MFDA Notice of Hearing

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201907

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

Pravinchandra Shah

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, 121 King Street West, Suite 1000, Toronto, Ontario on April 9, 2019 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 Pravinchandra Shah (“Respondent”).

DATED: Jan 25, 2019

"Michelle Pong"

Michelle Pong

Director of Regional Councils

Mutual Fund Dealers Association of Canada
121 King St. West, Suite 1000
Toronto, ON M5H 3T9
Telephone: 416-945-5134
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 March 2010 and May 2016, the Respondent altered, and used to process transactions, 20 account forms in respect of 22 clients by altering information on the account forms without having the client initial the alterations, contrary to MFDA Rule 2.1.1.

Allegation #2: Between July 2004 and July 2016, the Respondent obtained, possessed, and in some instances, used to process transactions, 12 pre-signed account forms in respect of 8 clients, contrary to MFDA Rule 2.1.1.

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. The Respondent was registered in the mutual fund industry commencing in March 1998.
  2. From July 2003 to June 2017, the Respondent was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with Investia Financial Services Inc. (“Investia”), a Member of the MFDA.
  3. On May 15, 2017, Investia issued a termination notice to the Respondent effective June 19, 2017.
  4. On June 19, 2017, the Respondent resigned from Investia.
  5. The Respondent is no longer registered in the securities industry in any capacity.
  6. At all material times, the Respondent conducted business in the Scarborough, Ontario area.

Allegation #1 – Altered Account Forms

  1. Beginning on or about February 9, 2012, Investia’s policies and procedures required client initials on any material changes made to client documents.
  2. Between March 2010 and May 2016, the Respondent altered, and used to process transactions, 20 account forms in respect of 22 clients by altering information on the account forms without having the client initial the alterations.
  3. The altered account forms consisted of New Account Application, Order Instruction, Transfer Authorization, and Know-Your-Client (“KYC”) update forms.
  4. By virtue of the foregoing, the Respondent failed to observe a high standard of ethics and conduct in the transaction of business and engaged in conduct unbecoming of an Approved Person, contrary to MFDA Rule 2.1.1.

Allegation #2 – Pre-Signed Account Forms

  1. Beginning in December 2008, Investia’s policies and procedures prohibited its Approved Persons from using pre-signed account forms.
  2. Between July 2004 and July 2016, the Respondent obtained, possessed, and in some instances, used to process transactions, 12 pre-signed account forms in respect of 8 clients.
  3. The pre-signed forms consisted of New Account Application, New Client Application, Order Instruction, Outside Activity Disclosure, Leveraged Account Review, Transfer Authorization, and KYC update forms.
  4. The Respondent was aware that the use of pre-signed forms was prohibited. On October 23, 2013 (prior to the dates on 8 of the pre-signed forms described above at paragraph 12), Investia issued a cautionary letter to the Respondent for maintaining pre-signed forms previously found in his client files.
  5. By virtue of the foregoing, the Respondent failed to observe a high standard of ethics and conduct in the transaction of business and engaged in conduct unbecoming of 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; 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: Jacklyn Neborak
Email: jneborak@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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