MFDA bans, fines rep $50K for misappropriating, borrowing client funds

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In March 2020, as markets tanked during the onset of the Covid-19 pandemic, Shin redeemed more than $54,000 from a 74-year-old client’s account and $60,000 from a 90-year-old client’s account without the clients’ knowledge, the agreement says.

Shin also processed an unauthorized switch of more than $330,000 in the latter client’s account, which resulted in losses of about $52,450.

Later that year, Shin reimbursed the account amounts, including unrealized gains for the 74-year-old client. The bank compensated the 90-year-old client for unrealized gains, the agreement says.

Also in March 2020, Shin borrowed $100,000 from a client using a written loan agreement. Shin later repaid the amount using misappropriated funds from the 74-year-old client’s account and his own money.

That same month, Shin borrowed $100,000 from his sister, who was his client. He repaid most of the amount about a year later, and his sister forgave the remaining $10,000, the agreement says.

Shin used the misappropriated and borrowed funds to satisfy a margin call on his brokerage account, the agreement says.

The agreement noted Shin’s repayment of the funds he misappropriated, borrowed or obtained (except the forgiven $10,000). Further, he fully cooperated with the regulator’s investigation, admitted the misconduct and sought to settle the matter.

“By entering into this settlement agreement, [Shin] has saved the MFDA the time, resources and expenses associated with conducting a full hearing on the allegations,” the agreement says.

In addition to the ban and fine, Shin must pay costs of $5,000.

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