MFDA Agreed Statement of Facts

View and Download English PDF
Home › ASF202117

File No. 202117

Re: Edward Henry MacDermaid

Agreed Statement of Facts

I. INTRODUCTION

  1. By Notice of Hearing dated May 17, 2021, the Mutual Fund Dealers Association of Canada (the “MFDA”) commenced a disciplinary proceeding against Edward Henry MacDermaid (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 December 15, 2014 and October 25, 2019, the Respondent photocopied signature pages from account forms that had been signed by clients and re-used the signature pages to complete 48 additional forms in respect of 18 clients, contrary to MFDA Rule 2.1.1.
    2. Allegation #2: Between February 29, 2018 and March 22, 2018, the Respondent altered and used to process transactions 2 account forms in respect of 2 clients by altering information on the account forms without having the client initial the alterations, contrary to MFDA Rule 2.1.1.
    3. Allegation #3: Between March 2, 2015 and August 24, 2017, the Respondent obtained, possessed, and used to process transactions, 6 pre-signed account forms in respect of 4 clients, 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. Commencing in July 1988, the Respondent was registered in the securities industry.
  2. From June 2011 to September 2019, the Respondent was registered as a Dealing Representative in New Brunswick with IPC Investment Corporation (the “Member”), a Member of the MFDA.
  3. The Respondent was also registered as a Dealing Representative with the Member in the following provinces as follows:
    1. in Ontario from June 2011 to November 2018;
    2. in Quebec from June 2011 to February 2012;
    3. in Newfoundland and Labrador from March 2013 to September 2019; and
    4. in Prince Edward Island from June 2011 to September 2019.
  4. On July 31, 2019, the Member suspended the Respondent as a result of the matters described herein. On September 10, 2019, the Respondent resigned from the Member and is not currently registered in the securities industry in any capacity.
  5. At all material times, the Respondent conducted business in the Bathurst, New Brunswick area.

Re-Used Client Signatures

  1. At all material times, the Member’s policies and procedures prohibited Approved Persons from photocopying documents to re-use client signatures.
  2. Between December 15, 2014 and October 25, 2019, the Respondent photocopied signature pages from account forms that had been signed by clients and re-used the signature pages to complete 48 additional forms in respect of 18 clients.
  3. The Respondent submitted all of the account forms to the Member for processing.
  4. The account forms consisted of 3 Non-Financial Change Forms and 45 Order Entry Forms.

Altered Account Forms

  1. At all material times, the Member’s policies and procedures prohibited Approved Persons from altering client account forms without obtaining client signatures or initials evidencing that the alteration was approved by the client.
  2. Between February 29, 2018 and March 22, 2018, the Respondent altered and used to process transactions 2 Order Entry forms in respect of 2 clients by altering information on the account forms without having the client initial the alterations.
  3. The Respondent altered fund codes on the account forms.

Pre-Signed Account Forms

  1. At all material times, the Member’s policies and procedures prohibited Approved Persons from obtaining or using pre-signed account forms.
  2. Between March 2, 2015 and August 24, 2017, the Respondent obtained, possessed, and used to process transactions, 6 pre-signed Order Entry Forms in respect of 4 clients.

The Member’s Response

  1. During the Course of a branch audit, the Member conducted a review of the client files maintained by the Respondent and identified several of the account forms described above. On July 22, 2019, the Member completed a full review of the client files maintained by the Respondent and identified the remaining account forms described above.
  2. On July 31, 2019, the Member suspended the Respondent as a result of the audit findings. Subsequently, on September 10, 2019, the Respondent resigned from the Member.
  3. On October 23, 2019, the Member issued a letter to clients whose accounts the Respondent formerly serviced, which included a transaction history for each client, and asked the clients to review the transaction history to ensure the accuracy of the trading activity in their accounts. The Member also provided the contact information of a new Approved Person and asked the clients to contact him if they had any questions or concerns.
  4. The new Approved Person that was assigned to service the client accounts met with some clients to further review past trading activity, to update Know-Your-Client information, and to advise clients to contact the Member’s Head Office if they had any complaints. No clients raised any concerns in response to the letter or their meetings with the new Approved Person.

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 he would ordinarily be entitled to receive had the transactions been carried out in the proper manner.
  2. There is no evidence of client complaints, loss, or a lack of authorization.
  3. The Respondent has not previously been the subject of MFDA disciplinary proceedings.
  4. The Respondent states that he engaged in the conduct described in this Agreed Statement of Facts for the purposes of client convenience.
  5. The Respondent is 74 years old.
  6. The Respondent states that he has not been working since his suspension from the Member and that he is not seeking to re-register in the securities industry.

Misconduct Admitted

  1. By engaging in the conduct described above, the Respondent admits that:
    1. between December 15, 2014 and October 25, 2019, the Respondent photocopied signature pages from account forms that had been signed by clients and re-used the signature pages to complete 48 additional forms in respect of 18 clients, contrary to MFDA Rule 2.1.1;
    2. between February 29, 2018 and March 22, 2018, the Respondent altered and used to process transactions 2 account forms in respect of 2 clients by altering information on the account forms without having the client initial the alterations, contrary to MFDA Rule 2.1.1; and
    3. between March 2, 2015 and August 24, 2017, the Respondent obtained, possessed, and used to process transactions, 6 pre-signed account forms in respect of 4 clients, 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: Jul 22, 2021

"Edward Henry MacDermaid"

Edward Henry MacDermaid

“Charles Toth”

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

841468