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Reasons for Decision
File No. 201338



IN THE MATTER OF A SETTLEMENT HEARING
PURSUANT TO SECTION 24.4 OF BY-LAW NO. 1 OF
THE MUTUAL FUND DEALERS ASSOCIATION OF CANADA


Re: Blair Addison


Heard: September 30, 2014 in Toronto, Ontario
Reasons for Decision: November 13, 2014

REASONS FOR DECISION

Hearing Panel of the Central Regional Council:

Frederick H. Webber
Chair

Janet Himmeroder
Industry Representative (by teleconference)

David W. Kerr
Industry Representative

Appearances:

Maria L. Abate
)
Enforcement Counsel, Mutual Fund Dealers

)
Association of Canada (“MFDA”)
)

Lindsay Scott
)
Counsel for Blair Addison (the “Respondent”)
)

)

Page 1 of 22

1.
As a result of a settlement agreement dated February 27, 2014 (the “Settlement
Agreement”), entered into between Staff of the MFDA (“Staff”) and the Respondent, a copy of
which is attached hereto as Schedule “1”, a settlement hearing was conducted on September 30,
2014 in Toronto. The Hearing Panel received and considered oral submissions from Staff and
counsel for the Respondent, and Staff’s written submissions. Respondent’s counsel advised the
Hearing Panel that she agreed with the submissions of Staff.

2.
The contraventions alleged by the MFDA and admitted by the Respondent are set out in
the Settlement Agreement and are as follows:

a) between August 2009 and March 2012, the Respondent engaged in personal financial
dealings with client DH by recommending and facilitating an investment by client
DH in the amount of $120,000 in a rental property owned by the Respondent by way
of a second mortgage secured against the property, thereby creating a conflict or
potential conflict of interest between the interests of the Respondent and the interests
of client DH which the Respondent failed to ensure was addressed by the exercise of
reasonable business judgment influenced only by the best interests of the client,
contrary to MFDA Rules 2.1.4 and 2.1.1; and

b) between at least March 30, 2011 and July 4, 2011, the Respondent failed to comply
with his reporting obligations to the Member in respect of complaints made the client
DH concerning his investment in the Respondent’s rental property, contrary to
MFDA Rule 1.2.2, and subsections 4.1(a) and (b)(v) of MFDA Policy No.6.

3.
The Respondent agreed to the following sanctions:

a) a fine in the amount of $20,000;
b) costs in the amount of $5,000;
c) the Respondent shall in future comply with all applicable MFDA By-laws, Rules and
Policies, and all applicable legislation and regulations that the Respondent has agreed
he breached in relation to the Settlement Agreement; and
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d) the Respondent shall attend the Settlement Hearing in person.

4.
The Respondent did not attend the Settlement Hearing in person but was represented by
counsel who advised that the Respondent was prevented from attending by a medical emergency
involving his wife. Both counsel agreed that the hearing should proceed in the absence of the
Respondent.

5.
The salient facts are set out in the Settlement Agreement as attached hereto and are, in
summary:

a) On or about September 2009, the Respondent engaged in personal financial dealings
with client DH by recommending and facilitating an investment by client DH in the
amount of $120,000 in a rental property owned by the Respondent by way of a
second mortgage secured against the property. The investment was for a term of one
year with a maturity date of September 24, 2010. The Respondent assured client DH,
who was also a long-time friend of the Respondent (20 plus years), that there would
be no issues with repayment since the investment was only for a short period of time
and that he had sufficient resources to repay the second mortgage in full at maturity.

b) On August 27, 2009, client DH transferred $131,495.36 from his Desjardins Financial
Security Investments Inc. (“Desjardins”) RSP account to a B2B RSP account since
Desjardins would not permit a client to hold a second mortgage in an RSP account.
On September 23, 2009, client DH advanced $120,000 from the B2B RSP account to
the Respondent secured by a second mortgage on the Respondent’s rental property.

c) While the Respondent made the monthly interest payments owing under the terms of
the second mortgage, at the end of the one year term on September 24, 2010, the
Respondent failed to repay the principal amount owing to Client DH.

d) On October 7, 2010, the Respondent requested a 12 month extension to repay client
DH. Client DH refused to provide an extension but entered into an interim agreement
Page 3 of 22


with the Respondent whereby he could attempt repayment in instalments and the
principal would be repaid in full by April 24, 2011. On April 24, 2011, the
Respondent failed to repay client DH in full and had also missed all of the agreed
upon instalment payments.

e) On March 30, 2011, after it became apparent that the Respondent would not be able
to repay client DH, client DH sought legal counsel to assist him to recoup his funds.
The Respondent did not report the receipt of client DH’s demand letter to Desjardins.

f) On July 4, 2011, client DH notified Desjardins about the personal financial dealings
between himself (Client DH) and the Respondent. Client DH also requested that his
account be transferred to another mutual fund salesperson.

g) On July 19, 2011, the Respondent requested a further extension to repay client DH.
The Respondent requested until August 24, 2011 to repay client DH in full. The
Respondent advised client DH that he would obtain the monies for repayment through
the sale of the rental property. Client DH agreed to the extension request, but on
August 24, 2011, the Respondent failed to repay the amount owning under the second
mortgage.

h) On December 15, 2011, the Respondent and client DH agreed to yet another
extension until April 24, 2012 for the Respondent to repay the amount owing to client
DH.

i) On March 28, 2012, the Respondent repaid client DH $120,000 plus outstanding fees
on account of the second mortgage and client DH signed a statement of discharge.
The Respondent obtained the funds through the sale of the rental property.

j) At all material times, Desjardin’s Policies and Procedures Manual (“PPM”) addressed
conflicts and potential conflicts of interest between Approved Persons and clients.
The PPM provided that any transaction giving rise to a conflict or potential conflict of
interest between an Approved Person and a client must be immediately reported to
Desjardins prior to the transaction taking place.
Page 4 of 22

6.
In accordance with s. 24.4 of MFDA By-law No. 1, a hearing panel has only two options
on a settlement hearing, it may accept or reject the Settlement Agreement, but is not permitted to
substitute its own decision. As stated in the MFDA written submissions, (citing Professional
Investments (Kingston) Inc. (Re), 2009 LNCMFDA 9), the proper approach to determine
whether the Panel should accept the Settlement Agreement is as follows:

“in a contested Hearing, the Hearing Panel attempts to determine the correct penalty. In a
Settlement Hearing, the Hearing Panel takes into account the settlement process itself and
the fact that the parties have agreed to the penalties set out in the Settlement
Agreement.…[A] Hearing Panel should not interfere lightly in a negotiated settlement
and should not reject a Settlement Agreement unless it views the penalty as clearly falling
outside a reasonable range of appropriateness.”

7.
This principle has been followed in a number of cases. This Hearing Panel agrees with
the principle stated and has followed it in this case. Furthermore, as stated in submissions of
Staff, this principle assists the MFDA to fulfill its regulatory objective of protecting the public
(citing British Columbia Securities Commission v. Seifert, 2007 BCCA 484).

8.
Given the standard of “reasonableness”, it is the responsibility of this Hearing Panel to
determine whether the penalties set forth in the Settlement Agreement strike a reasonable
balance between fairness to the Respondent in the circumstances and the need to protect the
investing public, the industry membership, the integrity of the discipline process, the integrity of
the securities markets and prevention of a repetition of the offence.

9.
Staff’s submissions set forth a number of factors commonly considered by hearing panels
in determining whether a settlement should be accepted:

a) whether the acceptance of the settlement agreement would be in the public interest
and whether the penalty imposed will protect investors;
b) whether the settlement agreement is reasonable and proportionate, having regard to
the conduct of the Respondent as set out in the settlement agreement;
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c) whether the settlement agreement addresses the issues of both specific and general
deterrence;
d) whether the proposed settlement will prevent the type of conduct described in the
settlement agreement from occurring again in the future;
e) whether the settlement agreement will foster confidence in the integrity of the
Canadian capital markets;
f) whether the settlement agreement will foster confidence in the integrity of the
MFDA; and
g) whether the settlement agreement will foster confidence in the regulatory process
itself.

10.
Staff submissions cited Zenon Smiechowski (Re) (Superintendant of Brokers), [2010]
MFDA File No. 201007 as authority for the foregoing. These factors were accepted and applied
by this Panel.

11.
Staff submissions then asserted that the primary goal of securities regulation is the
protection of the investor, citing the well known case of Pezim v. British Columbia
(Superintendant of Brokers, [1994] 2 S.C.R. 557. This Panel agrees. Additional factors regarding
the appropriateness of the penalty, citing Headley Re, [2006] MFDA File No. 200509 are:

a) the seriousness of the allegations proved against the Respondent;
b) the Respondent’s past conduct, including prior sanctions;
c) the Respondent’s experience and level of activity in the capital markets;
d) whether the Respondent recognizes the seriousness of the improper activity;
e) the harm suffered by investors as a result of the Respondent’s activities;
f) the benefits received by the Respondent as a result of the improper activity;
g) the risk to investors and the capital markets in the jurisdiction, were the Respondent
to continue to operate in capital markets in the jurisdiction;
h) the damage caused to the integrity of the capital markets in the jurisdiction by the
Respondent’s improper activities;
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i) the need to deter not only those involved in the case being considered, but also any
others who participate in the capital markets, from engaging in similar improper
activity;
j) the need to alert others to the consequences of inappropriate activities to those who
are permitted to participate in the capital markets; and
k) previous decisions made in similar circumstances.

12.
Staff reviewed with the Panel the MFDA Penalty Guidelines regarding the misconduct of
the type in this case. Staff submissions, with which Respondent’s counsel agreed, set out the
factors which were applied in this case, as follows.

Seriousness of the Activity

13.
The actions of the Respondent involving borrowing money from a client without
disclosing the transaction to Desjardins, and then failing to report to Desjardins when the client
complained about the Respondent’s failure to repay the loan are, as admitted by the Respondent,
breaches of MFDA Rules and Policies as set out above. The Panel views these actions as serious
misconduct by the Respondent, firstly, because they involve potential or actual conflict between
the interests of the client and the interests of the Respondent. It is the Respondent’s obligation to
make the client’s interest his primary focus and to avoid conflicts between his interests and those
of the client. The Respondent’s actions were not trivial nor were they inadvertent; they were
intentional, designed to help the Respondent with his financial issues and put the client’s assets
at serious risk. Furthermore, by failing to advise Desjardins of the loan prior to entering into it
and then failing to report the client’s complaint to Desjardins, Desjardins could not exercise its
oversight obligations to avoid harm to the particular client and to investigate whether other
clients of the Respondent may have been affected. The fact that the Respondent and the client
DH were friends does not make the conduct permissible. On the other hand, as mitigating
factors, the incidents in this case were isolated and no other clients were involved in any
misconduct by the Respondent.


Page 7 of 22


Respondent’s Experience and Past Conduct

14.
The Respondent has been registered in Ontario as a mutual fund salesperson with
Desjardins since 2005. He cannot claim lack of experience or knowledge. As a mitigating factor,
the Respondent has not been the subject of any previous disciplinary proceedings.

Client Harm/Respondent Benefit

15.
As a result of the Respondent’s misconduct, client DH was deprived of the use of his
funds for a period of 1.5 years and incurred the additional expenses of retaining legal counsel to
recoup his funds. After sale of the property and repaying the mortgages thereon, the Respondent
realized a gain of approximately $18,250.

Risk to Investors and Capital Markets

16.
The Respondent does not appear to have engaged in any misconduct with any of his
clients other than DH. Furthermore, the Respondent has cooperated with the MFDA
investigation, admitted his misconduct and agreed to the penalties in the Settlement Agreement.
These actions demonstrated the Respondent’s recognition of the seriousness of his misconduct
and eliminated the need for MFDA to conduct a contested hearing. Therefore, there appears to be
little or no risk to investors or the capital markets if the Respondent continues to operate.

General and Specific Deterrence

17.
This Hearing Panel agrees with the submissions of Staff that general and specific
deterrence are important considerations in making orders that are both protective and
preventative, that sanctions must protect the public interest and prevent future conduct
detrimental to the integrity of the capital markets. The parties have agreed that the penalties
agreed to in the Settlement Agreement will act as both a general deterrent and a deterrent specific
to the Respondent engaging in misconduct in the future, and the Panel has accepted the
Settlement Agreement. However, the Hearing Panel members wish to express concern that the
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issue of general deterrence needs to be emphasized through the imposition of substantial
penalties. If this case had not been a settlement hearing, the Hearing Panel would have imposed
more severe sanctions in order to address general deterrence and send a strong message to the
industry that misconduct of the type involved in this case is serious and will not be tolerated.

Case Law

18.
The Hearing Panel was referred to cases set out in the submissions of Staff. Although
each case turns on its own facts, these cases were general guidance to this Panel in determining
the reasonableness of the penalties proposed in the Settlement Agreement.

Acceptance of Settlement Agreement

Given the nature of the misconduct, the need for specific and general deterrence, the mitigating
and aggravating factors and the cases to which the Panel was referred, the Panel agreed that the
terms of the Settlement Agreement were reasonable. Accordingly the Settlement Agreement was
accepted by the Panel who signed the order accordingly.


DATED this 13th day of November, 2014.

“Frederick H. Webber”
Frederick H. Webber

Chair

“Janet Himmeroder”
Janet Himmeroder

Industry Representative

“David W. Kerr”
David W. Kerr

Industry Representative

Page 9 of 22

Schedule “1”
Settlement Agreement
File No. 201338


IN THE MATTER OF A SETTLEMENT HEARING
PURSUANT TO SECTION 24.4 OF BY-LAW NO. 1 OF
THE MUTUAL FUND DEALERS ASSOCIATION OF CANADA


Re: Blair Addison



SETTLEMENT AGREEMENT

I.
INTRODUCTION

1.
By Notice of Settlement Hearing, the Mutual Fund Dealers Association of Canada (the
“MFDA”) will announce that it proposes to hold a hearing to consider whether, pursuant to
section 24.4 of By-law No. 1, a hearing panel of the Central Regional Council (the “Hearing
Panel”) of the MFDA should accept the settlement agreement (the “Settlement Agreement”)
entered into between Staff of the MFDA (“Staff”) and the Respondent, Blair Addison.

II.
JOINT SETTLEMENT RECOMMENDATION

2.
Staff conducted an investigation of the Respondent’s activities. The investigation
disclosed that the Respondent had engaged in activity for which the Respondent could be
penalized on the exercise of the discretion of the Hearing Panel pursuant to s. 24.1 of By-law No.
1.
Page 10 of 22

3.
Staff and the Respondent recommend settlement of the matters disclosed by the
investigation in accordance with the terms and conditions set out below. The Respondent agrees
to the settlement on the basis of the facts set out in Part IV herein and consents to the making of
an Order in the form attached as Schedule “A”.

4.
Staff and the Respondent agree that the terms of this Settlement Agreement, including the
attached Schedule “A”, will be released to the public only if and when the Settlement Agreement
is accepted by the Hearing Panel.

III.
ACKNOWLEDGEMENT

5.
Staff and the Respondent agree with the facts set out in Part IV herein for the purposes of
this Settlement Agreement only and further agree that this agreement of facts is without
prejudice to the Respondent or Staff in any other proceeding of any kind including, but without
limiting the generality of the foregoing, any proceedings brought by the MFDA (subject to Part
XI) or any civil or other proceedings which may be brought by any other person or agency,
whether or not this Settlement Agreement is accepted by the Hearing Panel.

IV.
AGREED FACTS

6.
The Respondent has been registered in Ontario as a mutual fund salesperson with
Desjardins Financial Security Investments Inc. (“Desjardins”) since May 26, 2005. At the
material time, the Respondent carried on business in Brampton, Ontario.

7.
The Respondent has not previously been the subject of disciplinary proceedings.

Personal Financial Dealings with Client DH

8.
In 2008, DH became a client of Desjardins. The Respondent was the mutual fund
salesperson responsible for servicing client DH’s account. Prior to client DH becoming a
Page 11 of 22


Desjardins client, client DH and the Respondent had been friends for approximately 20 years.

9.
In or about September 2009, the Respondent approached client DH about investing
$120,000 in a rental property owned by the Respondent in Toronto, Ontario by way of a second
mortgage secured against the rental property.

10.
The investment was for a term of one year with a maturity date of September 24, 2010
and interest payable at the rate of 7.8% per annum due on the 24th day of each month,
commencing on October 24, 2009 and concluding on September 24, 2010. The Respondent
assured client DH that there would be no issues with repayment since the investment was only
for a short period of time and he (the Respondent) had sufficient capital and resources to repay
the second mortgage in full at maturity. Client DH agreed to proceed with the investment.

11.
At all material times, Desjardins’ Policies and Procedures Manual (“PPM”), dated
October 2007, addressed, among other things, conflicts and potential conflicts of interest
between Approved Persons and clients. The PPM provided that any transaction giving rise to a
conflict or potential conflict of interest between an Approved Person and a client must be
immediately reported to the Member prior to the transaction in question taking place.

12.
The Respondent did not disclose the second mortgage arrangement with client DH to
Desjardins prior to entering into the transaction or at any time thereafter. As a consequence,
Desjardins was unable to take appropriate supervisory action, including prohibiting the
Respondent from proceeding with the second mortgage.

13.
Prior to client DH advancing the mortgage proceeds to the Respondent, Desjardins would
not permit a client to hold a second mortgage in an RSP account. Accordingly, the Respondent
directed client DH to open a B2B Trust Self-Directed RSP account set up in client DH’s name.

14.
On August 27, 2009, client DH transferred $131,495.36 from the Desjardins RSP account
to the B2B RSP account.

Page 12 of 22


15.
On September 23, 2009, client DH invested $120,000 of the monies in the B2B RSP
account by advancing $120,000 to the Respondent secured by a second mortgage on the
Respondent’s rental property.

16.
The Respondent made the monthly interest payments owing under the terms of the
second mortgage but at the end of the one-year term, in September 2010, the Respondent did not
repay the principal amount owing. Client DH requested repayment of the principal according to
the terms of the mortgage but the Respondent was either unable or unwilling to do so as the
Respondent had not yet refinanced or sold the property.

17.
On October 7, 2010, the Respondent asked client DH for a 12 month extension to repay
the principal owing under the second mortgage. Client DH declined to grant a twelve month
extension but, as set out in the October 7, 2010 agreement, did agree to provide the Respondent
two additional months (to November 24, 2010) in which to attempt to secure additional financing
to pay out client DH’s second mortgage (the “Interim Agreement”).

18.
The Interim Agreement entered into between the Respondent and client DH stipulated,
among other things, that should the full amount owing under the second mortgage not be repaid
within the two month period, then at least $75,000 of the principal amount would be repaid by
November 24, 2010, with the remaining $45,000 to be paid in two payments of $20,000 and
$25,000 due on March 24, 2011 and April 24, 2011 respectively.

19.
The Respondent failed to find additional financing to replace the second mortgage and
did not personally qualify for additional mortgage funds. Client DH refused to take a third
mortgage position and the Respondent missed each of the extended repayment deadlines
provided for in the Interim Agreement.

20.
On March 30, 2011, client DH, through his legal counsel, sent a letter to the Respondent
demanding repayment of the second mortgage. The letter requested that the Respondent contact
client DH to arrange for repayment within 14 days of the date of the letter. The letter further
advised the Respondent that if full payment was not received within 14 days, then client DH
Page 13 of 22


would commence legal action to recover all amounts owing under the second mortgage without
further notice to the Respondent, including accrued interest, legal fees and court costs.

21.
The Respondent did not report receipt of client DH’s demand letter to Desjardins.

22.
On July 4, 2011, client DH sent a letter to the Respondent’s Branch Manager at
Desjardins advising him of the Respondent’s failure to repay the amounts secured by the second
mortgage and client DH’s subsequent attempts to resolve the matter with the Respondent. Client
DH also requested that Desjardins reassign his account to another mutual fund salesperson.

23.
On July 11, 2011, Desjardins filed a report in respect of the Respondent’s personal
financial dealings with client DH through the MFDA’s electronic Member Event Tracking
System (“METS”), in accordance with MFDA Policy No. 6.

24.
On July 19, 2011, the Respondent wrote to client DH requesting that he take no further
action to collect his monies if he (the Respondent) was able to repay the outstanding amount on
or before August 24, 2011. The Respondent further advised client DH that he would obtain the
monies for repayment through the sale of the property. Client DH agreed to allow the
Respondent until August 24, 2011 to repay the amount owing under the second mortgage.

25.
On August 24, 2011, the Respondent failed to repay amount owing under the second
mortgage.

26.
On December 15, 2011, the Respondent and client DH agreed to a further extension to
April 24, 2012 for the Respondent to repay the amount owing under the second mortgage.

27.
On or about February 21, 2012, the Respondent sold his rental property for $566,000.

28.
On March 28, 2012, the Respondent paid client DH $120,000, plus outstanding fees on
account of the second mortgage and client DH signed a statement of discharge in respect of the
second mortgage.
Page 14 of 22

29.
On March 29, 2012, client DH and the Respondent signed a document acknowledging the
repayment in full of the second mortgage and all interest, costs and other obligations between
them in the total amount of $124,510.25.

30.
On March 29, 2012, the Respondent also paid out the first mortgage and all associated
fees on the rental property in the total amount of $423,209.75. After paying out both mortgages,
the Respondent realized a gain of approximately $18,250.00 on the sale of the property.

31.
During the course of MFDA Staff’s investigation, the Respondent acknowledged that it
had been necessary for him to sell the rental property in order to repay client DH, that he had
realized a gain from the sale of the property and that he was aware that his activities created a
conflict or potential conflict of interest between himself and client DH.

Information Reporting Requirements

32.
MFDA Rule 1.2.2(b) and subsections 4.1(a) and (b)(v) of MFDA Policy No. 6 provide
that an Approved Person must report to the Member, within two business days, when the
Approved Person is, among other things, the subject of a client complaint in writing and when
the Approved Person is aware of any complaint (in any form) against him or her involving
allegations of, among other things, personal financial dealings with clients.

33.
The Respondent failed to notify Desjardins at any time of his personal financial dealings
with client DH, of client DH’s demands for repayment of the principal amount owing under the
second mortgage and, in particular, failed to report his receipt of the March 30, 2011 demand
letter from counsel for client DH.

34.
Desjardins was not made aware of the existence of the personal financial dealings
between the Respondent and client DH until client DH wrote directly to the Respondent’s
Branch Manager by way of letter dated July 4, 2011.

Page 15 of 22


V.
THE RESPONDENT’S POSITION

35.
The Respondent states that he and client DH were friends and over the course of their
friendship they had a number of discussions about investing in real estate.

36.
In September 2009, the Respondent paid for client DH to obtain independent legal advice
for the purposes of completing the mortgage transaction with the Respondent. At the suggestion
of legal counsel, the parties agreed on a higher interest rate of 7.8% than the 5% initially
proposed by the Respondent.

37.
On or about March 30, 2011, after receiving the demand letter from client DH’s legal
counsel requesting immediate payment of the outstanding $120,000, the Respondent states that
he contacted client DH and advised client DH that he would continue to take steps to find
financing to pay client DH’s second mortgage out in full. On this basis, the Respondent states
that client DH told him that he could ignore the demand letter.

38.
The Respondent states he failed to pay out client DH’s second mortgage by August 24,
2011, as agreed, because he was unable to sell the property. After relisting the property on or
about December 2011, the Respondent was able to sell the property on February 21, 2012.

VI.
CONTRAVENTIONS

39.
Between August 2009 and March 2012, the Respondent engaged in personal financial
dealings with client DH by recommending and facilitating an investment by client DH in the
amount of $120,000 in a rental property owned by the Respondent by way of a second mortgage
secured against the property, thereby creating a conflict or potential conflict of interest between
the interests of the Respondent and the interests of client DH which the Respondent failed to
ensure was addressed by the exercise of responsible business judgment influenced only by the
best interests of the client, contrary to MFDA Rules 2.1.4 and 2.1.1.

40.
Between at least March 30, 2011 and July 4, 2011, the Respondent failed to comply with
Page 16 of 22


his reporting obligations to the Member in respect of complaints made by client DH concerning
his investment in the Respondent’s rental property, contrary to MFDA Rule 1.2.2 and
subsections 4.1(a) and (b)(v) of MFDA Policy No. 6.

VII.
TERMS OF SETTLEMENT

41.
The Respondent agrees to the following terms of settlement:

(a) a fine in the amount of $20,000;

(b) costs of $5,000;

(c) the Respondent shall in the future comply with all applicable MFDA By-laws, Rules
and Policies, and all applicable securities legislation and regulations that the
Respondent has agreed he breached in relation to this Settlement Agreement; and

(d) the Respondent will attend in person, on the date set for the Settlement Hearing.

VIII. STAFF COMMITMENT

42.
If this Settlement Agreement is accepted by the Hearing Panel, Staff will not initiate any
proceeding under the By-laws of the MFDA against the Respondent in respect of the
contraventions described in Part VI of this Settlement Agreement, subject to the provisions of
Part XI below. Nothing in this Settlement Agreement precludes Staff from investigating or
initiating proceedings in respect of any facts and contraventions that are not set out in Part IV of
this Settlement Agreement or in respect of conduct that occurred outside the specified date
ranges of the facts and contraventions set out in Part IV, whether known or unknown at the time
of settlement. Furthermore, nothing in this Settlement Agreement shall relieve the Respondent
from fulfilling any continuing regulatory obligations.

Page 17 of 22


IX.
PROCEDURE FOR APPROVAL OF SETTLEMENT

43.
Acceptance of this Settlement Agreement shall be sought at a hearing of the Central
Regional Council of the MFDA on a date agreed to by counsel for Staff and the Respondent.

44.
Staff and the Respondent may refer to any part, or all, of the Settlement Agreement at the
settlement hearing. Staff and the Respondent also agree that if this Settlement Agreement is
accepted by the Hearing Panel, it will constitute the entirety of the evidence to be submitted
respecting the Respondent in this matter, and the Respondent agrees to waive its his rights to a
full hearing, a review hearing before the Board of Directors of the MFDA or any securities
commission with jurisdiction in the matter under its enabling legislation, or a judicial review or
appeal of the matter before any court of competent jurisdiction.

45.
Staff and the Respondent agree that if this Settlement Agreement is accepted by the
Hearing Panel, then the Respondent shall be deemed to have been penalized by the Hearing
Panel pursuant to s. 24.1.2 of By-law No. 1 for the purpose of giving notice to the public thereof
in accordance with s. 24.5 of By-law No. 1.

46.
Staff and the Respondent agree that if this Settlement Agreement is accepted by the
Hearing Panel, neither Staff nor the Respondent will make any public statement inconsistent with
this Settlement Agreement. Nothing in this section is intended to restrict the Respondent from
making full answer and defence to any civil or other proceedings against him.

X.
FAILURE TO HONOUR SETTLEMENT AGREEMENT

47.
If this Settlement Agreement is accepted by the Hearing Panel and, at any subsequent
time, the Respondent fails to honour any of the Terms of Settlement set out herein, Staff reserves
the right to bring proceedings under section 24.3 of the By-laws of the MFDA against the
Respondent based on, but not limited to, the facts set out in Part IV of the Settlement Agreement,
as well as the breach of the Settlement Agreement. If such additional enforcement action is
taken, the Respondent agrees that the proceeding(s) may be heard and determined by a hearing
Page 18 of 22


panel comprised of all or some of the same members of the hearing panel that accepted the
Settlement Agreement, if available.

XI.
NON-ACCEPTANCE OF SETTLEMENT AGREEMENT

48.
If, for any reason whatsoever, this Settlement Agreement is not accepted by the Hearing
Panel or an Order in the form attached as Schedule “A” is not made by the Hearing Panel, each
of Staff and the Respondent will be entitled to any available proceedings, remedies and
challenges, including proceeding to a disciplinary hearing pursuant to sections 20 and 24 of By-
law No. 1, unaffected by this Settlement Agreement or the settlement negotiations.

49.
Whether or not this Settlement Agreement is accepted by the Hearing Panel, the
Respondent agrees that he will not, in any proceeding, refer to or rely upon this Settlement
Agreement or the negotiation or process of approval of this Settlement Agreement as the basis
for any allegation against the MFDA of lack of jurisdiction, bias, appearance of bias, unfairness,
or any other remedy or challenge that may otherwise be available.

XII.
DISCLOSURE OF AGREEMENT

50.
The terms of this Settlement Agreement will be treated as confidential by the parties
hereto until accepted by the Hearing Panel, and forever if, for any reason whatsoever, this
Settlement Agreement is not accepted by the Hearing Panel, except with the written consent of
both the Respondent and Staff or as may be required by law.

51.
Any obligations of confidentiality shall terminate upon acceptance of this Settlement
Agreement by the Hearing Panel.

XIII. EXECUTION OF SETTLEMENT AGREEMENT

52.
This Settlement Agreement may be signed in one or more counterparts which together
shall constitute a binding agreement.
Page 19 of 22

53.
A facsimile copy of any signature shall be effective as an original signature.

DATED this 27th day of February, 2014.

“Dawn Addison”

“Blair Addison”
Witness – Signature

Blair Addison

Dawn Addison
Witness – Print name

“Shaun Devlin”

Staff of the MFDA
Per: Shaun Devlin
Senior Vice-President,
Member Regulation – Enforcement
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Schedule “A”
Order
File No. 201338

IN THE MATTER OF A SETTLEMENT HEARING
PURSUANT TO SECTION 24.4 OF BY-LAW NO. 1 OF
THE MUTUAL FUND DEALERS ASSOCIATION OF CANADA

Re: Blair Addison



ORDER



WHEREAS on August 20, 2013 the Mutual Fund Dealers Association of Canada (the
“MFDA”) issued a Notice of Settlement Hearing pursuant to section 24.4 of By-law No. 1 in
respect of Blair Addison (the “Respondent”);

AND WHEREAS the Respondent entered into a settlement agreement with Staff of the
MFDA, dated February 27th, 2014 (the “Settlement Agreement”), in which the Respondent
agreed to a proposed settlement of matters for which the Respondent could be disciplined
pursuant to ss. 20 and 24.1 of By-law No. 1;

AND WHEREAS the Hearing Panel is of the opinion that the Respondent engaged in
personal financial dealings with a client, thereby creating a conflict or potential conflict of
interest between the interests of the Respondent and the interests of the client which the
Respondent failed to ensure was addressed by the exercise of responsible business judgment
Page
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influenced only by the best interests of the client and that the Respondent failed to comply with
his reporting obligations to the Member in respect of client complaints;

IT IS HEREBY ORDERED THAT the Settlement Agreement is accepted, as a
consequence of which:

1.
the Respondent shall pay a fine in the amount of $20,000;

2.
the Respondent shall pay costs of $5,000.

3.
the Respondent shall in the future comply with all applicable MFDA By-laws, Rules and
Policies, and all applicable securities legislation and regulations that the Respondent has agreed
he breached in relation to this Settlement Agreement; and

4.
If at any time a non-party to this proceeding requests production of, or access to, any
materials filed in, or the record of, this proceeding, including all exhibits and transcripts, then the
MFDA Corporate Secretary shall not provide copies of, or access to, the requested documents to
the non-party without first redacting from them any and all intimate financial or personal
information, pursuant to Rules 1.8(2) and (5) of the MFDA Rules of Procedure.

DATED this [day] day of [month], 20[ ].

Per: __________________________

[Name of Public Representative], Chair

Per: _________________________

[Name of Industry Representative]

Per: _________________________

[Name of Industry Representative]
DM 397201 v2