More concerns about Winnipeg investment adviser raised

A Winnipeg woman is raising concerns about a Winnipeg investment adviser who was recently penalized by the Manitoba Securities Commission, and how he handled her late husband's investments.

Gerry Demchuk's husband of 31 years, Fred Demchuk, entrusted Ken Muzik of Wellington West Financial Services Inc. with his pension after attending one of Muzik's seminars.

Fred Demchuk, a retired railway worker, moved his pension to Muzik and Wellington, despite his wife's initial concerns.

"I remember saying to Fred, 'I don't really like him,' and Fred said, 'Oh, but he's for the railroaders and he's the one who looks after everybody. He's been holding the seminars.' And I said OK," Gerry Demchuk told CBC News.

Demchuk sand she and her husband separated for two years, following Fred's trying battle with cancer, but they never filed for divorce or legal separation.

They reconciled last year, then Fred discovered his cancer had returned, Demchuk said.

Demchuk said her husband then called Muzik to make sure she was listed as the beneficiary of his investments.

In late October, Muzik sent Gerry Demchuk an email confirming that the funds in her husband's portfolio would be "rolled over to you as a spousal rollover."

About a month later, when Fred Demchuk passed away, Muzik attended his funeral and spoke with Gerry Demchuk.

"Mr. Muzik had the audacity to come up to me and say that he didn't get the paperwork done, but he would try to do whatever he could to see that it was still looked after the way Fred wanted," she said.

Listed as 'divorced'

Since then, Demchuk discovered in Muzik's files that her husband was incorrectly listed as "divorced."

If the money goes to Fred Demchuk's estate, his wife could lose thousands of dollars in taxes — a scenario that she said could have been avoided.

Gerry Demchuk said she then learned Muzik had been reprimanded by the Manitoba Securities Commission in December for unsuitable investing. 

In the settlement, Muzik was ordered to pay $5,000 toward the costs of the investigation and to make a $15,000 payment to the minister of finance.

He acknowledged he acted "contrary to the public interest" and recommended investments that were outside the risk tolerance of clients.

Muzik has been under investigation since 2004 into dealings he has had with four other clients, and the securities commission has placed him under strict supervision.

Demchuk said she could not believe it has taken investigators seven years to look into Muzik's case.

The Manitoba Securities Commission says investigations tend to fan out, requiring investigators to examine the institution where the adviser in question works, or possibly look at a large number of client files.

"In cases where the investigation does get wider like that, it does take, obviously, a significant [amount of] time to complete," said Doug Brown, the commission's director of enforcement.

Muzik is currently under investigation by the Mutual Fund Dealer's Association as a result of a complaint from another investor, Bill Worthington.

Neither Muzik nor the National Bank, which took over Wellington West, has commented on the case to date.

Gerry Demchuk said she is exploring her options, including possible legal action.