MFDA Notice of Hearing

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201792

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

Lucas Stemshorn-Russell

NOTICE OF HEARING

NOTICE is hereby given that a first appearance will take place by teleconference before a hearing panel of the Pacific Regional Council (“Hearing Panel”) of the Mutual Fund Dealers Association of Canada (“MFDA”) in the hearing room at the MFDA offices, located at 650 West Georgia Street, Suite 1220, Vancouver, British Columbia on November 16, 2017 at 10:30 a.m. (Pacific), or as soon thereafter as the hearing can be held, concerning a disciplinary proceeding commenced by the MFDA against Lucas Stemshorn-Russell (“Respondent”). The Hearing on the Merits will take place in Vancouver, British Columbia at a time and venue to be announced.

DATED: Sep 19, 2017

"Bernadette Devine"

Bernadette Devine

Assistant Corporate Secretary

Mutual Fund Dealers Association of Canada
121 King St. West, Suite 1000
Toronto, ON M5H 3T9
Telephone: 416-943-7436
Fax: 416-361-9781
E-mail: corporatesecretary@mfda.ca



 

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

Allegation #1: Between March 2016 and April 2016, the Respondent cut and pasted the signatures of two (2) clients from account forms previously signed by the clients onto two (2) new account forms, contrary to MFDA Rule 2.1.1.

573688

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 was registered in the mutual fund industry commencing in March 2009.
  1. Between January 2015 and June 2016, the Respondent was registered in British Columbia as a mutual fund salesperson (now known as a dealing representative) with Worldsource Financial Management Inc. (“Worldsource”), a Member of the MFDA.
  1. Between March 2009 and January 2015, the Respondent was registered in British Columbia as a mutual fund salesperson with two other mutual fund dealers.
  1. On June 9, 2016, Worldsource terminated the Respondent’s registration for the matters described below, and the Respondent is not currently registered in the securities industry in any capacity.
  1. At all material times, the Respondent carried on business in the Sydney, British Columbia area.

The Respondent Cut and Pasted Client Signatures

  1. At all material times, Worldsource’s policies and procedures prohibited its Approved Persons, including the Respondent, from holding, obtaining, or using photocopies of previously signed trading instructions or forms.
  1. In or about May 2016, Worldsource staff completed a sales review of client files serviced by the Respondent’s and identified that two account forms were missing.
  1. In response to the deficiencies identified in the sales review, in or about June 2016, the Respondent cut and pasted the signatures of two (2) clients from account forms previously signed by the clients onto two (2) new account forms, rather than having the clients sign the account forms.
  1. The account forms consisted of an Engagement Letter and an Investment Guide.
  1. By virtue of the foregoing, the Respondent failed to observe high standards of ethics and conduct in the transaction of business and engaged in conduct unbecoming an Approved Person, contrary to MFDA Rule 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
Suite 850, 800 – 6th Avenue S.W.
Calgary, AB T2P 3G3
Attention: Sakeb Nazim
Fax: 403-266-8858
Email: snazim@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.