BCSC panel issues lifetime ban against former mutual fund salesperson for fraud
Vancouver – A British Columbia Securities Commission (BCSC) panel has fined and permanently banned Robert Bruce Rush from the province’s capital markets for fraud and illegally distributing securities.
The panel found that Rush, a B.C. resident and former mutual fund salesperson, advised an investor that she could re-invest her locked-in pension in higher return investments and do so on a tax-free basis. The investor, a former client of Rush when he was registered to sell mutual funds, agreed to follow this advice, and entered into a series of transactions that resulted in her effectively borrowing against her pension and receiving the cash proceeds therefrom.
Rush told the investor about certain investments that were being promoted by a third party and offered through an investment company, one of which was a foreign exchange trading account. The investor agreed to make an investment in a foreign exchange trading account.
The investor wrote a cheque for $73,200 payable to Breakthrough Financial Inc., a company for which Rush was the sole director and officer. Rush and Breakthrough Financial committed fraud when Rush told the investor that he would forward the funds to the investment company, but he did not do this. In its decision, the panel noted that a review of Breakthrough’s and Rush’s banking records indicates that these funds were instead used by Rush to pay personal expenses. The investor received $12,790 as a purported return on her investment, but the rest of her funds have been lost.
The panel also found that as neither Rush nor Breakthrough Financial were registered under the Securities Act at the relevant time, both respondents breached securities laws pertaining to registration requirements.
Writing about the harm caused by Rush’s misconduct, the panel wrote that the investor “has clearly suffered substantial harm from the misconduct of the respondents. The vast majority of the funds given to the respondents has been lost.”
Rush must pay to the Commission $60,410, the amount determined to be the difference between the monies invested and the purported returns paid to the investor. As there was a clear co-mingling of the funds between Rush and Breakthrough Financial, the panel ordered that they be joint and severally liable for this amount. The panel also ordered that Rush pay an administrative penalty of $200,000.
Rush must resign any position he holds as a director or officer of any issuer or registrant, and he is permanently prohibited from becoming or acting as a director or officer of any issuer or registrant, trading or purchasing securities or exchange contracts, acting as a registrant or promoter, engaging in investor relations activities, and acting in a management or consultative capacity in connection with the securities market.
Breakthrough Financial was permanently cease-traded by the panel.
You may view the sanctions decision on our website (www.bcsc.bc.ca) by typing Robert Bruce Rush, Breakthrough Financial Inc., or 2016 BCSECCOM 55 in the search box. Information regarding disciplinary proceedings can be found in the Enforcement section of the BCSC website.
Please visit the Canadian Securities Administrators’ Disciplined Persons List for information relating to persons disciplined by provincial securities regulators, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association (MFDA).
About the British Columbia Securities Commission (www.bcsc.bc.ca)
The British Columbia Securities Commission is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the Securities Act. Our mission is to protect and promote the public interest by fostering:
- A securities market that is fair and warrants public confidence
- A dynamic and competitive securities industry that provides investment opportunities and access to capital
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Richard Gilhooley, Media Relations
604-899-6854 or 1-800-373-6393 (toll free)
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