Order

WHEREAS on August 30, 2019, the Mutual Fund Dealers Association of Canada (the “MFDA”) issued a Notice of Settlement Hearing pursuant to section 24.4 of By-law No. 1 in respect of FundEX Investments Inc. (the “Respondent”);

AND WHEREAS the Respondent entered into a settlement agreement with Staff of the MFDA, dated August 15, 2019 (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 the Hearing Panel is of the opinion that:

1. Between June 2011 and April 2012, the Respondent failed to adequately supervise its Approved Person Christopher Singer’s recommendation to a client for the purchase of an exempt market product, which recommendation was unsuitable for the client having regard to concentration and the client’s Know-Your-Client information, including but not limited to the client’s investment knowledge and experience, and time horizon, contrary to MFDA Rules 2.2.1 and 2.1.1;
2. Between November 2007 and approximately February 2014, the Respondent did not have adequate procedures in place to monitor all of the holdings in its client accounts held at Canadian Western Trust, and did not identify the sale of unapproved products in the accounts of two clients, contrary to MFDA Rule 2.5.1;
3. Commencing in 2011, the Respondent failed to ensure that complaints from two clients regarding its Approved Persons Stuart Henschel and William Cormylo, were handled fairly, contrary to MFDA Rule 2.11 and MFDA Policy No. 3;
4. Between June 2013 and April 2017, the Respondent failed to conduct adequate supervisory investigations to review and resolve suitability and concentration of precious metal sector funds concerns it identified in client accounts serviced by 4 Approved Persons, contrary to MFDA Rules 2.2.1 and 2.5.1;
5. Between March 28, 2016 and May 1, 2018, the Respondent failed to ensure that a complaint from a client regarding its Approved Person Ronald Schwartz was handled fairly, contrary to MFDA Rule 2.11 and MFDA Policy No. 3; and
6. Between August 2009 to November 2013, the Respondent maintained a branch review program that did not ensure that in all instances an on-site compliance review of all of its branches was conducted at least once every three years, in accordance with MFDA Policy No. 5 and MFDA Rule 2.5.1.

IT IS HEREBY ORDERED THAT the Settlement Agreement is accepted, as a consequence of which:

1. The Respondent will pay a fine of $250,000 pursuant to section 24.1.2(b) of MFDA By-law No. 1;
2. The Respondent will pay costs of $50,000 pursuant to section 24.2 of MFDA By-law No. 1;
3. The Respondent shall in the future comply with MFDA Rules 1.2.1, 2.1.1, 2.2.1, 2.5, 2.5.1, and 2.11, and MFDA Policy No. 3 and No. 5; and
4. If at any time a non-party to this proceeding, with the exception of the bodies set out in section 23 of MFDA By-law No. 1, requests production of or access to exhibits in this proceeding that contain personal information as defined by the MFDA Privacy Policy, then the MFDA Corporate Secretary shall not provide copies of or access to the requested exhibits to the non-party without first redacting from them any and all personal information, pursuant to Rules 1.8(2) and (5) of the MFDA Rules of Procedure.