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Order
File No. 201115





IN THE MATTER OF A DISCIPLINARY HEARING
PURSUANT TO SECTIONS 20 AND 24 OF BY-LAW NO. 1 OF
THE MUTUAL FUND DEALERS ASSOCIATION OF CANADA

Re: Thomas G. Arseneau



ORDER


WHEREAS on December 22, 2011, the Mutual Fund Dealers Association of Canada
(the “MFDA”) issued a Notice of Hearing pursuant to section 20.1 of MFDA By-law No. 1 in
respect of Thomas G. Arseneau (the “Respondent”);

AND WHEREAS the Respondent did not file a Reply to the Notice of Hearing;

AND WHEREAS on February 17, 2012, a first appearance in this proceeding took place
by teleconference before a hearing panel of the Atlantic Regional Council of the MFDA (the
“Hearing Panel”), during which a hearing of the matters as described in the Notice of Hearing
(the “Hearing on the Merits”) was scheduled for June 26, 27 and 28, 2012 in Fredericton, New
Brunswick;

AND WHEREAS the Respondent did not attend or otherwise participate in the first
appearance;

AND WHEREAS on March 6, 2012, the Respondent sent a letter, by facsimile, to
MFDA Staff confirming that he had received the Notice of Hearing and advising that he did not
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intend to take any further part in the MFDA’s disciplinary proceeding;

AND WHEREAS on March 9, 2012, an interim appearance took place by teleconference
before the Hearing Panel;

AND WHEREAS the Respondent did not attend or otherwise participate in the interim
appearance;

AND WHEREAS on March 13, 2012 and June 4, 2012, MFDA Staff sent letters to the
Respondent advising of, among other things, the dates, time and location of the Hearing on the
Merits;

AND WHEREAS on June 26 and 27, 2012 and July 31, 2012, the Hearing Panel
conducted the Hearing on the Merits;

AND WHEREAS the Respondent did not attend or otherwise participate in the Hearing
on the Merits;

AND WHEREAS in the opinion of the Hearing Panel:

(a)
in about May 2007, the Respondent failed to observe high standards of ethics and
conduct in the transaction of business and be of such character and business repute as is
consistent with the standards prescribed by MFDA Rule 2.1.1 when he falsely reported
on a loan application, which he submitted to a lender, that client KA owned a cottage
property which she did not in fact own in order to increase the likelihood that the lender
would provide an investment loan to client KA;

(b)
between 2004 and 2007, the Respondent misrepresented, or failed to fully and
adequately explain, the risks and benefits of leveraged investment recommendations that
he made to at least 20 clients, thereby failing to ensure that the leveraged investment
recommendations were suitable and appropriate for clients and in keeping with their
investment objectives, contrary to MFDA Rules 2.2.1 and 2.1.1;
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(c)
between 2004 and 2007, the Respondent failed to ensure that his leveraged
investment recommendations were suitable and appropriate for the clients and in keeping
with their investment objectives, contrary to MFDA Rules 2.2.1 and 2.1.1, when he made
leveraged investment recommendations to: (i) at least 12 clients which were not suitable
and appropriate having regard to the relevant “Know Your Client” factors including, but
not limited to, the clients’ ability to afford the costs associated with the investment loans;
and (ii) at least 12 clients which were not suitable and appropriate having regard to the
requirements regarding the use of leveraging set out in the Member’s policies and
procedures; and

(d)
between 2004 and 2008, the Respondent relied upon the lender’s decision to
approve the investment loans for 120 clients as the determination that the leveraging
recommendations were suitable for those clients, without performing his own assessment
of the suitability of the leveraging recommendations that he made to the clients, contrary
to MFDA Rules 2.2.1, 2.5.1 and 2.1.1.

IT IS HEREBY ORDERED THAT:

1.
The Respondent shall be permanently prohibited from conducting securities
related business in any capacity over which the MFDA has jurisdiction, pursuant to s.
24.1.1(e) of MFDA By-law No. 1;

2.
The Respondent shall pay a fine in the amount of $500,000.00, pursuant to s.
24.1.1(b) of MFDA By-law No. 1;

3.
The Respondent shall pay costs in the amount of $20,000.00, pursuant to s. 24.2
of MFDA By-law No. 1; and

4.
If at any time a non-party to this proceeding requests production of, or access to,
any materials filed in, or the record of, this proceeding, including all exhibits and
transcripts, then the MFDA Corporate Secretary shall not provide copies of, or access to,
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the requested documents to the non-party without first redacting from them any and all
intimate financial or personal information, pursuant to Rules 1.8(2) and (5) of the MFDA
Rules of Procedure.

DATED this 28th day of September, 2012.

“D. Merlin Nunn”
The Hon. D. Merlin Nunn, Q.C.,

Chair

“Jason P. Downey”
Jason P. Downey,

Industry Representative

“David Losier”
David Losier,
Industry Representative

Doc 325269
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