MFDA Notice of Hearing

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201787

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

Tracey Lynn Greenwood

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 November 14, 2017 at 10:00 a.m. (Eastern), or as soon thereafter as the appearance can be held, concerning a disciplinary proceeding commenced by the MFDA against Tracey Lynn Greenwood (“Respondent”).

DATED: Sep 13, 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: 416-945-5143
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 January 2014 and February 2016, the Respondent borrowed $30,000 from client MB, thereby engaging in personal financial dealings with a client which gave rise to a conflict of interest that the Respondent failed to disclose to the Member and/or address by the exercise of responsible business judgment influenced only by the best interests of the client, contrary to MFDA Rules 2.1.1 and 2.1.4.

Allegation #2: On June 12, 2014 and on March 17, 2015, the Respondent provided false or misleading responses on the Member’s annual questionnaire to Approved Persons by denying that she had borrowed money from clients, thereby misleading the Member and interfering with its ability to supervise the Respondent’s conduct, contrary to MFDA Rule 2.1.1.

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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

  1. The Respondent has been registered as a mutual fund salesperson (now known as a Dealing Representative) in Ontario since July 17, 2006 and in British Columbia since February 17, 2015 with Investors Group Financial Services Inc. (“Investors Group”), a Member of the MFDA.
  1. Since June 21, 2010, the Respondent has acted as a Branch Manager.
  1. At all material times, the Respondent conducted business in the Kingston, Ontario area.

Allegation #1 – Borrowing from a Client

  1. At all material times, Investors Group maintained policies and procedures prohibiting its Approved Persons, including the Respondent, from borrowing from clients.
  1. In 2014, the Respondent was unable to renew a second mortgage on her home due to a decline in the value of her collateral.
  1. On January 21, 2014, the Respondent obtained an unsecured loan from client MB totaling $25,000 to cover the shortfall in her home financing. The Respondent provided client MB with a handwritten promissory note to evidence the loan.
  1. Client MB obtained the funds that she loaned to the Respondent by means of a cash advance on a credit card that offered a low interest rate for a temporary period as a promotional offer. When the low interest period expired, the annual interest rate on the credit card increased to 19%.
  1. The Respondent agreed to make all required payments, including interest payments, directly to the credit card company.
  1. In May 2015, the amount owing on the credit card was approximately $20,000. The Respondent requested an additional $5,000 loan from client MB.  Client MB agreed to advance another $5,000 to the Respondent which was wholly funded by an additional cash advance from the credit card.
  1. On October 25, 2015, the Respondent provided client MB with a handwritten note signed by the Respondent that acknowledged the outstanding debt to client MB. In the handwritten note, the Respondent also stated that client MB would be named as a beneficiary of the Respondent’s life insurance policy and repaid from insurance proceeds in the event of the Respondent’s death.
  1. The Respondent named client MB as a beneficiary of her life insurance policy.
  1. In February 2016, the Respondent repaid the full amount owing on client MB’s credit card and thereby repaid the loan from client MB.
  1. The Respondent did not disclose to Investors Group that she had borrowed monies from client MB.
  1. By engaging in the conduct described above, the Respondent engaged in personal financial dealings with client MB, which gave rise to a conflict of interest between the Respondent and client MB that the Respondent failed to disclose to Investors Group, and/or ensure was addressed by the exercise of responsible business judgment influenced only by the best interests of the client, contrary to MFDA Rules 2.1.1 and 2.1.4, and the policies and procedures of the Investors Group.

Allegation #2 – Misleading the Member

  1. On June 12, 2014, the Respondent completed Investors Group’s 2014 Annual Consultant Certificate in which she falsely responded to an inquiry from Investors Group by denying that she had borrowed money from a client.
  1. On March 17, 2015, the Respondent completed Investors Group’s 2015 Annual Consultant Certificate in which she, once again, falsely responded to an inquiry from Investors Group by denying that she had borrowed money from a client.
  1. The Annual Consultant Certificate is a tool used by Investors Group to supervise its Approved Persons, and detect actual or potential conflicts of interest that may need to be addressed.
  1. By engaging in the conduct described above, the Respondent mislead the Member and interfered with its ability to supervise the Respondent’s conduct, and thereby failed to observe high standards of ethics and conduct in the transaction of business, and engaged in conduct detrimental to the public interest, contrary to MFDA Rules 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 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: H.C. Clement Wai
Fax: (416) 361-9073
Email: cwai@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 Director of Regional Councils 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 Director of Regional Councils 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.