MFDA Notice of Hearing

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Notice of Hearing
File No. 201676


IN THE MATTER OF A DISCIPLINARY HEARING
PURSUANT TO SECTIONS 20 AND 24 OF BY-LAW NO. 1 OF
THE MUTUAL FUND DEALERS ASSOCIATION OF CANADA
Re: Anthony Paul Dorzek

NOTICE OF HEARING

NOTICE is hereby given that a first appearance will take place by teleconference before a
hearing panel of the Central Regional Council (the “Hearing Panel”) of the Mutual Fund Dealers
Association of Canada (the “MFDA”) in the hearing room at the MFDA offices, located at 121
King Street West, Suite 1000, Toronto, Ontario on November 22, 2016 at 10:00 a.m. (Eastern),
or as soon thereafter as the hearing can be held, concerning a disciplinary proceeding
commenced by the MFDA against Anthony Paul Dorzek (the “Respondent”).

DATED this 19th day of September, 2016.

“Sarah Rickard”
Sarah Rickard
Director of Regional Councils

Mutual Fund Dealers Association of Canada
121 King Street West, Suite 1000
Toronto, ON M5H 3T9
Telephone: 416-945-5143
Facsimile: 416-361-9781
Email: corporatesecretary@mfda.ca
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NOTICE is further given that the MFDA alleges the following violations of the By-laws, Rules
or Policies of the MFDA:

Allegation #1: Between 2010 and December 2014, the Respondent solicited and accepted
approximately $20,000 from client DB for investment in a real estate business, which
investment was not approved by the Member or processed through its facilities, thereby
engaging in securities related business outside the Member, contrary to MFDA Rules 1.1.1 and
2.1.1.

Allegation #2: Between 2010 and December 2014, the Respondent engaged in personal
financial dealings with client DB when he solicited and accepted approximately $20,000 from
client DB for investment in a real estate business and co-mingled his own monies with the
client’s investment, thereby engaging in conduct giving rise to a conflict of interest which the
Respondent failed to disclose and/or ensure was addressed by the exercise of responsible
business judgment influenced only the best interests of the client, contrary to MFDA Rules
2.1.4 and 2.1.1.

Allegation #3: Commencing in September 2011, the Respondent misappropriated, or failed to
account for, at least $10,000 of the monies that he solicited and accepted from client DB for
investment in a real estate business, thereby failing to deal fairly, honestly and in good faith
with client DB and to observe high standards of ethics and conduct in the transaction of
business, contrary to MFDA Rules 2.1.1 and 2.1.4.

Allegation #4: Commencing in or about May 2015, the Respondent failed to cooperate with
MFDA Staff during the course of an investigation into his conduct, contrary to section 22.1 of
MFDA By-law No. 1.

PARTICULARS
NOTICE is further given that the following is a summary of the facts alleged and intended to be
relied upon by the MFDA at the hearing:

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Registration History

1.
From April 12, 2007 to September 30, 2011, the Respondent was registered in Ontario as
a mutual fund salesperson (now known as a dealing representative) with Investors Group
Financial Services Inc. (“Investors Group”), a Member of the MFDA.

2.
From September 30, 2011 to December 19, 2014 when he was terminated as a result of
the events described below, the Respondent was registered in Ontario as a mutual fund
salesperson (now known as a dealing representative) with FundEX Investments Inc.
(“FundEX”), a Member of the MFDA.

3.
At all material times, the Respondent conducted business in Oakville, Ontario.

4.
The Respondent has not been registered in the securities industry in any capacity since
December 19, 2014.

Background

5.
Client DB was a childhood friend of the Respondent. In about 2007, client DB became a
client of Investors Group and the Respondent was the mutual fund salesperson assigned to
service his accounts at Investors Group.

6.
In about 2010, the Respondent solicited and accepted approximately $10,000 from client
DB purportedly for investment in a real estate business. The Respondent represented to client
DB that, among other things:

a) the investment would pay client DB a guaranteed rate of return of 10-15% over a
period of 6 months;
b) client DB’s investment would be pooled with the Respondent’s own investment of
approximately $15,000; and
c) the Respondent personally knew the principal of the real estate business.
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7.
Client DB delivered a cheque to the Respondent in the amount of $10,000 payable to the
Respondent personally in respect of the investment.

8.
The Respondent did not provide client DB, nor did client DB otherwise receive, any
documentation in respect of the investment.

9.
Following the expiry of the six month investment term, the Respondent repaid the
principal of the client DB’s $10,000 investment together with a payment representing a 12½%
return on the investment.

10.
In about September 2011, the Respondent again approached client DB with respect to an
opportunity to invest in the same real estate business described above. The Respondent advised
client DB that his monies would be secured against real estate and pooled with the Respondent’s
own investment.

11.
On October 5, 2011, the Respondent sent an email to client DB stating:

If you are interested in the private investment offer again, I will need to know by
tomorrow at some point and the funds will need to post by Thursday at which
time I have a meeting to set up the deal. It will pay out on the same basis (a return
of 10% to 15% but I’m thinking closer to the 10% mark which is still amazing!)
as the previous time except that the money has to vest for 6 months and not 3
months; the main reason for the timing is due to current market conditions and the
availability of shorter returns has diminished.

12.
On or about October 8, 2011, client DB provided a cheque to the Respondent in the
amount of $9,850 payable to the Respondent personally in respect of client DB’s investment. At
that time, the Respondent owed client DB $150 for a personal matter and client DB understood
that the Respondent would be adding this amount to client DB’s investment, which would bring
client DB’s total investment to $10,000.
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13.
The Respondent did not provide client DB, nor did client DB otherwise receive, any
documentation in respect of the investment.

14.
In about December 2011, client DB transferred his accounts from Investors Group to
FundEX. At all material times, the Respondent was the mutual fund salesperson assigned to
service client DB’s accounts at FundEX.

15.
In about April 2012 (shortly before the expiry of the six month term of the investment),
client DB advised the Respondent that he wanted to redeem his investment as he required the
monies he had invested in order to pay personal expenses.

16.
The Respondent did not respond to client DB’s request to redeem his investment until on
or about May 29, 2012 (after the expiry of the six month term of the investment) when he sent an
email to client DD stating: “I completely forgot about the investment since I had my buddy roll
mine again for another 6 months. I will contact him today.”

17.
On or about June 8, 2012, the Respondent sent an email to client DB stating:

I heard back from him yesterday and he rolled over all the funds. Unfortunately,
when I made the request I didn’t specify not to separate your 10k plus interest; I
only said I wanted to roll my funds.
I didn’t get back to you yesterday because I requested that he (made him) check to
see what could be done to unlock the funds or have them paid out separately.
However, because these are locked in term investments (your funds are
completely secure as the investments are always asset backed) he was unable
which he told me from the get go but I desperately asked that he try his best
which he promises he did but at this time he remains unsuccessful. He is going to
approach the matter again on Monday with another person at the capital
management company.
If I had the cash in the bank, I would just pay you today but I have all of mine
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invested throught him until the end of the next term (Oct 15). However, if he is
unsuccessful next week, I should have some additional business over the next
couple of months… maybe less and will pay you as I get the additional business.
If this is the route I have to take, not only will I pay you ASAP but once the
investments come due I will also pay you the ROI is (sic).
I’m so very sorry for my screw up; my stomache (sic) has been in knots since
yesterday when I heard what I had done.

18.
On June 15, 2012, the Respondent sent another email client DB stating:

I just heard back on your investment and he was unsuccessful in getting them to
move on the policy of no withdrawals until the end of the term. I AM SO
SORRY. As I said before, because this was my fumble (eve if it was his, I would
do the same as you put your faith in me) I am going to work on getting you this
money asap from money earned on new business going forward. In the
meantime, your money is securely invested.

19.
Between June 2012 and December 2013, the Respondent communicated with client DB
about the status of his investment.

20.
In or about December 2013, the Respondent advised client DB that the Respondent may
not be able to recover client DB’s investment.

21.
Client DB made numerous requests to the Respondent for documentation and information
regarding his investment. The Respondent failed to respond to these requests.

22.
The Respondent has failed to account for the monies he purportedly invested on client
DB’s behalf in the real estate business described above.

23.
The Respondent did not disclose his activities with respect to client DB’s investments
described above to Investors Group or FundEX.
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24.
The investments offered by the Respondent described above were not investments which
were approved for sale by Investors Group or FundEX, and the investments were not processed
through the facilities of Investors Group or FundEX.

Allegation #1: Securities Related Business Outside the Member

25.
By virtue of the foregoing, the Respondent solicited and accepted approximately $20,000
from client DB for investment in a real estate business, which investment was not approved by
the Member or processed through its facilities, thereby engaging in securities related business
outside the Member, contrary to MFDA Rules 1.1.1 and 2.1.1.

Allegation #2: Personal Financial Dealings

26.
By virtue of the foregoing, the Respondent engaged in personal financial dealings with
client DB when he solicited and accepted approximately $20,000 from client DB for investment
in a real estate business, and co-mingled his own monies with the client’s investment, thereby
engaging in conduct giving rise to a conflict of interest which the Respondent failed to disclose
and/or ensure was addressed by the exercise of responsible business judgment influenced only
the best interests of the client, contrary to MFDA Rules 2.1.4 and 2.1.1.

Allegation #3: Misappropriation or Failure to Account for Client Monies

27.
By virtue of the foregoing, the Respondent misappropriated, or failed to account for, at
least $10,000 of the monies that he solicited and accepted from client DB for investment in a real
estate business, thereby failing to deal fairly, honestly and in good faith with client DB and to
observe high standards of ethics and conduct in the transaction of business, contrary to MFDA
Rules 2.1.1 and 2.1.4.

Allegation #4: Failure to Cooperate

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28.
On May 13, July 9, July 27 and September 3, 2015, MFDA Staff sent letters to the
Respondent requesting his attendance at an interview, pursuant to section 22.1 of MFDA By-law
No. 1.

29.
On July 29, 2015, August 5, 2015, September 3, 2015 and November 6, 2015, MFDA
Staff left voicemail messages for the Respondent requesting that he contact MFDA Staff to
schedule an interview, pursuant to section 22.1 of MFDA By-law No. 1.

30.
Despite MFDA Staff’s repeat attempts to contact him, the Respondent has failed to
respond to MFDA Staff and attend an interview with MFDA Staff.

31.
By failing to respond to MFDA Staff and attend an interview, the Respondent has
frustrated MFDA Staff’s ability to investigate the full nature and extent of the Respondent’s
activities and to determine the whereabouts of the monies that are owed to client DB.

32.
By virtue of the forgoing, the Respondent has failed to attend an interview requested by
MFDA Staff during the course of an investigation, contrary to section 22.1 of MFDA By-law
No. 1.

NOTICE is further given that the Respondent shall be entitled to appear and be heard and be
represented by counsel or agent at the hearing and to make submissions, present evidence and
call, examine and cross-examine witnesses.

NOTICE is further given that MFDA By-laws provide that if, in the opinion of the Hearing
Panel, the Respondent:


has failed to carry out any agreement with the MFDA;

has failed to comply with or carry out the provisions of any federal or provincial
statute relating to the business of the Member or of any regulation or policy made
pursuant thereto;

has failed to comply with the provisions of any By-law, Rule or Policy of the
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MFDA;

has engaged in any business conduct or practice which such Regional Council in
its discretion considers unbecoming or not in the public interest; or

is otherwise not qualified whether by integrity, solvency, training or experience,

the Hearing Panel has the power to impose any one or more of the following penalties:

(a)
a reprimand;
(b)
a fine not exceeding the greater of:

(i)
$5,000,000.00 per offence; and
(ii)
an amount equal to three times the profit obtained or loss avoided by such
person as a result of committing the violation;

(c)
suspension of the authority of the person to conduct securities related business for
such specified period and upon such terms as the Hearing Panel may determine;
(d)
revocation of the authority of such person to conduct securities related business;
(e)
prohibition of the authority of the person to conduct securities related business in
any capacity for any period of time;
(f)
such conditions of authority to conduct securities related business as may be
considered appropriate by the Hearing Panel;

NOTICE is further given that the Hearing Panel may, in its discretion, require that the
Respondent pay the whole or any portion of the costs of the proceedings before the Hearing
Panel and any investigation relating thereto.

NOTICE is further given that the Respondent must serve a Reply on Enforcement Counsel and
file a Reply with the Office of the Corporate Secretary within twenty (20) days from the date of
service of this Notice of Hearing.

A Reply shall be served upon Enforcement Counsel at:
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Mutual Fund Dealers Association of Canada

121 King Street West, Suite 1000

Toronto, ON M5H 3T9

Attention: H. C. Clement Wai

Fax: 416-361-9073

Email: cwai@mfda.ca

A Reply shall be filed by:

(a)
providing four (4) copies of the Reply to the Office of the Corporate Secretary by
personal delivery, mail or courier to:

The Mutual Fund Dealers Association of Canada
121 King Street West, Suite 1000
Toronto, ON M5H 3T9
Attention: Office of the Corporate Secretary; or

(b)
transmitting one (1) copy of the Reply to the Office of the Corporate Secretary by
fax to fax number 416-361-9781, provided that the Reply does not exceed 16
pages, inclusive of the covering page, unless the Office of the Corporate Secretary
permits otherwise; or
(c)
transmitting one (1) electronic copy of the Reply to the Office of the Corporate
Secretary by e-mail at corporatesecretary@mfda.ca.

A Reply may either:

(i)
specifically deny (with a summary of the facts alleged and intended to be relied
upon by the Respondent, and the conclusions drawn by the Respondent based on
the alleged facts) any or all of the facts alleged or the conclusions drawn by the
MFDA in the Notice of Hearing; or
(ii)
admit the facts alleged and conclusions drawn by the MFDA in the Notice of
Hearing and plead circumstances in mitigation of any penalty to be assessed.

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NOTICE is further given that the Hearing Panel may accept as having been proven any facts
alleged or conclusions drawn by the MFDA in the Notice of Hearing that are not specifically
denied in the Reply.

NOTICE is further given that if the Respondent fails:

(a)
to serve and file a Reply; or
(b)
attend at the hearing specified in the Notice of Hearing, notwithstanding that a
Reply may have been served,

the Hearing Panel may proceed with the hearing of the matter on the date and the time and place
set out in the Notice of Hearing (or on any subsequent date, at any time and place), without any
further notice to and in the absence of the Respondent, and the Hearing Panel may accept the
facts alleged or the conclusions drawn by the MFDA in the Notice of Hearing as having been
proven and may impose any of the penalties described in the By-laws.

END.

DM 503212 v1
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