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2005/51September 14, 2005
White Rock mutual fund salesperson who committed fraud in stealing clients’ money hit with maximum $250,000 penalty
Vancouver -- The British Columbia Securities Commission has issued the maximum penalty it can against a former White Rock, B.C.-based mutual fund salesperson who defrauded his clients of about $1.6-million during a six-year period.
Paul Robert Maudsley has been banned for life from trading securities, being a director or officer, and engaging in investor relations. He must also pay a $250,000 administrative penalty – the maximum fine the commission can impose on an individual -- as well as almost $60,000 in costs related to the hearing.
A commission panel found that Maudsley and his company, Shaylor Management Ltd. violated the Securities Act in committing fraud when Maudsley convinced 23 clients to redeem about $1.6-million in mutual fund holdings to invest in other securities. Maudsley did not invest any of the money, instead taking the clients’ money for his own use to fund his personal and lifestyle expenses, including, a self-admitted substance abuse problem described by a witness as “his cocaine and gambling habit and alcohol addiction.”
The panel also found that Maudsley failed to deal fairly, honestly and in good faith with his clients – nearly half of whom were elderly or vulnerable.
“He simply took their money, or caused Shaylor to do so – about as stark an instance of deceit as there can be,” said the panel.
“The evidence provides clear and convincing proof that Maudsley had subjective knowledge of the deceit, and that it would result in the deprivation of others.”
Maudsley committed his violations when he was a mutual fund salesperson at Investors Group Inc.’s South Surrey Regional Office in White Rock between 1996 and 2003. He was fired from the firm on Mar. 3, 2003.
The commission panel also permanently cease-traded Shaylor’s securities in the sanctions decision. The firm is permanently banned from trading securities and must also pay an administrative penalty of $500,000 -- the maximum that the commission can order against it. Shaylor must also pay costs of the hearing.
The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the decision on our website www.bcsc.bc.ca by typing in the search box, Paul Robert Maudsley or 2005 BCSECCOM 577. If you have questions, contact Andrew Poon, Media Relations, 604-899-6880.
© BC Securities Commission 2004

Here is what Ken K thinks is wrong:

Here's the point. He stole a lot of money and doesn't spend even 5 minutes in jail. Note the low limits on fines in BC.His employer isn't even sanctioned or given a wrist slap fine.Investors don't get a nickle back. Soon , abusive provincial limitations Acts will swing into action putting tight time pressures on investors for civil action.This is the kind of regulatory enforcement regime that simply does nothing to protect investors.ken kivenko http://www.bcsc.bc.ca/release.asp?id=2748

Here is what Larry thinks is wrong:
These Securities Commissions do nothing for investors, and white collar criminals have to practically kill their clients to get any sanctions whatsoever. The crimes described above are so very very obvious that third grade children could do an improved job of sanctioning them and providing some recourse to investors. Where the commissions fail is in the more subtle, more cleverly crafted methods of duping clients of their moneys, by "trained, trusted and professional", salespeople who take advantage of the clients faith and trust.
The securities commissions cannot even make a dent into the various frauds, deceits, misrepresentations in 99% of cases. I feel they do not even have the will to do so, since it would reflect so badly on how they have run the system under their watch. It seems they can only stand by and watch now, while the smarter or more ethical among them are leaving.
Even if they had the ethics to address white collar frauds, they have nowhere near the strength. the RCMP is on record as saying they only have manpower to investigate 5% of the commercial crime reported to them, and I suspect the Securities Commissions are similar.
It is still "buyer beware" for clients and white collar crime heaven for fraudsters here in Canada.