The Manitoba Securities Commission (MSC) failed to inform a potential investor that Ken Muzik, a Winnipeg financial adviser, was under supervision pending an investigation into complaints about his practices, CBC News has learned.
One of Muzik's former clients, Bill Worthington, asked an investigator at the MSC in 2011 about Muzik's record.
According to emails obtained by the CBC News I-Team, the investigator stated that there was nothing on Muzik's file other than his registration.
Worthington later learned that Muzik was under supervision and reporting requirements, which is public information. The supervision and reporting were in place while the MSC was conducting a seven-year investigation into Muzik's conduct with other clients.
In 2011, the MSC investigation concluded that Muzik acted "contrary to the public interest," and he agreed to make a "voluntary payment to the Minister of Finance in the amount of $15,000," along with $5,000 in costs.
The MSC has refused to comment on the matter.
Client turns to court after regulators dismiss case
Jocelyne Robidoux, another former client of Muzik's, says the securities commission failed to conduct a thorough investigation after she raised questions in 2002.
Robidoux became a client of Muzik's in the early 1990s after a friend recommended him.
"I was quite young and had some money to invest," she said in an interview.
According to Robidoux, she tried to get in touch with Muzik in 2001 after her funds took a dive, but her calls went unanswered. She said it wasn't until she tried, unsuccessfully, to set up a face-to-face meeting with Muzik that she became suspicious.
"I took a closer look at my investments, I pulled out all the paperwork and saw that a lot of transactions had happened over a short period," she said.
Robidoux admitted that she wasn't paying close attention to her account at the time, and she had signed a form stating that Muzik did not need her signature to make trades.
However, Muzik did need verbal permission before he could make changes to her account. That permission was something Robidoux said she never provided.
Robidoux filed a complaint with the compliance department at Muzik's firm, but it was dismissed.
"They told me that they were closing my file, and that they had found no wrongdoing. And that was it," she said.
Muzik had provided his firm the dates when he and Robidoux spoke about the trades, but Robidoux said her phone records refute this claim.
Furthermore, Robidoux said she was out of town and unreachable by phone on two of the dates referenced by Muzik.
When asked about the phone records, Muzik said he confirmed changes with Robidoux.
"I had long-distance charges that I had provided to my lawyers, who verified it was in fact [Robidoux's] number," he said in an interview.
'I was angry and upset'
CBC News asked to see these records, but Muzik stated he could no longer provide them as they're in the hands of his former firm's legal counsel.
Robidoux turned to the MSC with her complaint, but it was also dismissed.
In the letter, outlining why her case was dismissed, the MSC said it boiled down to "one person's word over another," and Muzik had provided "handwritten notes … [indicating] he made contact with [Robidoux] and discussed a number of proposed switches." The letter went on to state that "Mr. Muzik has created reasonable doubt and we have therefore decided to close the file."
"I was angry and upset," said Robidoux. "It was a shock, like the police saying they don't investigate a robbery at your home."
After unsuccessfully trying to hire a lawyer to argue her case, Robidoux represented herself and sued Muzik, using her own phone records to demonstrate the phone calls Muzik claimed were made did not occur.
Robidoux said before the case went to trial, Muzik's firm offered to settle, eventually offering her the same amount she was suing for. Robidoux accepted.
Other allegations surface
In another complaint made against Muzik last year, Gerry Demchuk alleges Muzik failed to fulfill a request made by her terminally ill husband, Fred Demchuk, to make her the beneficiary of his investments, which cost her thousands of dollars in taxes after her husband passed away.
Mr. and Mrs. Demchuk had been separated but reconciled prior to his passing. Mrs. Demchuk told CBC News in 2012 her late husband had asked Muzik to change his documents to recognize the reconciliation, but she said that never happened.
In 2013, The couple's daughter, Erin Demchuk, turned to the courts after the Mutual Fund Dealers Association (MFDA) dismissed the Demchuk's complaint.
Erin Demchuk's statement of claim, filed February 2013, said Muzik received "specific instructions from [Fred] Demchuk that the funds in [his] portfolio were to be rolled over to [Gerry]," and Muzik confirmed "the proper beneficiary designations would be registered with the appropriate companies."
The Demchuk's allegations have not been proven in court. They are asking for $75,000 plus interest.
According to Muzik, the late Mr. Demchuk wanted to see him in person to sign the documents. Muzik said he "made every attempt to do exactly what Mr. Demchuk wanted to do," and he "made several attempts to have [Mr. Demchuk] come to [his]
Furthermore, in his statement of defence, Muzik denies the Demchuks "suffered any loss or damage in respect of a 'higher rate of taxation' as alleged or at all."
The allegations of Bill Worthington and at least two other former clients of Muzik's are currently under investigation by the MFDA.