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MFDA SETTLEMENT AGREEMENT

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HomeCompleted Hearings201851 - Luigi Cristiano Congi › SA201851

File No. 201851

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: Luigi Cristiano Congi

SETTLEMENT AGREEMENT

I. INTRODUCTION

  1. Staff of the Mutual Fund Dealers Association of Canada (“Staff”) and the Respondent, Luigi Cristiano Congi (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 June 2015 and April 2016, the Respondent signed the signature of 21 clients on 23 account forms, and submitted the account forms to the Member for processing, 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 be prohibited from conducting securities related business in any capacity while in the employ of or associated with any MFDA Member for a period of 1 year, commencing from the date the Settlement Agreement is accepted by the Hearing Panel, pursuant to section 24.1.1(e) of MFDA By-law No. 1;
    2. the Respondent shall pay costs in the amount of $2,500, pursuant to section 24.2 of MFDA By-law No. 1, in instalments as follows:
      1. $500, in certified funds, on the date the Settlement Agreement is accepted by the Hearing Panel;
      2. $400, in certified funds, on or before the last business day of the first month following the acceptance of the Settlement Agreement;
      3. $400, in certified funds, on or before the last business day of the second month following the acceptance of the Settlement Agreement;
      4. $400, in certified funds, on or before the last business day of the third month following the acceptance of the Settlement Agreement;
      5. $400, in certified funds, on or before the last business day of the fourth month following the acceptance of the Settlement Agreement;
      6. $400, in certified funds, on or before the last business day of the fifth month following the acceptance of the Settlement Agreement;
    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. Between May 2011 and May 2016, the Respondent was registered in Ontario as a mutual fund salesperson (now known as a Dealing Representative) with BMO Investments Inc. (“BMO”), a Member of the MFDA.
  2. On or about May 4, 2016, the Respondent resigned from BMO, and is not currently registered in the securities industry in any capacity.
  3. At all material times, the Respondent conducted business in the Leamington, Ontario area.

Respondent Signed Client Signatures

  1. Between June 2015 and April 2016, the Respondent signed the signature of 21 clients on 23 account forms, and submitted the account forms to BMO for processing.
  2. The account forms included non-financial account amendment forms, existing account transaction forms, existing account application forms, and account redemption forms.
  3. In respect of 8 of these forms, the Respondent signed the client signatures in response to a supervisory inquiry from BMO. BMO compliance staff identified deficiencies with 8 account forms during routine trade reviews and required the Respondent to obtain new signed account forms from the clients.  Rather than correcting the deficiencies in the manner required by BMO, the Respondent signed the clients’ signatures on new account forms and submitted these forms to BMO for processing.

BMO’s Investigation

  1. On or around April 18, 2016, the Respondent’s branch compliance officer identified irregular client signatures on account forms submitted by the Respondent.
  2. BMO commenced an investigation and identified the account forms that are the subject of this Settlement Agreement. BMO contacted 19 of the clients whose signature the Respondent signed on the account forms, who confirmed they authorized the underlying transactions.  BMO was unable to contact 2 of the clients.
  3. On April 28, 2016, the Respondent resigned from BMO.

Additional Factors

  1. The Respondent states that he is the sole income earner for his family and the father of four children. The Respondent further supports his eldest child, who has autism spectrum disorder and attends school for only 2-hours a day.  The Respondent’s wife dedicates her time to volunteer work with Autism Ontario Windsor Essex Chapter.
  2. The Respondent’s states that as a result of the foregoing he has limited financial means and is unable to pay any additional amounts towards a fine or costs. The Respondent acknowledges that absent the factors described above, it would have been appropriate for him to be subject to a penalty that included a fine due to the seriousness of the misconduct that is the subject of the Settlement Agreement.
  3. There is no evidence that the Respondent received any benefit from the conduct set out above beyond the commissions or fees he would ordinarily be entitled to receive had the transactions been carried out in the proper manner.
  4. There is no evidence of client loss or lack of authorization for the underlying transactions.
  5. The Respondent has not previously been the subject of MFDA disciplinary proceedings.

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: Nov 29, 2018

"AB"

Witness – Signature


AB

Witness – Print Name

“Luigi Cristiano Congi”

Luigi Cristiano Congi


 

“Shaun Devlin ”

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