A former Burnaby insurance agent and his associate who pressured an investor to lie to a B.C. Securities Commission investigator have been fined a total of $70,000 and slapped with strict investment market prohibitions.
Hunter Wei-Shun Wang was a licensed insurance broker employed by FS Financial Strategies Inc., and Jing “Janet” Zhang was that company’s marketing director, according to BCSC documents.
In December, a BCSC panel found the pair guilty of obstruction of justice under the Securities Act.
The charges relate to events in 2014.
On March 29, 2014, Wang and Zhang convinced a 28-year-old man living with his mom in Burnaby to invest $25,000 in the company.
They told him he would be guaranteed a 10% return for three years, risk-free, according to the December BCSC panel ruling.
“The moneys for his investment came from savings he built over a period of about nine years,” the ruling states. “During the relevant period, he was earning $75,000 annually.”
Three days later, however, the investor had regrets and asked for his money back.
While he was waiting for a response, his mother called the securities commission to complain about the investment.
After commission staff contacted Wang to investigate the mother’s complaint – Wang and Zhang met with the investor and his mother and told them the investment would only be refunded if the investor lied to the commission about it, according to the ruling.
Wang and Zhang then coached the investor to lie to a BCSC investigator by telling the investigator the concerns that prompted the complaint had been resolved.
“The coaching included role-playing where Wang pretended to be the investigator taking the investor’s call. The investor ultimately wrote down the script for the call,” states the December ruling.
Wang and Zhang then listened in while the investor called the investigator and read out the false story, according to the ruling.
The investor and his mother then met Zhang at her personal bank branch, where she took out $25,000 and gave it to the investor to refund his investment. (Zhang was reimbursed by the company a few weeks later.)
But the investor and his mother then told the BCSC investigator all about their dealings with the pair.
On Friday, a panel ruled to fine Wang $30,000 and Zhang $40,000 for the deceit.
Both are also banned from being a director or officer of any issuer or registrant, being or acting as a registrant or promoter, acting in a management or consultative capacity in connection with the securities market and engaging in promotional activities.
For Wang, those prohibitions will be in place for two years – for Wang, three years.
In sanctioning the pair last week, the panel said Wang and Zhang’s conduct caused “serious concerns about their fitness to be registrants and to have positions of control or direction over corporate entities.”
“Honesty is a critical aspect of being either a registrant or a director or officer of an issuer or to be otherwise involved in the capital markets as a promoter or consultant,” stated the ruling. “Our sanctions must take into account the serious risk the respondents pose to the public demonstrated by the premediated nature and duration of their deceit.”
Two of the three BCSC panel members ruled it was not an aggravating factor that Wang had been working as an insurance broker for four years and was studying to be a certified financial planner at the time of the offence.
But a dissenting opinion by panel member Deborah Armour, Q.C. found those factors were aggravating and should have resulted in Wang getting the same punishment as Zhang.
“A reasonable person understands that it is fundamentally dishonest to coach another person to lie to a regulator,” Armour wrote. “In my view, when the person doing the coaching is a voluntary participant in a similarly regulated industry to that of the securities industry [i.e. insurance] , they should have a heightened sense of the importance of the role of the regulator.”
Follow Cornelia Naylor on Twitter @CorNaylor
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