A Manitoba accountant has been ordered to pay nearly $280,000 — to be divided between the Manitoba Securities Commission and his clients — for giving investment advice without registration.
In a decision dated Jan. 31, a panel for the commission ruled Arthur Leon Schellenberg must pay back more than $145,000 to two clients for money they lost after investing on his advice. He was also ordered to pay back $11,700 in fees he charged those two clients, as well as one other, for his services.
Schellenberg must also pay more than $95,000 for the costs of the proceeding, in addition to a $25,000 administrative penalty for improper conduct — a quarter of the maximum penalty of $100,000.
He also won’t be able to access any exemptions under Manitoba’s Securities Act.
The decision says it’s clear Schellenberg had been operating a side-business “for years,” and that evidence suggests the clients he’s been ordered to make payments to aren’t the only people he served.
In acting as an adviser, he put himself under the obligations and duties of a registered adviser, the decision states.
It found the two clients he’s been ordered to re-pay for losses were “abandoned” after he helped them make investments between 2005 and 2007. In both cases, the clients are described as not knowledgeable investors and the decision found Schellenberg invested their money in products they didn’t understand well.
In one case, a client started with more than $100,000 in 2005. The decision said the client was “completely at sea” when Schellenberg stopped advising him in 2007 and sat helplessly as the total dropped to just $22.54 by September 2012.
Another client began with $124,000 in her combined accounts in 2006. By 2015, the amount had dwindled to just over $16,000.
The decision says the panel chose the $25,000 penalty fee instead of the maximum because there’s no evidence of actual theft or fraudulent activity. It also says there’s some basis to the argument Schellenberg made that it wasn’t clear to him whether he was operating outside the rules.
“The panel believes that Schellenberg really felt he could help these individuals due to his investment experience,” the decision states. “He didn’t go about it the right way.”
Schellenberg didn’t attend the penalty phase of the hearing, according to the decision.
Published at Thu, 08 Feb 2018 08:02:31 -0500