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MFDA Notice of Hearing

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HomeCompleted Hearings201739 - Gregory Burke › NOH201739

This is a Third Party Document.

201739

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

Gregory Burke

NOTICE is hereby given that a first appearance will take place by teleconference before a hearing panel (“Hearing Panel”) of the Atlantic Regional Council of the Mutual Fund Dealers Association of Canada (“MFDA”) on July 18, 2017 at 10:00 a.m. (Atlantic) concerning a disciplinary proceeding commenced by the MFDA against Gregory Burke (“Respondent”). Members of the public who would like to listen to the teleconference should contact the Manager, Hearings at 416-945-5146 or mwynnyckyj@mfda.ca to obtain particulars. The Hearing on the Merits will take place in Halifax, Nova Scotia at a time and venue to be announced.

DATED: May 24, 2017

"Sarah Rickard"

Sarah Rickard

Mutual Fund Dealers Association of Canada
121 King St. West, Suite 1000
Toronto, ON M5H 3T9
Telephone: 416-945-5143
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 August 2011 and November 2015, the Respondent sent written communications to seven clients containing misleading or incomplete information, unwarranted or exaggerated claims, and/or failing to identify the material assumptions upon which the conclusions were based, contrary to MFDA Rules 2.8.2 and 2.1.1.

553839 v1

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:

Respondent’s Registration History

  1. The Respondent has been registered as a mutual fund salesperson since January 1998.
  1. Since December 2, 2009, the Respondent has been registered as a mutual fund salesperson (now known as a dealing representative) with Equity Associates Inc. (“Equity”), a Member of the MFDA. The Respondent has been registered with Equity in the following provinces during the following time periods:
    • December 2, 2009 to present: Ontario and Nova Scotia;
    • December 2, 2009 to December 23, 2011 and June 28, 2016 to present: Alberta; and
    • December 2, 2009 to December 23, 2011: Newfoundland and Labrador.
  1. From January 2008 to November 30, 2009, the Respondent was registered in Alberta, Newfoundland and Labrador, Nova Scotia, and Ontario as a mutual fund salesperson with FundEX Investments Inc., a Member of the MFDA.
  1. From June 2004 to January 10, 2008, the Respondent was registered in Alberta, Newfoundland and Labrador, Nova Scotia, and Ontario as a dealing representative with Holliswealth Advisory Services Inc. (formerly Dundee Private Investors Inc.), a Member of the MFDA.
  1. At all material times, the Respondent carried on business from a sub-branch location in Halifax, Nova Scotia.

Misleading Client Communications

  1. From August 22, 2011 to November 25, 2015, the Respondent sent client communications to seven clients of Equity with respect to investments that the clients held, or investments that the Respondent was recommending to them, which included the following statements:

Date of email or letter

Client

Content

August 22, 2011
– Letter

RB

“I have hired the best portfolio managers in Canada to manage our funds…”

“We are 99% invested in Canada with the remainder in the U.S. in high yield corporate bonds. This month we have spent 8% of our cash during this correction taking advantage of the great buys”

“…in 2008 when the TSX went down to 7,200 points, a decrease of -52% on the TSX. Our portfolio fell -22%. The TSX came up -25% and we came up a plus 7%.”

“If you began a T-SWP in December 2007 you would be receiving $60k per annum, tax deferred.”

February 18, 2013
– Email

GB & MB

“$100,000 invested today at 8% over 12 years should give you a return of $251k, enabling you to withdraw $20k net, taxed deferred over twenty years…”

November 10, 2013
– Email

JM & HM

“TSWP funds to avoid non-realized capital gains, monies being distributed on an 8% ROC (return of capital) basically avoiding any taxes over the next twenty years…”

“I may suggest that if given an opportunity to payout your mortgage providing not attached to another interest bearing loan it would be to your benefit to pay it off, borrow against your house to reinvest using the interest for a tax deduction Total interest paid $71k giving you a tax refund of $31,600 over a period of five years…”

October 14, 2014
– Email

RB[1]

“…in 2013 the market climbed 7%, but we gained 28%”

“We will always outperform the markets on the way up.”

“…I can assure you that with all the volatility we will double our investments in 10 – 12 years”

March 25-26, 2015 – Email

AB

“…I will do a comparable analyst mine vs. GWL. Most pension funds are managed using a diversified balanced fund, on that alone I can blow theirs out of the ball park even in a downturn.”

November 25, 2015 – E-mail

MN

“The projected future of this net investment in ten years nearing your retirement would be estimated at an 8% compounded interest at approximately $800k allowing a net annual income of approximately $64,000…”

“I am suggesting redeeming your existing Manulife loans taking our profits $229k investing into Fidelity funds pledging the profits of $100k of the 229 for a 3:1 $300k B2B loan.”

“One, showing you’re the future growth in 10-20 years at 8% compounded interest of the strategy I am recommending. Two, a scenario of the growth of your investment in 10 years formerly IA Clarington now Fidelity at 8% compounded interest. The third is a withdrawal amount of both scenarios and the future growth on an 8% compounded interest with a 7.9% withdrawal over 30 years…”

  1. The client communications describe above:
    1. were untrue or misleading;
    2. failed to explain the risks, potential costs, or losses associated with the recommendations, including leveraged investment recommendations;
    3. made unwarranted or exaggerated claims or conclusions or failed to identify the material assumptions made in arriving at these conclusions; and/or
    4. failed to indicate the source of the information, such as providing complete information about how the proposed returns would be achieved on the investment recommendations the Respondent made to the clients.
  1. By virtue of the foregoing, from August 2011 to November 2015, the Respondent sent written communications to seven clients containing misleading or incomplete information, unwarranted or exaggerated claims, and/or failing to identify the material assumptions upon which the conclusions were based, contrary to MFDA Rules 2.8.2 and 2.1.1.

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: Lyla Simon
Fax:  416-361-9073
Email: lsimon@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 Office of the Corporate Secretary 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] This refers to the same client RB as identified in the letter sent August 22, 2011.