or trade securities in Ontario.
Mr. Yoannou, a former salesman at Investors Group Financial Services Inc., has been barred from the financial industry on the basis of his 2013 guilty plea on accusations that he took $6.6-million from investors – many of them senior citizens – and put the money in his own bank account.
Mr. Yoannou admitted at his 2013 trial that he told clients their money was being invested in Investors Group products but instead took the funds himself and sent the clients falsified account statements. The Crown attorney said Mr. Yoannou had a gambling problem and lost much of the money on online gambling sites.
He was sentenced to six years in prison and ordered to repay $6.6-million owed to clients, but his lawyer told the court last year that Mr. Yoannou has no money and the chances of repayment are "remote."
The OSC released its ruling Friday, saying the trial evidence showed Mr. Yoannou encouraged clients to mortgage their homes, use lines of credit or take out loans to invest more money with him.
"It is clear based on the court decision and the admitted facts that the respondent should not be permitted to participate in the future in Ontario capital markets," OSC vice-chairman James Turner said in his written decision.
His ruling permanently bans Mr. Yoannou from trading or buying securities, from working as a director or officer of a public company or financial firm, and from working as a registrant or investment fund manager in the financial sector.
The Mutual Fund Dealers Association of Canada, which regulates people working in the mutual fund sector, permanently banned Mr. Yoannou from being an MFDA registrant in 2013 and ordered him to pay a $6-million fine, the largest penalty ever imposed by the regulator.
The OSC bans have a broader impact, however, and cover more than just mutual fund companies under MFDA oversight.
The MFDA accused Mr. Yoannou of stealing $12-million from clients. The criminal case cited just $6.6-million of losses because it involved a subset of his 32 victims.
Janet McFarland