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File No. 201695

IN THE MATTER OF A SETTLEMENT HEARING PURSUANT TO SECTION 24.4 OF BY-LAW NO. 1 OF THE MUTUAL FUND DEALERS ASSOCIATION OF CANADA

Re: TeamMax Investment Corporation

Order

WHEREAS on December 16, 2016, the Mutual Fund Dealers Association of Canada (the “MFDA”) issued a Notice of Settlement Hearing pursuant to section 24.4 of MFDA By-law No. 1 in respect of TeamMax Investment Corporation (the “Respondent”);

AND WHEREAS the Respondent entered into a settlement agreement with Staff of the MFDA (“Staff”), dated January 11, 2017 (the “Settlement Agreement”), in which the Respondent agreed to a proposed settlement of matters for which the Respondent could be disciplined pursuant to sections 20 and 24.1 of MFDA By-law No. 1;

AND WHEREAS the Hearing Panel is of the opinion that:

  1. Between August 2010 and April 2014, the Respondent failed to respond, or provided untimely, incomplete or inadequate responses, to requests for information and documents requested by Staff during the course of compliance examinations, contrary to MFDA Rules 1.2.5(a)(iii)[1] and 2.1.1;
  2. Between September 2009 and April 2014, the Respondent failed to establish, implement and maintain adequate policies and procedures to supervise leveraging recommendations and ensure the suitability of leveraging recommendations made by Approved Persons to clients, contrary to MFDA Rules 2.2.1, 2.5 and 2.10 and MFDA Policy No. 2;
  3. Commencing October 2011, the Respondent failed to conduct a historical leveraging review of the Respondent’s leveraged client accounts to identify and correct deficiencies identified by Staff relating to those leveraged client accounts, contrary to MFDA Rules 1.2.5(a)(iii)[2], 2.2.1 and 2.1.1;
  4. Between September 2009 and July 2015, the Respondent failed to implement a supervisory structure for the Respondent compliant with the requirements set out in MFDA Policies No. 2 and 5, and failed to effectively discharge the supervisory obligations prescribed by MFDA Rule 2.5, contrary to MFDA Rules 2.5 and MFDA Policies No. 2 and 5, and the Order dated July 8, 2014 (“2014 Order”);
  5. Between, August 2010 and April 2014, the Respondent failed to regularly update the Respondent’s policies and procedures manual, contrary to MFDA Rule 2.10 and MFDA Policy No. 2;
  6. Between March 2010 and July 2015, the Respondent failed to implement a Branch Review Program compliant with the requirements set out in MFDA Policy No. 5;
  7. Between March 2010 and July 2015, the Respondent failed to adequately detect and query patterns in the Know-Your-Client information collected from clients by three Approved Persons: EYCQ, MF and HHYZ, contrary to MFDA Rule 2.2.1 and MFDA Policy No. 2;
  8. Between March 2010 and July 2015, the Respondent failed to conduct sufficient supervisory activities of its Approved Persons’ outside business activities, contrary to MFDA Rule 1.2.1(c)[3].

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

  1. The Respondent shall pay a fine in the amount of $60,000, with $10,000 payable upon the acceptance of the Settlement Agreement and the balance being paid in 5 monthly instalments of $10,000 each;
  1. The Respondent shall pay costs in the amount of $10,000 upon the acceptance of the Settlement Agreement;
  1. The Respondent acknowledges that, having regard to the size of its business, its ultimate designated person (“UDP”) shall not be appointed as the Chief Compliance Officer (“CCO”), perform the day-to-day compliance duties and functions of the CCO, or perform other day-to-day compliance functions and duties (beyond fulfilling his duties and functions as UDP), without the prior written consent of Staff;
  1. The Respondent shall in the future comply with all MFDA By-laws, Rules and Policies, and all applicable securities legislation and regulations made thereunder, including MFDA Rules 1.2.1(c)[4], 1.2.5(a)(iii)[5], 2.1.1, 2.1.2, 2.2.1, 2.5, 2.10, and MFDA Policies No. 2 and 5;
  1. The terms and conditions imposed by the 2014 Order shall be removed;
  1. The proceeding commenced on July 7, 2014 is concluded; and
  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.

[1] Now MFDA Rule 1.4(a)(iii).
[2] Now MFDA Rule 1.4(a)(iii).
[3] Now MFDA Rule 1.3.
[4] Now MFDA Rule 1.3.
[5] Now MFDA Rule 1.4(a)(iii).

DATED: Jul 11, 2017

"Thomas Lockwood"

Thomas Lockwood

Chair


"Linda Anderson"

Linda Anderson

Industry Representative


"Guenther Kleberg"

Guenther Kleberg

Industry Representative


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