Order

WHEREAS on May 18, 2018, the Mutual Fund Dealers Association of Canada (“MFDA”) issued a Notice of Settlement Hearing pursuant to section 24.4 of By-law No. 1 in respect of Equity Associates Inc. (“Respondent”);

AND WHEREAS the Respondent entered into a settlement agreement with Staff of the MFDA, dated April 30, 2018 (“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 the Respondent:

1. during the period March 1, 2012 to September 30, 2014, failed to adequately supervise, or failed to maintain adequate records of the supervision at its Head Office, sub-branch level, and branch level, of:
   1. daily trading activity;
   2. approval of new accounts;
   3. approval of amendments to know-your-client information; and
   4. leveraged accounts;

   contrary to MFDA Rules 2.2.1, 2.2.2, 2.2.3, 2.5.1, 2.9, and 5.1, and MFDA Policy No. 2;

2. during the period March 1, 2012 to September 30, 2014, failed to establish, implement and maintain adequate policies and procedures to conduct trend analysis reports to supervise its Approved Persons’ trading activity, contrary to MFDA Rules 2.2.1, 2.5.1, 2.9, and 2.10, and MFDA Policy No. 2;
3. during the period March 1, 2012 to September 30, 2014, failed to maintain adequate compliance resources, contrary to MFDA Rules 2.5.1 and MFDA Policy No. 2;
4. during the period October 1, 2014 to July 31, 2016, the Respondent failed to adequately supervise, or failed to maintain adequate records of the supervision of:
   1. uniformity of certain client KYC information; and
   2. concentration of sector mutual funds in client accounts;

   contrary to MFDA Rules 2.2.1, 2.5.1, 2.9 and 5.1, and MFDA Policy No. 2;

5. commencing on or about August 19, 2014, failed to conduct a reasonable supervisory investigation in response to information it received that its Approved Person, Gilles Latour, was charged with offences pursuant to the Criminal Code of Canada for alleged conduct involving clients and other individuals, contrary to MFDA Rules 2.5.1 and MFDA Policy No. 3; and
6. commencing May 2014, failed to conduct a reasonable supervisory investigation regarding investment suitability concerns and portfolio concentration issues in the client accounts serviced by its Approved Person Lawrence Fike, contrary to MFDA Rule 2.5.1 and MFDA Policy No. 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 $125,000, pursuant to s. 24.1.2(b) of MFDA By-law No. 1;

2. the Respondent shall pay costs in the amount of $20,000 to the MFDA, pursuant to s. 24.2 of MFDA By-law No. 1;

3. the payment by the Respondent of the fine and costs in paragraphs 1 and 2 above shall be made to and received by MFDA Staff in certified funds as follows:
   1. $82,500 (fine and costs) upon the acceptance of the Settlement Agreement; and
   2. $62,500 (fine) no later than 6 months after the acceptance of the Settlement Agreement.

4. the Respondent shall in the future comply with MFDA Rules 2.1, 2.2.2, 2.2.3, 2.5.1, 2.9, 2.10 and 5.1, and MFDA Policy No. 2 and No. 3; and

5. 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.