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MFDA SETTLEMENT AGREEMENT

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HomeCompleted Hearings2018127 - Kimberly Ann Ryan › SA2018127

File No. 2018127

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: Kimberly Ann Ryan

SETTLEMENT AGREEMENT

I. INTRODUCTION

  1. Staff of the Mutual Fund Dealers Association of Canada (“Staff”) and the Respondent, Kimberly Ann Ryan (the “Respondent”), consent and agree to settlement of this matter by way of this agreement (the “Settlement Agreement”).
  2. Staff conducted an investigation of the Respondent’s activities which disclosed activity for which the Respondent could be penalized by 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.
  2. The Respondent admits to the following violations of the By-laws, Rules or Policies of the Mutual Fund Dealers Association of Canada (“MFDA”):
    1. between January 5, 2012 and February 8, 2015, the Respondent obtained, possessed, and used to process transactions, 2 pre-signed account forms in respect of 3 clients, contrary to MFDA Rule 2.1.1;
    2. between December 3, 2012 and March 23, 2016, the Respondent altered and used to process transactions, 18 account forms in respect of 15 clients by altering information on the account forms without having the clients initial the alterations, contrary to MFDA Rule 2.1.1; and
    3. on or about February 26, 2015, the Respondent attached the signature page of an account form previously signed by a client to a new account form to process a transaction, contrary to MFDA Rule 2.1.1.
  3. Staff and the Respondent agree and consent to the following terms of settlement:
    1. the Respondent shall pay a fine in amount of $15,000, pursuant to s. 24.1.1(b) of MFDA By-law No. 1, in instalments as follows:
      1. $2,500, in certified funds, upon acceptance of the Settlement Agreement;
      2. $2,083.35, in certified funds, on or before the last business day of the first month following the acceptance of the Settlement Agreement;
      3. $2,083.33, in certified funds, on or before the last business day of the second month following the acceptance of the Settlement Agreement;
      4. $2,083.33, in certified funds, on or before the last business day of the third month following the acceptance of the Settlement Agreement;
      5. $2,083.33, in certified funds, on or before the last business day of the fourth month following the acceptance of the Settlement Agreement;
      6. $2,083.33, in certified funds, on or before the last business day of the fifth month following the acceptance of the Settlement Agreement; and
      7. $2,083.33, in certified funds, on or before the last business day of the sixth month following the acceptance of the Settlement Agreement;
    2. the Respondent shall pay costs in the amount of $2,500, in certified funds upon acceptance of the Settlement Agreement, pursuant to s. 24.2 of MFDA By-law No. 1;
    3. the Respondent shall in the future comply with MFDA Rule 2.1.1; and
    4. the Respondent will attend in person on the date set for the Settlement Hearing.
  4. 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 History

  1. Since January 31, 2011, the Respondent has been registered in Ontario as a Dealing Representative with Sun Life Financial Investment Services (Canada) Inc. (“Sun Life”), a member of the MFDA.
  2. At all material times, the Respondent conducted business in the Renfrew, Ontario area.

Pre-Signed Account Forms

  1. At all material times, Sun Life’s policies and procedures prohibited Approved Persons from obtaining and using pre-signed forms, and stated that all forms must be duly executed after all information on a form has been properly completed.
  2. Between January 5, 2012 and February 8, 2015, the Respondent obtained, possessed, and used to process transactions, 2 pre-signed account forms in respect of 3 clients.
  3. The pre-signed account forms consisted of a mutual fund application form and an education savings plan application form.

Altered Account Forms

  1. Between December 3, 2012 and March 23, 2016, the Respondent altered and used to process transactions, 18 account forms in respect of 15 clients by altering information on the account forms without having the clients initial the alterations.
  2. The altered account forms consisted of Know-Your-Client forms, mutual fund application forms, limited trade authorization forms, and transfer authorization forms.

Re-used Signature Page

  1. On or about February 26, 2015, the Respondent attached the signature page of a previously signed account form to a new account form to process a transaction.
  2. The re-used account form was a transfer authorization.

Sun Life’s Investigation

  1. On or around May 1, 2017, during the course of a file review, Sun Life detected altered account forms in the Respondent’s files that are the subject of this Settlement Agreement. As a result, Sun Life conducted a review on or around June 6, 2017, which revealed additional pre-signed, altered, and re-used account forms, all of which together are the remaining forms that are the subject of this Settlement Agreement.
  2. As part of its investigation, Sun Life sent letters to all clients serviced by the Respondent in order to determine whether the Respondent had engaged in unauthorized trading. No clients reported any concerns to Sun Life.
  3. On May 19, 2017, Sun Life placed the Respondent under close/enhanced supervision for 12 months, which included a bi-weekly audit of client paperwork.

Additional Factors

  1. There is no evidence that the Respondent received any financial benefit from engaging in the misconduct described above beyond any commissions and fees that she would ordinarily be entitled to receive had the transactions been carried out in the proper manner.
  2. There is no evidence of any client loss or that the transactions were unauthorized.
  3. The Respondent has not previously been the subject of MFDA disciplinary proceedings.
  4. By entering into this Settlement Agreement, the Respondent has saved the MFDA the time, resources, and expenses associated with conducing a full hearing of 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.
  2. 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. MFDA Settlement Hearings are typically held in the absence of the public pursuant to section 20.5 of MFDA By-law No. 1 and Rule 15.2(2) of the MFDA Rules of Procedure.  If the Hearing Panel accepts the Settlement Agreement, then the proceeding will become open to the public and a copy of the decision of the Hearing Panel and the Settlement Agreement will be made available at www.mfda.ca.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. The Settlement Agreement may be signed in one or more counterparts which together shall constitute a binding agreement. An electronic copy of any signature shall be effective as an original signature.

DATED: Dec 12, 2018

"MG"

Witness – Signature


MG

Witness – Print Name

“Kimberly Ann Ryan”

Kimberly Ann Ryan


 

“Shaun Devlin ”

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


Schedule “A”

Order
File No.

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: Kimberly Ann Ryan

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 Kimberly Ann Ryan (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 the Respondent:

  1. between January 5, 2012 and February 8, 2015, obtained, possessed, and used to process transactions, 2 pre-signed account forms in respect of 3 clients, contrary to MFDA Rule 2.1.1;
  2. between December 3, 2012 and March 23, 2016, altered and used to process transactions, 18 account forms in respect of 15 clients by altering information on the account forms without having the clients initial the alterations, contrary to MFDA Rule 2.1.1; and
  3. on or about February 26, 2015, attached the signature page of an account form previously signed by a client to a new account form to process a transaction, contrary to MFDA Rule 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 amount of $15,000, pursuant to s. 24.1.1(b) of MFDA By-law No. 1, in instalments as follows:
    1. $2,500, in certified funds, upon acceptance of the Settlement Agreement;
    2. $2,083.35, in certified funds, on or before the last business day of the first month following the acceptance of the Settlement Agreement;
    3. $2,083.33, in certified funds, on or before the last business day of the second month following the acceptance of the Settlement Agreement;
    4. $2,083.33, in certified funds, on or before the last business day of the third month following the acceptance of the Settlement Agreement;
    5. $2,083.33, in certified funds, on or before the last business day of the fourth month following the acceptance of the Settlement Agreement;
    6. $2,083.33, in certified funds, on or before the last business day of the fifth month following the acceptance of the Settlement Agreement; and
    7. $2,083.33, in certified funds, on or before the last business day of the sixth month following the acceptance of the Settlement Agreement.
  2. The Respondent shall pay costs in the amount of $2,500, in certified funds, pursuant to s. 24.2 of MFDA By-law No. 1.
  3. The Respondent shall in the future comply with MFDA Rules 2.1.1.
  4. 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]