Order

WHEREAS on December 16, 2016, Staff of the Mutual Fund Dealers Association of Canada  (“MFDA”) issued a Notice of Hearing pursuant to sections 20 and 24 of By-law No. 1 in respect of Investia Financial Services Inc. (“Respondent”);

AND WHEREAS on March 14, 2017, a first appearance in this proceeding was held before one public representative of a Regional Council acting as Chair on behalf of a hearing panel of the Central Regional Council of the MFDA (“Hearing Panel”), pursuant to s. 19.13 of  MFDA  By-Law  No.  1 (“first appearance”);

AND WHEREAS during the first appearance Staff and counsel for the Respondent made submissions to the Chair of the Hearing Panel with respect to scheduling and other procedural matters;

AND WHEREAS during the first appearance, the hearing on the merits in this matter was scheduled to take place September 26-28, 2017 at the MFDA offices located in Toronto, Ontario;

AND WHEREAS on September 25, 2017 the parties jointly requested to the Hearing Panel that the hearing on the merits be adjourned to commence on September 28, 2017;

AND WHEREAS the Respondent entered into a settlement agreement with Staff of the MFDA, dated September 27, 2017 (“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 September 28, 2017, following submissions made by Staff and counsel for the Respondent, the Hearing Panel scheduled the settlement hearing to consider the Settlement Agreement to commence on October 17, 2017 at 9:30 a.m.;

AND WHEREAS the settlement hearing to consider the Settlement Agreement was held on October 17, 2017 in the hearing room at the MFDA offices in Toronto, Ontario pursuant to which Staff and counsel for the Respondents made submissions to the Hearing Panel;

AND WHEREAS the Hearing Panel is of the opinion that the Respondent:

1. between August 2011 and June 2012, failed to adequately supervise, and establish and maintain adequate internal controls pertaining to, the outside business activities of its Approved Person Bemelekot Tewahade (“Tewahade”), by failing to conduct a supervisory review of Tewahade after the Member had become aware that he was engaged in undisclosed outside business activities, contrary to MFDA Rules 2.1(c) (now MFDA Rule 1.3), 2.5.1 and 2.9;
2. between June 14, 2012 and July 23, 2012, failed to adequately supervise, and establish and maintain adequate internal controls pertaining to, the outside business activities of its Approved Person Russell Chang, contrary to MFDA Rules 1.1.1, 1.2.1(c) (now MFDA Rule 1.3), 2.5.1 and 2.9;
3. between November 2003 and September 2013, failed to adequately supervise, and establish and maintain adequate internal controls pertaining to, the outside business activities of its Approved Person Charles Albert Martin (“Martin”), by failing to conduct any follow up or supervisory review of Martin’s outside business activities already disclosed to the Respondent by Martin, contrary to MFDA Rules 1.2.1(c) (now MFDA Rule 1.3), 2.5.1 and 2.9;
4. between 2006 and June 2014, failed to adequately supervise, and establish and maintain adequate internal controls pertaining to, the outside business activities of its Approved Person ST, by failing to conduct any follow up or supervisory review of ST’s outside business activities already disclosed to the Respondent by ST, contrary to MFDA Rules 1.2.1(c) (now MFDA Rule 1.3), 2.5.1 and 2.9;
5. between March 2011 and October 2016, failed to adequately supervise, and establish and maintain adequate internal controls pertaining to, the activities of its Approved Person DM after becoming aware that DM had altered Know-Your-Client (“KYC”) information in at least 2 client accounts without the affected clients’ knowledge or authorization, contrary to MFDA Rules 2.2.1, 2.2.4, 2.5.1 and 2.9; and
6. between March 2011 and October 2016, failed to inform and report to at least 2 clients and the MFDA that its Approved Person DM had altered KYC information in the clients’ accounts without the clients’ knowledge or authorization, contrary MFDA Rule 1.2.2 (now MFDA Rule 1.4) and MFDA Policy No. 6.

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

1. 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;

2. The Respondent shall in the future comply with MFDA Rules 1.3, 1.4, 2.2.1, 2.2.4, 2.5.1 and 2.9 and MFDA Policy No. 6;

3. The Respondent shall pay a fine in the amount of $200,000, pursuant to section 24.1.2(b) of By-law No. 1, upon the acceptance of this Settlement Agreement; and

4. The Respondent shall pay the costs of this proceeding and investigation in the amount of $20,000, pursuant to section 24.2 of By-law No. 1, upon the acceptance of this Settlement Agreement.