WHEREAS on November 20, 2017, the Mutual Fund Dealers Association of Canada (the “MFDA”) issued a Notice of Hearing pursuant to sections 20 and 24 of By-law No. 1 in respect of a disciplinary proceeding against Dino DeRosa (the “Respondent”);
AND WHEREAS the Respondent entered into a settlement agreement with Staff of the MFDA, dated October 2, 2018 (the “Settlement Agreement”), in which the Respondent agreed to a proposed settlement of matters for which the Respondent could be disciplined pursuant to ss. 20 and 24.1 of By-law No. 1;
AND WHEREAS on the basis of the facts and contraventions that the Respondent has admitted in the Settlement Agreement, the Hearing Panel is of the opinion that:
a. between 2006 and April 2013, the Respondent, in his capacity as Chief Compliance Officer (“CCO”) of H. Stuart Mutuals Ltd. (“W. H. Stuart”), failed to identify regulatory concerns and take adequate supervisory action including completing a reasonable supervisory investigation in response to red flags that indicated, or could have revealed, that W. H. Stuart’s principals and Approved Persons were soliciting off-book investments in promissory notes issued by W. H. Stuart, its principals and related entities, contrary to MFDA Rules 1.1.1, 2.5.3 and 2.1.1;
b. between February 2011 and April 2013, the Respondent, in his capacity as CCO of W.H. Stuart, received complaints concerning the accounts of clients SI, DR and MD but failed to ensure that:
i. the complaints were reported to the MFDA on the Member Event Tracking System (“METS”);
ii. reasonable supervisory investigations into the subject matter of the complaints were conducted;
iii. the complaints were dealt with promptly and fairly; and
iv. records were maintained of the investigation and proposed resolution of the complaints;
contrary to MFDA Rules 1.2.21 (now 1.4), 2.1.1, 2.11, 2.1.4, 2.5.3 and MFDA Policy Nos. 3 and 6.
c. between December 2011 and April 2013, the Respondent signed the certificate of partners or directors on behalf of W. H. Stuart that accompanied the submission of the Member’s monthly and annual financial reports to the MFDA when he knew or ought to have known that the financial reports contained inaccurate financial information, contrary to MFDA Rules 3.5.1 and 1.1.2 and MFDA Rule 2.1.1.
IT IS HEREBY ORDERED THAT the Settlement Agreement is accepted, as a consequence of which:
- From the date of this Order, the Respondent shall be permanently prohibited from conducting securities related business in any capacity as an Approved Person of, or in association with, any Member of the MFDA, pursuant to s. 24.1.1(e) of MFDA By-law No. 1;
- The Respondent shall pay a fine in the amount of $10,000, pursuant to s. 24.1.1(b) of MFDA By-law No. 1;
- The Respondent shall pay costs in the amount of $5,000, pursuant to s. 24.2 of MFDA
By-law No. 1 which shall be payable on the date of this order; and
1 From December 3, 2010 to March 17, 2016, Rule 1.2.2 listed certain requirements with respect to reporting to the MFDA. On March 17, 2016, the requirements in that rule were renumbered and are now in Rule 1.4. At the time when the Respondent’s obligation to make reports the MFDA arose, this requirement was set out Rule 1.2.2.
Martin L. Friedland, CC, QCMartin L. Friedland, CC, QCChair
Guenther W. K. KlebergGuenther W. K. KlebergIndustry Representative
Joseph YassiJoseph YassiIndustry Representative