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MFDA Notice of Hearing

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HomeCurrent Hearings201729- Nathan Eric Breukelman › NOH201729

201729

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

Nathan Eric Breukelman

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 (“Hearing Panel”) of the Mutual Fund Dealers Association of Canada (“MFDA”) in the hearing room at the MFDA offices, located at 121 King Street West, Suite 1000, Toronto, Ontario on December 12, 2017 at 9:00 a.m. (Eastern), or as soon thereafter as the hearing can be held, concerning a disciplinary proceeding commenced by the MFDA against Nathan Eric Breukelman (“Respondent”).

DATED: Oct 3, 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: corporatesecretary@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 November 26, 2014 and April 21, 2015, the Respondent misappropriated a total of $28,889.45 from client SM, thereby failing to deal fairly, honestly and in good faith with the client, failing to observe high standards of ethics and conduct in the transaction of business, and/or engaging in business conduct or practice unbecoming or detrimental to the public interest, contrary to MFDA Rule 2.1.1.

Allegation #2: Commencing August 8, 2016, the Respondent failed to cooperate with an investigation by MFDA Staff 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: 

Registration History

  1. From June 14, 2013 to February 18, 2016, 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.
  1. The Respondent is not currently registered in the securities industry in any capacity.
  1. At all material times the Respondent conducted business in Thunder Bay, Ontario. 

Allegation #1 – The Respondent Misappropriated $28,889.45 from Client SM

  1. In 2014, the Respondent and client SM were common-law spouses. They jointly owned a home and a joint bank account (the “Joint Bank Account”).
  1. At our about the beginning of October 2014, the Respondent and client SM sold their home.
  1. On October 5, 2014, client SM opened a Tax Free Savings Account (“TFSA”) at Investors Group and invested her share of the proceeds from the sale of the home which was approximately $28,000. At all material times, the Respondent was the mutual fund salesperson responsible for servicing SM’s TFSA.
  1. In or about November 2014, client SM and the Respondent separated. At about that time, client SM instructed the Respondent to redeem holdings in her TFSA so that client SM would have monies to pay her bills and other living expenses.
  1. In response to client SM’s redemption instructions, the Respondent informed her that the mutual funds held in the TFSA could not be redeemed. Nevertheless, between November 26, 2014 and April 21, 2015, the Respondent processed 21 redemptions in client SM’s TFSA totaling $28,889.45 without client SM’s knowledge or instructions.  The redemptions generated net proceeds (after deduction of deferred sales charges) of $27,304.74.[1]
  1. Without client SM’s knowledge of authorization, the Respondent deposited the net proceeds of the redemptions into the Joint Bank Account and withdrew the monies for his personal use.
  1. In or about February 2016, client SM discovered the unauthorized redemptions in her TFSA and submitted a complaint to Investors Group.
  1. On February 18, 2016, following an investigation into client SM’s complaint, Investors Group terminated the Respondent.
  1. In May 2016, Investors Group fully compensated client SM for the losses caused by the Respondent.
  1. By engaging in the conduct described above, the Respondent misappropriated monies from client SM, thereby failing to deal fairly, honestly and in good faith with the client, failing to observe high standards of ethics and conduct in the transaction of business, and/or engaging in business conduct or practice unbecoming or detrimental to the public interest, contrary to MFDA Rule 2.1.1.

Allegation #2 – The Respondent Failed to Cooperate With an Investigation of the MFDA

  1. On March 18, 2016, Staff of the MFDA (“Staff”) sent a letter to the Respondent informing him that it had commenced an investigation of his activities as a result of client SM’s complaint to Investors Group.
  1. On July 12, 2016, Staff sent a letter to the Respondent notifying him that this matter had been escalated to the MFDA’s investigations department.
  1. Between August 8, 2016 and October 31, 2016, Staff sent four letters to the Respondent, by regular mail, registered mail and email, requesting that he provide, for the period October 2, 2014 to April 30, 2015, evidence of deposits and withdrawals in respect of the Joint Bank Account, including copies of cheques drawn on the Joint Bank Account (the “Requested Documents”). The Respondent failed to respond to any of Staff’s letters.
  1. On November 11, 2016, Staff delivered, via process server, a letter to the Respondent again demanding copies of the Requested Documents and further advising that he was required to attend an interview with Staff regarding his conduct on December 7, 2016.
  1. The Respondent did not respond to Staff’s letter dated November 11, 2016 and did not attend an interview with Staff on December 7, 2016.
  1. The Respondent’s failure to provide the Requested Documents and attend at an interview with Staff frustrated Staff’s ability to complete its investigation and determine the full nature and extent of the Respondent’s conduct. 
  1. By engaging in the conduct described above, the Respondent failed to cooperate with an investigation by Staff into his conduct, 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 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:

  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 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:

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:

  1. providing four (4) copies of the Reply to the Office of the Corporate Secretary by personal delivery, mail or courier to:
    1. The Mutual Fund Dealers Association of Canada
      121 King Street West
      Suite 1000
      Toronto, ON M5H 3T9
      Attention: Office of the Corporate Secretary; or
  2. 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 Director of Regional Councils permits otherwise; or
  3. 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 Respondent fails:

  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 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.

[1] Deferred sales charges in respect of the 21 redemptions totaled $1,584.71.

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