MFDA Agreed Statement of Facts

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File No. 202101

Re: Matthew Elliott de Haan

Agreed Statement of Facts

I. INTRODUCTION

  1. By Notice of Hearing dated January 18, 2021, the Mutual Fund Dealers Association of Canada (the “MFDA”) commenced a disciplinary proceeding against Matthew Elliott de Haan (the “Respondent”) pursuant to ss. 20 and 24 of MFDA By-law No. 1.
  2. The Notice of Hearing set out the following allegations:
    1. Allegation #1:   Between on or about October 29, 2018 and December 3, 2018, the Respondent solicited a client and other individuals to invest in an investment that was not approved for sale by the Member, thereby engaging in securities related business that was not carried on for the account of the Member or through the facilities of the Member, contrary to the Member’s policies and procedures and MFDA Rules 1.1.1, 1.1.2, 2.1.1, and 2.5.1.
    2. Allegation #2:   Between on or about October 29, 2018 and December 3, 2018, the Respondent engaged in an unapproved outside activity when he, acting on behalf of a third party company, solicited a client and other individuals to invest in an investment that was not approved for sale by the Member, contrary to the Member’s policies and procedures and MFDA Rules 1.1.2, 1.3.2, 2.1.1, and 2.5.1.
    3. Allegation #3:   On or about December 7, 2018, the Respondent provided a false or misleading statement to the Member during the course of an investigation by the Member, 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 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 to impose on the Respondent.

IV. AGREED FACTS

  1. Staff and the Respondent agree that submissions made with respect to the appropriate penalty are based only on the agreed facts in Part IV, and no other information, facts or documents, subject to the content of this paragraph and paragraph 7 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. Since July 8, 2016, the Respondent was registered as a dealing representative in British Columbia with Sun Life Financial Investment Services (Canada) Inc. (the “Member”), a Member of the MFDA.
  2. At all material times, the Respondent carried on business in the City of Abbotsford, British Columbia
  3. On November 27, 2018, the Respondent resigned from the Member, effective December 12, 2018.
  4. The Respondent is not currently registered in the securities industry in any capacity.

Contravention #1 – Securities Related Business Outside the Member

  1. At all material times, the Member’s policies and procedures required its Approved Persons to conduct all securities related business through the Member. Approved Persons were permitted to only offer products approved by the Member.
  2. Impact International Secured Investments Corporation (“Impact”) is a corporation incorporated in British Columbia.
  3. In or about October 2018, the Respondent accepted a sales role with Impact to solicit investors to provide capital to be used by Impact to: (i) sponsor the formation of bonds offered by Impact; (ii) purchase bonds; or (iii) serve as working capital for underlying projects for which Impact was arranging financing.
  4. On or about October 29, 2018, the Respondent and Impact entered into an agreement (the “Agreement”), which provided, among other things, that the Respondent would receive compensation comprised of a 10% commission on closed transactions.
  5. At the time he signed the Agreement, the Respondent was aware that there was a requirement for him to seek approval from the Member to enter into the Agreement; however, the Respondent did not obtain the required approval of the Member to enter into the Agreement.
  6. The Respondent obtained promotional materials from Impact to use when soliciting investors to provide capital for a bond that was being arranged by Impact to finance a windfarm project in the United States called “WinGen 7” (the “Investment”). Among other things, the materials provided that:
    1. the WinGen 7 project was an Ultra Green Bond offering for financing the windfarm;
    2. the amount of investment sought was USD $500,000; and
    3. the total forecasted return on $500,000 of investment was a percentage return of 7468% consisting of a share of investment from the purchase of the bond, assets put up to collateralize the bond, and revenue accruing from the operations of the underlying project.
  7. A representative sample of the promotional materials referred to above are attached hereto as Appendix A.
  8. From on or about November 1, 2018 to December 3, 2018, the Respondent solicited at least seven individuals, including one client (collectively, the “Investors”) to invest in the Investment. In particular, the Respondent engaged in one or more of the following activities with the Investors:
    1. introducing the Investors to the opportunity to invest monies in the Investment;
    2. providing the Investors with promotional materials, including the materials described above, and advertising that described the Investment;
    3. discussing the terms and features, including purported rates of return, of the Investment with the Investors;
    4. providing the Investors with an assessment of the risks and merits of the Investment; and
    5. recommending the Investment to Investors.
  9. In addition to sending the promotional materials attached as Appendix A to potential investors, the Respondent also sent his own notes (the “Notes”) concerning the Investment to potential investors. The information provided in the Notes was derived solely from information provided to the Respondent by Impact. The Notes are attached hereto as Appendix B.
  10. Some of the details of the solicitation in which the Respondent engaged are described in the chart below:

DETAILS OF DE HAAN SOLICITATION

#

Person Solicited

Date of Solicitation

1

Investor #1

November 1, 2018

2

Investor #2

November 3, 2018

3

Investor #3 (a client of the Member)

November 7, 2018

4

Investor #4

November 7, 2018

5

Investor #5

November 8, 2018

6

Investor #6

November 20, 2018

7

An Ontario Company

Unknown

  1. The Respondent did not obtain the approval of the Member to solicit the Investors to invest as described above. The Investment was not an investment approved for sale by the Member.
  2. The Respondent’s activities with respect to the Investment described above were not carried on for the account or through the facilities of the Member.

Contravention #2 – Unapproved Outside Activity

  1. At all material times, the Member’s policies and procedures required that its Approved Persons disclose to and obtain written consent from the Member prior to engaging in any business or occupation other than acting as an Approved Person for the Member.
  2. As described above, the Respondent entered into the Agreement with Impact which provided that the Respondent would receive payment of a 10% commission on closed transactions, and, acting on behalf of Impact, solicited investors to invest in the Investment.
  3. The Respondent did not disclose to or obtain approval from the Member to enter into the Agreement or to solicit individuals to invest in the Investment as described above.

Contravention #3 – Misleading the Member

  1. In December 2018, the Member became aware that the Respondent had solicited investment outside of the Member and commenced an investigation into the Respondent’s conduct as described above.
  2. On December 7, 2018, the Member interviewed the Respondent during the course of its investigation into the Respondent’s conduct as described above. During the interview, the Respondent told the Member that he had solicited investors for Impact, but had not solicited clients to invest in the Investment.
  3. The Respondent’s statement to the Member was false because one of the individuals whom the Respondent had solicited to invest in the Investment was a client of the Member.
  4. The Respondent states that he responded to the Member’s questions about who was solicited to invest in the Investment while he was travelling in a car and therefore was not in a position to check his records prior to answering the question. However, the Respondent acknowledges that the factual information that he provided was inaccurate and that he should have verified the accuracy of the information that he provided and corrected his answer to the Member’s question after the interview if he had subsequently discovered that he was mistaken.

Additional Factors

  1. The Respondent cooperated with Staff throughout its investigation and during this disciplinary proceeding.
  2. The Respondent has not previously been the subject of MFDA disciplinary proceedings.
  3. There is no evidence that any of the Investors ultimately invested in the Investment.
  4. There is no evidence that the Respondent benefitted financially from his conduct.

Misconduct Admitted

  1. By engaging in the conduct described above, the Respondent admits that he:
    1. Between on or about October 29, 2018 and December 3, 2018, solicited seven (7) individuals, including one client, to invest in an investment that was not approved for sale by the Member, thereby engaging in securities related business that was not carried on for the account of the Member or through the facilities of the Member, contrary to the Member’s policies and procedures and MFDA Rules 1.1.1, 1.1.2, 2.1.1, and 2.5.1.
    2. Between on or about October 29, 2018 and December 3, 2018, engaged in an unapproved outside activity when he, acting on behalf of a third party company, solicited seven (7) individuals, including one client, to invest in an investment that was offered for sale by that company and not approved for sale by the Member, contrary to the Member’s policies and procedures and MFDA Rules 1.1.2, 1.3.2, 2.1.1, and 2.5.1.
    3. On or about December 7, 2018, during the course of the Member’s supervisory investigation into his conduct, provided a false or misleading statement to the Member, contrary to MFDA Rule 2.1.1.

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: Aug 8, 2021

"Matthew Elliott de Haan"

Matthew Elliott de Haan

“Charles Toth”

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

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