MFDA Agreed Statement of Facts

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File No. 202002

Re: Omar Enrique Rojas Diaz

Agreed Statement of Facts

I. INTRODUCTION

  1. By Notice of Hearing issued August 5, 2020, the Mutual Fund Dealers Association of Canada (the “MFDA”) commenced a disciplinary proceeding against Omar Enrique Rojas Diaz (the “Respondent”) pursuant to ss. 20 and 24 of MFDA By-law No. 1, alleging:
    1. Allegation #1:  Between on or about September 8, 2017 and June 29, 2018, the Respondent misappropriated approximately $39,270 from one client, contrary to MFDA Rule 2.1.1.

II. IN PUBLIC / IN CAMERA

  1. The Respondent and Staff of the MFDA (“Staff”) agree that this matter should be heard in public pursuant to Rule 1.8 of the MFDA Rules of Procedure.

III. ADMISSIONS AND ISSUES TO BE DETERMINED

  1. The Respondent has reviewed this Agreed Statement of Facts (“Agreed Statement of Facts”), and admits the facts set out in Part IV herein. The Respondent admits that the facts in Part IV constitute misconduct for which the Respondent may be penalized on the exercise of the discretion of a Hearing Panel pursuant to s. 24.1 of MFDA By-law No. 1.
  2. Staff and the Respondent jointly request that the Hearing Panel determine, on the basis of this Agreed Statement of Facts, the appropriate penalty and costs to be imposed on the Respondent.

IV. AGREED FACTS

  1. Staff and the Respondent agree that submissions made with respect to the appropriate penalty should be based only on the agreed facts in Part IV, and no other information or documents, subject to the content of this paragraph and paragraph 6 below.
  2. In the event that the Hearing Panel advises one or both of Staff and the Respondent of any additional facts that it considers necessary in order to determine the issues before it, Staff and the Respondent agree that such additional facts may be provided to the Hearing Panel, either: (a) with the consent of both Staff and the Respondent if the additional facts are agreed upon; (b) if the Respondent is not present at the hearing, Staff may disclose additional relevant facts, at the request of the Hearing Panel; or (c) if the parties are both present at the hearing and are not in agreement about the additional facts requested by the Hearing Panel, the parties will be given a reasonable opportunity to lead evidence concerning the additional facts. In circumstances where a party leads evidence concerning additional facts requested by the Hearing Panel, the opposing party may cross-examine any witness tendered to lead such evidence and shall be given a reasonable opportunity to lead responding evidence if they wish to do so.
  3. Nothing in this Part IV is intended to restrict the Respondent from making full answer and defence to any civil or other proceedings against him.

Registration History

  1. From December 9, 2013 to July 17, 2018, the Respondent was registered as a dealing representative in Ontario with Royal Mutual Funds Inc. (the “Member”), a Member of the MFDA.
  2. At all material times, the Respondent conducted business at a branch of the Member (the “Branch”) in Toronto, Ontario. The Respondent was also an employee of Royal Bank of Canada (the “Bank”) which is affiliated with the Member and which operated a bank branch at the same premises as the Branch.
  3. On July 17, 2018, the Member terminated the Respondent as a result of the conduct described herein. The Respondent is not currently registered in the securities industry in any capacity.

Allegation #1 – Misappropriation of Monies

  1. In or about 2013, client MC became acquainted with the Respondent as they both attended the same church.
  2. On or about February 24, 2014, client MC became a client of the Member, and the Respondent started servicing her mutual fund accounts. At the same time, the Respondent facilitated the opening of a chequing account with the Bank for client MC.
  3. In early 2017, the Respondent advised client MC that she had been pre-approved for a line of credit with the Bank in the amount of $10,000. Client MC was not interested in opening a line of credit; however, the Respondent continued encouraging client MC to do so, and on or about February 23, 2017, client MC opened a line of credit with the Bank.
  4. On or about September 6, 2017, two days before he started misappropriating monies from client MC, the Respondent changed the contact details (address, telephone number, and email) on client MC’s client profile to fictitious details without client MC’s knowledge or authorization. The changes enabled the Respondent to conceal subsequent activity in client MC’s account from client MC, as described in more detail below.
  5. On or about October 3, 2017, the Respondent opened a new account at the Bank in the name of client MC, without client MC’s knowledge or authorization. The Respondent changed the repayment account linked to client MC’s line of credit to the new account, so that he could pay the minimum interest on client MC’s line of credit from the new account. The Respondent did all of this by submitting a letter of direction to the Bank, on which he falsified client MC’s signature without her knowledge or authorization.
  6. Between on or about September 8, 2017 and June 29, 2018, the Respondent processed unauthorized transactions in client MC’s line of credit account at the Bank, and misappropriated a total of $39,270. The unauthorized transactions included approximately:
    • 30 increases to the credit limit on client MC’s line of credit account;
    • 30 withdrawals of monies (ranging from $200 to $5,100) from client MC’s line of credit account for the Respondent’s personal use and benefit; and
    • 15 deposits into client MC’s line of credit account in order to pay the monthly interest charges such that the line of credit did not go into default, thereby avoiding detection of his activities.
  7. At all material times, client MC was unaware that her line of credit was being accessed or used, and had not authorized anyone, including the Respondent, to access or use her line of credit.
  8. In or about July 2018, the Respondent’s conduct was discovered by the Bank and subsequently reported to the MFDA.

Misconduct Admitted

  1. By engaging in the conduct described above, the Respondent admits that between on or about September 8, 2017 and June 29, 2018, the Respondent misappropriated approximately $39,270 from one client, contrary to MFDA Rule 2.1.1.

Additional Factors

  1. The client was compensated by the Bank for the amounts misappropriated by the Respondent.
  2. The Member conducted an investigation and no evidence of additional misconduct affecting other clients of the Member or the bank was identified. There have been no other client complaints to the Member or to the MFDA.
  3. The Respondent has not previously been the subject of MFDA disciplinary proceedings.
  4. In November 2018, the Respondent entered into a consumer proposal (“Proposal”), which his creditors, including the Bank, accepted.
  5. Pursuant to the Proposal, the Respondent is required to make monthly payments of $350 to the administrator of the Proposal, to a required total of $21,000 after 60 months. The administrator then makes annual payments to the Respondent’s creditors on a 13% recovery pro rata basis.
  6. The Respondent had been making the required monthly payments; however, as of November 3, 2020, the Respondent was behind by two payments.
  7. To date, the administrator has made two payments to the Bank, totaling $7,000. The next payment to creditors is scheduled for December 2020.
  8. The Respondent is married and has two school age children. In 2019, the Respondent and his family moved to Calgary, Alberta in order to pursue employment opportunities. The Respondent states that after moving to Calgary, he was initially driving for Uber and working sporadically as a day laborer. For tax year 2019, the Respondent had total income of $9,235.
  9. Since April 2020, the Respondent has been receiving the federal Canada Emergency Response Benefit. His wife was laid off and is receiving employment insurance benefits. The Respondent and his family live in a rented apartment.
  10. The Respondent has cooperated with MFDA Staff throughout the investigation and the disciplinary proceedings herein.

Execution of Agreed Statement of Facts

  1. This Agreed Statement of Facts may be signed in one or more counterparts, which together, shall constitute a binding agreement.
  2. A facsimile copy of any signature shall be effective as an original signature.

DATED: Dec 8, 2020

"Omar Enrique Rojas Diaz"

Omar Enrique Rojas Diaz

“Charles Toth”

Staff of the MFDA
Per: Charles Toth
Vice-President, Enforcement

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