MFDA Notice of Hearing

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201888

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

Mohamad Mohtaz Sawwaf

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 October 9, 2018 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 Mohamad Mohtaz Sawwaf (“Respondent”).

DATED: Aug 19, 2018

"Paige Ward"

Paige Ward

Corporate Secretary

Mutual Fund Dealers Association of Canada
121 King St. West, Suite 1000
Toronto, ON M5H 3T9
Telephone: 416-943-5838
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 2007 and August 2012, the Respondent, or his assistant for whom he was responsible, obtained, possessed and, in some instances, used to process transactions, seven pre-signed account forms in respect of five clients, contrary to MFDA Rule 2.1.1.

Allegation #2: Between May 2012 and August 2015, the Respondent, or his assistant for whom he was responsible, falsified and in some instances, used to process transactions, three account forms in respect of three  clients, by altering information on the account forms without having the clients initial the alterations, contrary to MFDA Rule 2.1.1.

Allegation #3: Between July 15, 2014 and October 2016, the Respondent processed purchases of mutual funds in the accounts of 19 clients which were subject to deferred sales charges, without keeping records that the clients were informed of all fees and charges in accordance with MFDA Rules 2.4.4, contrary to Rule 5.1(b)(iv) and Rule 1.1.2.

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 August 22, 2007 to October 3, 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. Between January 14, 2010 and October 3, 2016, Investors Group designated the Respondent as a branch manager.
  1. On October 3, 2016, Investors Group terminated the Respondent’s registration for the matters detailed herein. The Respondent is not registered in the securities industry in any capacity.
  1. At all material times, the Respondent conducted business in the Mississauga, Ontario area.

Allegation #1: Pre-Signed Account Forms

  1. At all material times, Investors Group’s policies and procedures prohibited its Approved Persons, including the Respondent, from obtaining or using pre-signed account forms.
  1. Between November 2007 and August 2012, the Respondent, or his assistant for whom he was responsible, obtained, possessed and, in some instances, used to process transactions, seven pre-signed account forms in respect of five clients.
  1. The pre-signed account forms consisted of Pre-Authorized Contribution Agreements and Transfer Authorizations.
  1. By virtue of the foregoing, the Respondent failed to observe a high standard of ethics and engaged in conduct unbecoming an Approved Person contrary to MFDA Rule 2.1.1.

Allegation #2: Altered Forms

  1. Between May 2012 and August 2015, the Respondent, or his assistant for whom he was responsible, altered and in some instances, used to process transactions, three account forms in respect of three clients, by altering information on the account forms without having the clients initial the alterations.
  1. The altered forms consisted of three Transfer Authorizations.
  1. By virtue of the foregoing, the Respondent failed to observe a high standard of ethics and engaged in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1.

Allegation #3: Failure to Keep Records that Clients were Informed of Deferred Sales Charge Fees

  1. Between July 15, 2014 and October 2016, the Respondent processed purchases of mutual funds in the accounts of, at least, 19 clients which were subject to Deferred Sales Charge (“DSC”), without keeping records that the client was informed of all fees and charges.
  1. By virtue of the foregoing the Respondent failed to keep records that the clients were informed of all fees and charges in accordance with MFDA Rules 2.4.4, contrary to Rule 5.1(b)(iv) and Rule 1.1.2.

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; and
  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: H. C. Cement Wai
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) 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.

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