MFDA Notice of Hearing

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This is a Third Party Document.

201727

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: Mahmoud Rihawi, Attal Golzay, Ajmal Golzay, Roomal Golzay, Mustafa Sayed Hashimi, Zobair Hashimi, Sama Tabesh, Saadet Kolgekaya, Hammond Lieu, Rhea Galias Fortes, Shameel Rawani, Anjum Pathan, Mohammad Yunas Masood and Juliene da Rosa Lima

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 June 7, 2017 at 9:30 a.m. (Eastern), or as soon thereafter as the hearing can be held, concerning a disciplinary proceeding commenced by the MFDA against Mahmoud Rihawi (“Rihawi”), Attal Golzay (“Attal”), Ajmal Golzay (“Ajmal”), Roomal Golzay (“Roomal”), Mustafa Sayed Hashimi (“Mustafa”), Zobair Hashimi (“Zobair”), Sama Tabesh (“Tabesh”), Saadet Kolgekaya (“Kolgekaya”), Hammond Lieu (“Lieu”), Rhea Galias Fortes (“Fortes”), Shameel Rawani (“Rawani”), Anjum Pathan (“Pathan”), Mohammad Yunas Masood (“Masood”) and Juliene da Rosa Lima (“Lima”) (collectively referred to as the “Respondents”).

DATED: Feb 28, 2017

"Sarah Rickard"

Sarah Rickard

Director of Regional Councils

Mutual Fund Dealers Association of Canada
121 King St. West, Suite 1000
Toronto, ON M5H 3T9
Telephone: 416-943-5143
Fax: 416-361-9781
E-mail: corporatesecretrary@mfda.ca



NOTICE is further given that the MFDA alleges the following violations of the By-laws, Rules or Policies of the MFDA:

 

Allegation #1: Between 2008 and August 21, 2014, the Respondents falsified, fabricated or altered:

  1. clients’ Know-Your-Client (“KYC”) information such as income, net worth, investment objectives, and risk tolerance on account forms submitted to the Member, including new account application forms; and
  2. information on loan applications and client documents submitted to lenders, including bank statements, investment statements, pay stubs, or Canada Revenue Agency Notices of Assessment;

in order to obtain at least 51 investment loans to purchase mutual funds on behalf of clients, thereby failing to observe the high standards of ethics and conduct in the transaction of business, and engaging in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1.

 

Allegation #2: Between 2008 and August 21, 2014, the Respondents failed to ensure that at least 51 investment loans recommended to clients were suitable for the clients and in keeping with the clients’ investment objectives, having regard to the clients’ relevant “Know-Your-Client” information and financial circumstances, contrary to the Member’s policies and procedures, and MFDA Rules 2.2.1 and 2.1.1.

 

Allegation #3: Commencing December 2013, the Respondents engaged in conduct unbecoming Approved Persons by providing false and misleading responses to the Member during the course of the Member’s investigation into their conduct, contrary to MFDA Rule 2.1.1.

 

Allegation #4: Between December 12, 2011 and August 21, 2014, Attal failed to fulfill his responsibilities as Branch Manager by failing to adequately supervise the Respondents, and report to the Member that the Respondents (including himself) were falsifying, fabricating or altering client KYC information and client documents in order to obtain investment loans to purchase mutual funds, which prevented the Member from conducting a reasonable supervisory investigation and take such other supervisory measures as may have been warranted in the circumstances, contrary to MFDA Rules 2.5.1, 2.5.5, 1.1.2, and 2.1.1, and MFDA Policy No. 2.

 

Allegation #5: Commencing in December 2014, Pathan, Roomal, Zobair, Rawani, and Masood failed to attend an interview with MFDA Staff and produce information, documents and records requested by MFDA Staff during the course of an investigation, contrary to section 22.1 of MFDA By-law No. 1.

 

Allegation #6: Commencing in March 2015, Rihawi, Mustafa, Tabesh, Attal, Ajmal, Kolgekaya, and Fortes misled MFDA Staff during an interview and/or failed to produce copies of documents and records requested by MFDA Staff during the course of an investigation, 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:

 

Overview

 

  1. The Respondents all operated out of the same branch office of WFG Securities Inc. (“WFG”) or one of its predecessor companies, located in Mississauga, Ontario (the “Branch”).

 

  1. This proceeding concerns allegations that the Respondents engaged in a widespread practice at the Branch which involved falsifying, fabricating or altering clients’ KYC information on account forms submitted to WFG including new account application forms, and information on client documents submitted to lenders including bank statements, investment statements, pay stubs, or Canada Revenue Agency Notices of Assessment, in order to obtain investment loans to purchase mutual funds in client accounts.

 

  1. The Respondents engaged in these practices, without the knowledge or authorization of clients, in order to make it appear as though the clients satisfied WFG’s requirements regarding the use of leveraging and to increase the likelihood that the lenders would approve the investment loans.

 

  1. The Respondents’ conduct increased the amount of money invested by the clients in mutual funds, and thereby increased the amount of commissions and fees each of them received.

 

Registration History – Rihawi

 

  1. From January 23, 2012 to August 21, 2014, Rihawi was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with WFG. Rihawi is not currently registered in the securities industry in any capacity.

 

Registration History - Attal

 

  1. From September 24, 2008 to August 21, 2014, Attal was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with WFG. From December 12, 2012 to August 21, 2014, Attal was also designated as the Branch’s branch manager. Attal is not currently registered in the securities industry in any capacity.

 

Registration History - Ajmal

 

  1. From May 2, 2012 to August 21, 2014, Ajmal was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with WFG. Ajmal is not currently registered in the securities industry in any capacity.

 

Registration History - Roomal

 

  1. From September 24, 2008 to August 21, 2014, Roomal was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with WFG. Roomal is not currently registered in the securities industry in any capacity.

 

Registration History - Mustafa

 

  1. From March 25, 2011 to August 21, 2014, Mustafa was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with WFG. Mustafa is not currently registered in the securities industry in any capacity.

 

Registration History - Zobair

 

  1. From March 29, 2012 to August 21, 2014, Zobair was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with WFG. Zobair is not currently registered in the securities industry in any capacity.

 

Registration History - Tabesh

 

  1. From February 15, 2008 to August 21, 2014, Tabesh was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with WFG. Tabesh is not currently registered in the securities industry in any capacity.

 

Registration History - Kolgekaya

 

  1. From April 16, 2008 to August 21, 2014, Kolgekaya was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with WFG. Kolgekaya is not currently registered in the securities industry in any capacity.

 

Registration History - Lieu

 

  1. From February 13, 2012 to August 21, 2014, Lieu was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with WFG. Lieu is not currently registered in the securities industry in any capacity.

 

Registration History - Fortes

 

  1. From May 15, 2012 to August 21, 2014, Fortes was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with WFG. Fortes is not currently registered in the securities industry in any capacity.

 

Registration History - Rawani

 

  1. From January 14, 2010 to August 21, 2014, Rawani was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with WFG. Rawani is not currently registered in the securities industry in any capacity.

 

Registration History - Pathan

 

  1. From September 28, 2009 to August 21, 2014, Pathan was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with WFG. Pathan is not currently registered in the securities industry in any capacity.

  

Registration History - Masood

 

  1. From November 7, 2013 to August 21, 2014, Masood was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with WFG. Masood is not currently registered in the securities industry in any capacity.

 

Registration History - Lima

 

  1. From May 24, 2012 to August 21, 2014, Lima was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with WFG. Lima is not currently registered in the securities industry in any capacity.

 

Allegation #1 – Falsification of KYC Information and Client Documents

 

  1. Between 2008 and August 21, 2014, the Respondents recommended to at least 51 clients that the clients borrow monies and use the proceeds of the investment loans to purchase mutual funds for their accounts at WFG.[1]

 

  1. In the course of assisting the clients to obtain the investment loans, the Respondents prepared and submitted new client account forms (“NCAFs”) and loan applications, which they knew or ought to have known contained falsified, fabricated, incorrect, and/or misleading information. Among other things, the Respondents:
    1. inflated the market values of the clients’ residences on the loan applications without consulting the clients about the market values of their residences or by ignoring the market value estimates provided by the clients;
    2. reported on the loan applications and/or NCAFs that the clients owned cash or liquid assets which the clients did not own or which the Respondent inflated in value;
    3. reported on the clients’ loan applications that the clients owned other investments which the clients did not in fact own or which the Respondents inflated in value;
    4. reported on the loan applications and/or NCAFs that the clients had “good” investment knowledge and a “high” risk tolerance when the clients had limited to nil investment knowledge and a risk tolerance less than “high”;
    5. reported on the clients’ loan applications that the clients owned properties or other assets (such as cars) which the clients did not own or which the Respondents inflated in value;
    6. failed to report the true nature and extent of the clients’ liabilities on the loan applications when many of the clients had material liabilities, and without making adequate or any inquiries to determine whether the clients had any liabilities;
    7. inflated the clients’ net worth on the clients’ NCAFs and loan applications; and
    8. inflated the clients’ income on the clients’ NCAFs and loan applications.

 

  1. In addition, the Respondents falsified, fabricated or altered information contained in documents provided by the clients, including bank statements, investment statements, pay stubs, and Canada Revenue Agency Notices of Assessment. The Respondents submitted the client documents to lenders as part of the applications for investment loans.

 

  1. The Respondents engaged in the activities described in paragraph 20 above, without the knowledge or instructions of the clients, to ensure that the information contained in the client documents matched the false information that the Respondents had reported on the clients’ NCAFs and loan applications.

 

  1. Prior to February 2012, each of the Respondents falsified, fabricated or altered information in the client documents each of them submitted in support of client investment loan applications.

 

  1. Commencing in or about February 2012, the Respondents arranged for Lieu to falsify, fabricate or alter client documents on their behalf. For every client document Lieu falsified, fabricated or altered, the Respondents paid him a fee.

 

  1. The following table identifies the number of investment loans recommended, and number of falsified documents submitted to WFG and/or the lenders, by each of the Respondents in the manner described above:

 

Respondent Name

# of Client Loans

# of Altered or Falsified Documents

Attal Golzay

1

2

Mustafa Hashimi

5

11

Sama Tabesh

6

6

Saadet Kolgekaya

11

19

Mahmoud Rihawi

8

21

Roomal Golzay

3

4

Ajmal Golzay

2

2

Zobair Hashimi

2

5

Shameel Rawani

3

4

Anjum Pathan

1

1

Mohammad Masood

3

7

Hammond Lieu

4

9

Rhea Fortes

1

3

Juliene Lima

1

1

Totals

51

95

 

  1. By virtue of the foregoing conduct, the Respondents falsified, fabricated or altered clients’ KYC information on account forms submitted to the Member, and information on loan applications and client documents submitted to lenders, in order to obtain at least 51 investment loans to purchase mutual funds on behalf of clients, thereby failing to observe the high standards of ethics and conduct in the transaction of business, and engaging in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1.

 

Allegation #2 – Failure to Ensure Loan Recommendations were Suitable

 

  1. At all material times, WFG’s policies and procedures required its Approved Persons, including the Respondents, to assess and determine whether a leveraged investment recommendation was suitable for a client having regard to certain criteria. In particular, WFG’s policies and procedures stated: 

General: It must be kept in mind at all times that leveraging (borrowing for securities purchases), as with any investment strategy, is not suitable for all clients.  Before leveraging is used, it is important that you carefully review the matter for suitability based on the specific investment objectives, needs, investing experience, financial position and their capacity to service debt load.

You should carefully review with each client, the risks inherent to leveraging.  In particular, the client must be advised that changes in interest rates and/or value of funds can result in the client having to make payments for the loans from other resources.

Leveraging Parameters.  Clients must have the following as a minimum:

  • A good investment knowledge;
  • High risk tolerance;
  • A Long term investment horizon;
  • No Margin Loan, the borrowed amount SHOULD NOT exceed 50% of the clients’ total net worth; and
  • Margin Loan, the borrowed amount SHOULD NOT exceed 50% of the clients’ total liquid assets.
  • Clients must be able to afford to service their debt load using their own demonstrated personal income. The following methods to fund a loan are “prohibited”:  systematic withdrawal plans (SWP’s) and cash distributions from underlying funds.  [Underline added.]

 

  1. The Respondents recommended at least 51 investment loans to clients as described above without taking adequate or any steps to ensure that the loans were suitable for the clients.

 

  1. The majority of the clients had limited to no investment knowledge, had limited to no prior investing experience, and had never previously borrowed monies to invest.

 

  1. In addition, the Respondent’s knew or ought to have known that the clients could not afford to pay the costs of servicing the investment loans from their own personal income or withstand the risk of investment loss associated with using borrowed monies to invest.

 

  1. The Respondents engaged in the conduct described in paragraphs 19-25 above in order to:
    1. increase the likelihood that the lenders would approve the clients’ investment loans; and
    2. make it appear to WFG’s supervisory and compliance staff as though the clients satisfied WFG’s requirements regarding the use of leveraging, as set out in its policies and procedures, when the clients did not satisfy these requirements.

 

  1. By engaging in the conduct described above, the Respondents were able to sell more mutual funds to clients, thereby inflating the sales commissions and fees the Respondents were entitled to receive.

 

  1. By virtue of the foregoing, the Respondents failed to ensure that at least 51 investment loans recommended to clients were suitable for the clients and in keeping with the clients’ investment objectives, having regard to the clients’ relevant “Know-Your-Client” information and financial circumstances, contrary to the Member’s policies and procedures, and MFDA Rules 2.2.1 and 2.1.1.

 

Allegation #3 – The Respondents Misled WFG

 

  1. In December 2013, WFG received a client complaint alleging that Rihawi had recommended unsuitable investment loans in the client’s account (the “Rihawi Complaint”).

 

  1. In or about February 2014, MFDA Staff commenced an investigation of the Rihawi Complaint. As part of its initial review of the Rihawi Complaint, WFG compliance staff obtained documents from the client, including the client’s bank statements, a pay stub and CRA Notices of Assessment. The client claimed to have provided these documents to Rihawi at the time she applied for an investment loan at Rihawi’s recommendation, but the information on those documents did not match the information on the documents contained in her client file at WFG.  The information on the documents in the client file appeared to have been falsified, fabricated or altered to inflate the clients’ income and assets.

 

  1. On or about June 21, 2014, Rihawi, Attal, Mustafa, Tabesh, Roomal, Rawani, Masood, Fortes, and Lieu attended a meeting to discuss, and devise a collective response to, WFG’s investigation.

 

  1. In July 2014, WFG received a client complaint alleging that Kolgekaya had recommended and implemented an unsuitable leveraged investment strategy in the complaining client’s account (the “Kolgekaya Complaint”). As part of its initial review of the Kolgekaya Complaint, WFG compliance staff obtained documents from the complaining client, including the client’s bank statements, a pay stub and CRA Notices of Assessment. The client claimed to have provided these documents to Kolgekaya at the time she applied for an investment loan at Kolgekaya’s recommendation, but the information on those documents did not match the information on the documents located in her client file at WFG.  The information appeared to have been falsified, fabricated or altered to inflate the clients’ income and assets.

 

  1. In July 2014, further to requests made by MFDA Staff, WFG compliance staff expanded its investigation of the Rihawi and Kolgekaya Complaints to review all leveraged activity at the Branch. In total, WFG compliance staff reviewed approximately 150 leveraged client account files maintained by all Approved Persons operating at the Branch.  WFG compliance staff further obtained and reviewed documents from the investment loan companies that had provided loans to those 150 client accounts.

 

  1. In July 2014, all of the Respondents attended a meeting to discuss, and devise a collective response to, WFG’s investigation.

 

  1. During both the June 21, 2014 and July 2014 meetings, the Respondents agreed not to reveal to WFG their roles in falsifying, fabricating or altering client information in NCAFs, loan applications, or client documents submitted with the loan applications. Instead, the Respondents agreed to maintain a unified response, and deny any knowledge, responsibility or wrongdoing with respect to the falsified, fabricated or altered documents.

 

  1. By the end of July 2014, WFG determined that documents pertaining to at least 51 client investment loans had been falsified, fabricated or altered. As a result of its findings, WFG compliance staff suspended the Respondents pending a further investigation into their activities.

 

  1. In July and August 2014, WFG compliance staff obtained statements from the Respondents, each of whom stated that they did not know who or why client documents and records at the Branch had been falsified, fabricated or altered.

 

  1. The Respondents therefore provided false and misleading responses to the Member during the course of the Member’s investigation into their conduct, contrary to MFDA Rule 2.1.1.

 

  1. On August 21, 2014, WFG terminated each of the Respondents.

 

Allegation #4 – Attal Failed to Fulfill the Supervisory Responsibilities of a Branch Manager

 

  1. From December 12, 2012 to August 21, 2014, Attal was designated as the Branch Manager of the Branch.

 

  1. During this time, Attal, directly or indirectly through Lieu, falsified, fabricated or altered information contained in at least one NCAF, loan application and/or client document in order to obtain an investment loan for a client he serviced. In addition, Attal knew or ought to have known that the other Respondents at the Branch were engaged in the same practice.

 

  1. Attal failed to report to WFG that the Respondents (including himself) were falsifying, fabricating or altering client KYC information and client documents in order to obtain investment loans to purchase mutual funds, which prevented the Member from conducting a reasonable supervisory investigation and take such other supervisory measures as may have been warranted in the circumstances contrary to MFDA Rules 2.5.1, 2.5.5, 1.1.2, and 2.1.1, and MFDA Policy No. 2.

 

Allegations #5 and #6 – The Respondents (Except Lieu and Lima) Failed to Cooperate With an Investigation of the MFDA

 

  1. In October 2014, MFDA Investigations Staff sent letters to the Respondents, by regular mail and registered mail, notifying them that this matter had been escalated to the MFDA’s investigations department.

 

  1. Commencing December 18, 2014, MFDA Staff sent letters to each of the Respondents, by regular mail and registered mail, advising that they were required to attend an interview with the MFDA regarding their conduct.

 

  1. All of the Respondents, except Lieu and Lima, failed to cooperate with MFDA Staff’s investigation. In particular:
    1. Pathan, Roomal, Zobair, Rawani, and Masood failed to attend at an interview with Staff; and
    2. Rihawi, Mustafa, Tabesh, Attal, Ajmal, Kolgekaya, and Fortes misled MFDA Staff during interviews and/or failed to produce for inspection copies of documents and records requested by the MFDA Staff during the course of its investigation. 

Pathan, Roomal, Zobair, Rawani, and Masood

 

  1. Between December 18, 2014 and July 2015, MFDA Investigations Staff made numerous attempts to secure the attendance and participation of Pathan, Roomal, Zobair, Rawani and Masood at interviews in order to obtain their statements. These attempts included letters delivered by regular mail, registered mail and process servers, as well as communications by email and telephone.

 

  1. Despite MFDA Staff’s requests, Pathan, Roomal, Zobair, Rawani, and Masood failed attend interviews with MFDA Staff.

 

  1. The failure of Pathan, Roomal, Zobair, Rawani and Masood to attend interviews has frustrated MFDA Staff from determining the full nature and extent of the Respondents’ conduct and its ability to complete its investigation.

 

  1. By failing to attend an interview as requested by the MFDA, Pathan, Roomal, Zobair, Rawani and Masood engaged in conduct contrary to s. 22.1 of MFDA By-law No. 1.

 

Rihawi, Mustafa, Tabesh, Attal, Ajmal, Kolgekaya, and Fortes

 

  1. Between March 6, 2015 and June 25, 2015, Rihawi, Mustafa, Tabesh, Attal, Ajmal, Kolgekaya, and Fortes attended interviews with MFDA Staff.

 

  1. Rihawi, Mustafa, Tabesh, Attal, Ajmal, Kolgekaya and Fortes each misled Staff during the course of their interviews. Among other things, Rihawi, Mustafa, Tabesh, Attal, Ajmal, Kolgekaya, and Fortes falsely denied their roles in altering, falsifying or fabricating client documents and NCAFs in spite of evidence presented to them by Staff during their respective interviews to the effect that: (1) they had in fact deliberately altered, falsified or fabricated client documents and NCAFs or instructed one or more of the other Respondents to do so on their behalf; and (2) they conspired with the other Respondents to deny having do so.

 

  1. In addition to misleading MFDA Staff during their respective interviews, Rihawi and Mustafa undertook to provide MFDA Staff with documents including the following:
    1. Copies of their respective personal bank account statements for MFDA Staff to verify that the bank account statements they submitted to investment loans for the implementation of a leveraged investment strategy in their own personal WFG accounts had not been altered, falsified or fabricated; and
    2. Letters authorizing MFDA Staff to contact Rihawi’s former employer in order to confirm and verify the income and job title he had recorded on his own personal WFG NCAF and investment loan application (collectively, the “Undertaking Documents”).

 

  1. On March 9, 2015 and March 20, 2015, letters from MFDA Staff were personally served on Rihawi requesting that he provide the Undertaking Documents to MFDA Staff no later than March 27, 2015. The letters also reminded Rihawi of his obligations as a former Approved Person of the MFDA to cooperate with Staff during the course of an investigation and that any failure to provide the Undertaking Documents, as requested, could result in disciplinary proceedings being commenced against him. Rihawi later responded to MFDA Staff that he would not provide the Undertaking Documents.

 

  1. On March 20, 2015 and April 6, 2015, letters from MFDA Staff were personally served on Mustafa requesting that he provide the Undertaking Documents to MFDA Staff no later than April 10, 2015. The letters also reminded Mustafa of his obligations as a former Approved Person of the MFDA to cooperate with Staff during the course of an investigation and that any failure to provide the Undertaking Documents, as requested, could result in disciplinary proceedings being commenced against him. No response to these letters was ever received by MFDA Staff from Mustafa.

 

  1. To date, neither Rihawi nor Mustafa have provided the Undertaking Documents to MFDA Staff. As a result, MFDA Staff has been unable to determine the full nature and extent of the Rihawi’s and Mustafa’s activities.

 

  1. By engaging in the conduct described above, Rihawi, Mustafa, Tabesh, Attal, Ajmal, Kolgekaya, and Fortes engaged in conduct contrary to section 22.1 of MFDA By-law No. 1.

 

NOTICE is further given that the Respondents 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 Respondents:

  • have failed to carry out any agreement with the MFDA;
  • have 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;
  • have failed to comply with the provisions of any By-law, Rule or Policy of the MFDA;
  • have 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:

  1. a reprimand;
  2. a fine not exceeding the greater of:
    1. $5,000,000.00 per offence; and
    2. an amount equal to three times the profit obtained or loss avoided by such person as a result of committing the violation;
  3. 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;
  4. revocation of the authority of such person to conduct securities related business;
  5. prohibition of the authority of the person to conduct securities related business in any capacity for any period of time;
  6. 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 Respondents 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 Respondents 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:

 

     Mutual Fund Dealers Association of Canada

            121 King Street West, Suite 1000

            Toronto, ON M5H 3T9

            Attention: Francis Roy

            Fax:  416-361-9073

            Email: froy@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:

  1. 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
  2. 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.

 

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 Respondents fail:

  1. to serve and file a Reply; or
  2. 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 Respondents, 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.

[1] The individual Respondents’ participation in recommending and implementing a leveraged investment strategy in the accounts of at least 51 clients commenced on or about the date they became registered as mutual fund salesperson with WFG. All of the Respondents’ individual participation in recommending and implementing a leveraged investment strategy ended on August 21, 2014 when WFG terminated their registration as a result of the facts alleged in this Notice of Hearing.

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