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MFDA SETTLEMENT AGREEMENT

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File No. 201714

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: Peter Ewens

SETTLEMENT AGREEMENT

I. INTRODUCTION

  1. Staff of the Mutual Fund Dealers Association of Canada (“Staff”) and the Respondent, Peter Ewens, consent and agree to settlement of this matter by way of this agreement (the “Settlement Agreement”).
  1. Staff conducted an investigation of the Respondent’s activities which disclosed 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.

II. JOINT SETTLEMENT RECOMMENDATION

  1. Staff and the Respondent jointly recommend that the Hearing Panel accept the Settlement Agreement.
  1. The Respondent admits to the following violations of the By-laws, Rules or Policies of the MFDA:
    1. between November 29, 2013 and August 2014, the Respondent processed approximately 53 authorized discretionary trades as part of a dollar-cost averaging strategy in relation to 1 client, contrary to MFDA Rules 2.3.1 and 2.1.1;
  1. Staff and the Respondent agree and consent to the following terms of settlement:
    1. the Respondent shall pay a fine in the amount of $11,500 pursuant to section 24.1.1(b) of By-law No. 1;
    2. the Respondent shall pay costs in the amount of $2,500, pursuant to section 24.2 of By-law No. 1;
    3. the Respondent shall in the future comply with MFDA Rules 2.3.1 and 2.1.1; and
    4. the Respondent will attend the Settlement Hearing in person.
  1. Staff and the Respondent agree to the settlement on the basis of the facts set out in Part III herein and consent to the making of an Order in the form attached as Schedule “A”.

III. AGREED FACTS

Registration

  1. The Respondent has been registered in the securities industry since 2010.
  1. The Respondent has been registered as a mutual fund salesperson (now known as a dealing representative) in British Columbia since February 1, 2010 with Investors Group Financial Services Inc. (“IG”), a Member of the MFDA.
  1. At all material times, the Respondent carried on business in the North Vancouver, British Columbia area.

Discretionary Trading

  1. At all material times, IG had a policy in place prohibiting its Approved Persons from engaging in discretionary trading.
  1. Since November 20, 2013, client BG was a client of IG, whose account was serviced by the Respondent.
  1. On November 29, 2013, client BG and the Respondent discussed client BG’s investment portfolio and recommended he invest in certain funds and provided client BG with a list of funds and what percentage of the client’s total investment would be allocated to each mutual fund (the “Target Portfolio”). Client BG agreed to invest in the Target Portfolio at the allocations recommended by the Respondent and began transferring his monies to be invested with IG.
  1. The Respondent states that he processed the trades on behalf of client BG to implement a dollar-cost averaging strategy. Dollar-cost averaging is a strategy whereby a client will make investments at periodic intervals in order to diversify the purchase price for a unit of a given mutual fund. The Respondent obtained client BG’s authorization to proceed with the purchases of the mutual funds using this strategy.
  1. The Respondent invested client BG’s monies totaling $185,000 in a money market mutual fund. The Respondent then, at his discretion, periodically processed trades on behalf of client BG by transferring client BG’s investment from the money market mutual fund to the mutual funds that comprised client BG’s Target Portfolio (the “Transfers”).
  1. The Respondent periodically processed the Transfers until client BG’s entire investment was allocated in accordance with the agreed upon Target Portfolio. Generally, the Respondent would fully allocate the client’s investment within several weeks to several months after the determination of the Target Portfolio.
  1. Between November 29, 2013 and August 2014, the Respondent processed approximately 53 authorized discretionary trades as part of the dollar-cost averaging strategy.
  1. The Respondent decided particulars for each of the Transfers, including the date of the Transfer and the number of mutual fund units purchased by client BG. The Respondent did not contact client BG prior to processing the Transfers. In some instances, the Respondent contacted client BG to provide details of the Transfers after they had been processed. Client BG met with the Respondent on November 29, 2013, February 3, 2014, June 22, 2014, and August 11, 2014 to discuss the Target Portfolio. 

IG’s Response

  1. On November 19, 2014, client BG complained to IG about the Respondent making a series of discretionary investments without consulting client BG.
  1. IG commenced an investigation into the Respondent’s conduct, and on December 17, 2014, IG placed the Respondent on close supervision.
  1. The Member deducted from the Respondent commissions totaling $7,569.29 representing the amounts earned by the Respondent on the Transfers.
  1. On March 5, 2015, IG issued a warning letter to the Respondent with respect to the discretionary trading described above. 

Additional Factors

  1. The Respondent has not previously been the subject of MFDA disciplinary proceeding.
  1. There is no evidence of client loss. The Target Portfolio increased in value during the period it was invested with IG.
  1. There is no evidence that the Respondent obtained any personal financial gain other than commission he would normally have been entitled to for the Transfers had the transactions in the client’s accounts been carried out in the proper manner.
  1. The Respondent states that he has amended his practice to ensure compliance with MFDA Rules in the future.
  1. The Respondent has cooperated in full with both IG and the MFDA. By entering into this Settlement Agreement, the Respondent has saved the MFDA the time, resources, and expenses associated with conducting a full hearing on the allegations.

IV. ADDITIONAL TERMS OF SETTLEMENT

  1. This settlement is agreed upon in accordance with section 24.4 of MFDA By-law No. 1 and Rules 14 and 15 of the MFDA Rules of Procedure.
  1. The Settlement Agreement is subject to acceptance by the Hearing Panel which shall be sought at a hearing (the “Settlement Hearing”). At, or following the conclusion of, the Settlement Hearing, the Hearing Panel may either accept or reject the Settlement Agreement.
  1. The Settlement Agreement shall become effective and binding upon the Respondent and Staff as of the date of its acceptance by the Hearing Panel. Unless otherwise stated, any monetary penalties and costs imposed upon the Respondent are payable immediately, and any suspensions, revocations, prohibitions, conditions or other terms of the Settlement Agreement shall commence, upon the effective date of the Settlement Agreement.
  1. Staff and the Respondent agree that if this Settlement Agreement is accepted by the Hearing Panel:
    1. the Settlement Agreement will constitute the entirety of the evidence to be submitted respecting the Respondent in this matter;
    2. the Respondent waives any 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;
    3. Staff will not initiate any proceeding under the By-laws of the MFDA against the Respondent in respect of the contraventions described in this Settlement Agreement. Nothing in this Settlement Agreement precludes Staff from investigating or initiating proceedings in respect of any contraventions that are not set out in this Settlement Agreement.  Furthermore, nothing in this Settlement Agreement shall relieve the Respondent from fulfilling any continuing regulatory obligations;
    4. 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; and
    5. 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 the Respondent.
  1. If, for any reason, this Settlement Agreement is not accepted 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 the Settlement Agreement or the settlement negotiations.
  1. Staff and the Respondent agree that the terms of the 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.
  1. The Settlement Agreement may be signed in one or more counterparts which together shall constitute a binding agreement. A facsimile copy of any signature shall be effective as an original signature.

DATED: Feb 14, 2017

"SM"

Witness – Signature


SM

Witness – Print Name

“Peter Ewens”

Peter Ewens


“Shaun Devlin ”

Staff of the MFDA
Per: Shaun Devlin
Senior Vice-President,
Member Regulation – Enforcement


Schedule “A”

Order
File No. 201714

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: Peter Ewens

ORDER

WHEREAS on [date], 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 Peter Ewens (the “Respondent”);

AND WHEREAS the Respondent entered into a settlement agreement with Staff of the MFDA, dated [date] (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, between November 29, 2013 and August 2014, the Respondent processed approximately 53 authorized discretionary trades as part of a dollar-cost averaging strategy in relation to 1 client, contrary to MFDA Rules 2.3.1 and 2.1.1;

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 $11,500, pursuant to section 24.1.1(b) of By-law No. 1;
  1. The Respondent shall pay costs in the amount of $2,500, pursuant to section 24.2 of By-law No. 1;
  1. The Respondent shall in the future comply with MFDA Rules 2.3.1 and 2.1.1; and
  1. If at any time a non-party to this proceeding, with the exception of the bodies set out in section 23 of MFDA By-law No. 1, requests production of or access to exhibits in this proceeding that contain personal information as defined by the MFDA Privacy Policy, then the MFDA Corporate Secretary shall not provide copies of or access to the requested exhibits to the non-party without first redacting from them any and all 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]