WHEREAS on April 13, 2018, the Mutual Fund Dealers Association of Canada (the “MFDA”) issued a news release pursuant to section 24.4 of By-law No. 1 in respect of Kenneth Fialho (the “Respondent”);
AND WHEREAS the Respondent entered into a settlement agreement with Staff of the MFDA, dated April 13, 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 admissions made by the Respondent in the Settlement Agreement, the Hearing Panel is of the opinion that:
- the Respondent admits that between April 16, 2012 and November 27, 2013, he submitted four trades in four client accounts to the Member, without sufficient authorization or evidence of instructions from the clients, contrary to the policies and procedures of the Member and MFDA Rules 2.1.1, 2.3.1, 2.10 and 1.1.2.
- the Respondent admits that in January 2014, he attempted to process two trades in reliance upon LTAs in contravention of a direction from the Member prohibiting the use of LTAs by the Respondent, contrary to MFDA Rule 2.1.1(b) and (c).
- the Respondent admits that between December 2009 and October 2013, he:
- submitted four client account forms to the Member containing signatures or initials that of someone other than the account holder;
- did not take adequate steps to ensure that the four client account forms had been signed by the account holder; and
- processed a trade based on instructions that he received from someone other than the account holder,
contrary to MFDA Rules 2.1.1, 2.3.1 and 1.1.2.
- the Respondent admits that on September 8, 2015, he provided notes to MFDA Staff during the course of its investigations that purported to demonstrate that he had obtained instructions from a client to process a trade, when he knew or ought to have known he had processed the trade in question based on the instructions of someone other than the client, contrary to MFDA Rule 2.1.1.
IT IS HEREBY ORDERED THAT the Settlement Agreement is accepted, as a consequence of which:
- the Respondent’s authority to conduct securities related business in any capacity while in the employ of or associated with any MFDA Member shall be prohibited for a period of two years from the date of the order, pursuant to section 24.1.1(e) of MFDA By-law No. 1;
- the Respondent shall pay costs in the amount of $5,000 pursuant to section 24.2 of By-law No. 1 upon acceptance of this Settlement Agreement;
- the payment by the Respondent of the costs described above in paragraph 3 shall be made to and received by MFDA Staff in certified funds as follows:
- $1,250 (costs) shall be paid upon acceptance of the Settlement Agreement by the Hearing Panel;
- $1,250 (costs) shall be paid on or before June 29, 2018;
- $1,250 (costs) shall be paid on or before August 31, 2018; and
- $1,250 (costs) shall be paid on or before October 26, 2018;
- If the Respondent fails to make any of the payments described above in paragraph 4, then:
- any outstanding balance of the costs owed by the Respondent shall immediately become due and payable to the MFDA; and
- the Respondent shall continue to be prohibited from conducting securities related business while in the employ of or associated with a Member of the MFDA until such time as the total amount outstanding of the costs owed by the Respondent is paid to the MFDA, pursuant to section 24.3.13(c) of MFDA By-law No. 1.
Frederick W. ChenowethFrederick W. ChenowethChair
Guenther W. K. KlebergGuenther W. K. KlebergIndustry Representative
Linda J. AndersonLinda J. AndersonIndustry Representative