- By Notice of Hearing dated February 22, 2018, the Mutual Fund Dealers Association of Canada (the “MFDA”) commenced a disciplinary proceeding against Raymond Louis Blais (the “Respondent”) pursuant to ss. 20 and 24 of MFDA By-law No. 1.
II. IN PUBLIC/IN CAMERA
- The Respondent and Staff of the MFDA (“Staff”) agree that this matter should be heard in public pursuant to Rule 1.8 of the MFDA Rules of Procedure.
III. ADMISSIONS AND ISSUES TO BE DETERMINED
- The Respondent has reviewed this Agreed Statement of Facts and admits the facts set out in Part IV herein. The Respondent admits that the facts in Part IV constitute misconduct for which the Respondent may be penalized on the exercise of the discretion of a Hearing Panel pursuant to s. 24.1 of MFDA By-law No. 1.
- Subject to the determination of the Hearing Panel, Staff submits, and the Respondent does not oppose, that the appropriate penalty to impose on the Respondent includes a permanent prohibition on the Respondent’s authority to act and be registered as a mutual fund salesperson (now known as a dealing representative), pursuant to section 24.1(e) of By-law No. 1.
- Staff and the Respondent however disagree on the quantum of financial penalties, including fines and costs, to be imposed on the Respondent pursuant to ss. 24.1.1(b) and 24.2 of MFDA By-law No. 1. Staff and the Respondent therefore request that the Hearing Panel determine the appropriate of quantum of fines and costs to be ordered against the Respondent, if any.
- The Respondent opposes the imposition of any fine and costs to be requested by Staff. The Respondent has filed a notice to creditors of consumer proposal pursuant to the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (as amended) pursuant to which he claims to be insolvent. The Respondent therefore states that he is unable to pay any amount towards either a fine or costs.
IV. AGREED FACTS
- Staff and the Respondent agree that submissions made with respect to the appropriate penalty are based only on the agreed facts in Part IV and no other facts or documents. In the event the Hearing Panel advises one or both of Staff and the Respondent of any additional facts it considers necessary to determine the issues before it, Staff and the Respondent agree that such additional facts shall be provided to the Hearing Panel only with the consent of both Staff and the Respondent. If the Respondent is not present at the hearing, Staff may disclose additional relevant facts, at the request of the Hearing Panel.
- Nothing in this Part IV is intended to restrict the Respondent from making full answer and defence to any civil or other proceedings against him.
- From July 4, 2000 to May 16, 2013, the Respondent was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with W.H. Stuart Mutuals Ltd. (“W.H. Stuart”), a former Member of the MFDA.
- From May 17, 2013 to November 3, 2015, the Respondent was registered in Ontario as a mutual fund salesperson (now dealing representative) with Keybase Financial Group Inc. (“Keybase”), a Member of the MFDA.
- The Respondent is no longer registered in the securities industry in any capacity.
- At all material times, the Respondent conducted business in Sudbury, Ontario.
- At all material times, the Respondent held online trading accounts in which he personally invested in various non-mutual fund securities, including precious metals equity securities. The Respondent also engaged in foreign exchange trading.
- Commencing in at least 2003 and continuing to November 3, 2015, the Respondent:
- arranged for at least 120 investors, including 81 clients, to open online discount brokerage accounts (“Trading Accounts”) at financial institutions outside of W.H. Stuart and later Keybase;
- proposed that the 120 investors, including 81 clients, clients deposit monies in the Trading Accounts either from savings or lines of credit (which he also recommended);
- obtained the login information (including user names and passwords) for the Trading Accounts from the 120 investors, including 81 clients;
- accessed the Trading Accounts using the login information provided by the 120 investors, including 81 clients, and processed trades in respect of non-mutual fund securities, including precious metals equity securities, and engaged in foreign exchange trading.
- The Respondent proposed and processed trades in the Trading Accounts which were comparable to the trades processed by the Respondent in his personal online trading accounts.
- The Respondent exercised discretion with respect to some or all elements of the trades that he processed for the 120 investors, including 81 clients, in the Trading Accounts, including the selection of which securities would be traded, the amounts of each security to be traded, the prices at which trades were executed, and the timing of those trades.
- In addition to directly processing trades in the Trading Accounts, the Respondent also made trade suggestions to the 120 investors, including 81 clients, and advised them to execute trades in their Trading Accounts on their own.
- The Respondent charged the 120 investors, including 81 clients, fees of at least $70,000 for investment advice and for processing trades in the Trading Accounts as described above. These fees were paid to the Respondent personally and not to the Members with which he was registered.
- In the event that the fees that the Respondent charged for servicing online trading accounts were not paid, the Respondent advised the 120 investors, including 81 clients, that he would discontinue servicing their Trading Accounts and deprive them of his service.
- At all material times, the Respondent was not registered to provide advice or process trades in equity securities or conduct foreign exchange trading.
- In addition, the Respondent was aware that he was not registered nor authorized to provide advice or facilitate trades in securities for the 120 investors, including 81 clients, other than securities approved for sale and processed through the facilities of the Members with which he was registered.
- None of the trades recommended and/or processed by the Respondent in respect of the Trading Accounts were carried on for the account or through the facilities of W.H. Stuart or Keybase.
- Neither W.H. Stuart nor Keybase were aware of the Respondent’s activities with respect to the Trading Accounts.
- During the course of its investigation of the Respondent’s activities, Staff did not receive, nor is it aware of, any complaints alleging investment losses arising from the Respondent’s above-described activities. Staff has been unable to determine the extent of investment gains or losses incurred by the 120 investors, if any. The records or documents enabling such calculations were unavailable to Staff and, by the time of Staff’s investigation, the Respondent no longer had access to such records or documents.
- By engaging in the conduct described above, the Respondent admits that, between at least 2003 and November 3, 2015, he engaged in securities related business that was not carried on for the account or through the facilities of the Members he was registered with, by:
- arranging for at least 120 investors, including 81 clients, to open online discount brokerage accounts outside the Members; and/or
- proposing trades, processing trades or otherwise conducting acts in furtherance of trades with respect to securities for the accounts;
- contrary to MFDA Rules 1.1.1 and 2.1.1, and the terms of his registration in the securities industry.
Execution of Agreed Statement of Facts
- This Agreed Statement of Facts may be signed in one or more counterparts which together shall constitute a binding agreement.
- A facsimile copy of any signature shall be effective as an original signature.
Raymond Louis BlaisRaymond Louis Blais
Staff of the MFDA
Per: Shaun Devlin
Member Regulation – Enforcement