Order

WHEREAS on June 6, 2017, the Mutual Fund Dealers Association of Canada (“MFDA”) issued a Notice of Hearing pursuant to sections 20 and 24 of MFDA By-law No. 1 in respect of a disciplinary proceeding commenced against Ronald Morrell Schwartz (“Respondent”);

AND WHEREAS the Respondent did not file a Reply;

AND WHEREAS a first appearance in this matter proceeded before a Hearing Panel of the Central Regional Council of the MFDA (the “Hearing Panel”) on August 22, 2017 (“First Appearance”);

AND WHEREAS at the First Appearance, counsel for Staff of the MFDA (“Staff”) and counsel for the Respondent attended and made submissions with respect to scheduling and other matters;

AND WHEREAS at the First Appearance, the matter was scheduled to proceed to a Hearing on the Merits (“Hearing”) on May 29-31, 2018;

AND WHEREAS on March 13, 2018, counsel for the Respondent advised Staff that the Respondent would not be responding to the MFDA allegations, such that Staff requested that the Hearing be rescheduled to one day only, on May 29, 2018;

AND WHEREAS the Hearing was rescheduled to May 29, 2018;

AND WHEREAS the Hearing proceeded before the Hearing Panel in Toronto, Ontario on May 29, 2018;

AND WHEREAS the Respondent did not attend at the Hearing, either in person or represented by counsel;

AND WHEREAS at the Hearing, the Hearing Panel considered the evidence and submissions filed by counsel for Staff with respect to the alleged misconduct including;

• an affidavit and other materials filed and marked as exhibits at the Hearing; and
• the submissions of Staff at the Hearing;

AND WHEREAS the Hearing Panel found that:

1. between January 2009 and October 24, 2014, the Respondent processed a series of unauthorized redemptions and misappropriated at least $69,035 from six clients, contrary to MFDA Rules 2.1.1 and 2.3.1;

2. between January 2009 and October 24, 2014, the Respondent created and distributed fictitious account statements, and misled clients and his Members in response to inquiries regarding his trading activities, in order to conceal that he had processed unauthorized redemptions in client accounts and misappropriated client monies, contrary to MFDA Rules 2.8.2 and 2.1.1; and

3. commencing on June 1, 2015, the Respondent failed to cooperate with an investigation by MFDA Staff into his conduct, contrary to section 22.1 of MFDA By-law No. 1.

AND WHEREAS on June 8, 2018, the Hearing Panel issued Reasons for Decision regarding misconduct;

AND WHEREAS on June 11, 2018, the MFDA corporate secretary provided to counsel for the Respondent, among other things, the Reasons for Decision regarding misconduct, and the Order regarding misconduct dated May 29, 2018;

AND WHEREAS on June 19, 2018, Staff provided a copy of Staff’s submissions on penalty to counsel for the Respondent;

AND WHEREAS on July 3, 2018, a penalty hearing proceeded before the Hearing Panel in Toronto, Ontario (“Penalty Hearing”);

AND WHEREAS the Respondent did not deliver materials regarding penalty, or attend at the Penalty Hearing, either in person or represented by counsel;

AND WHEREAS at the Penalty Hearing, the Hearing Panel considered the submissions and authorities filed by counsel for MFDA Staff with respect to penalty;

IT IS HEREBY ORDERED THAT:

1. the Respondent shall be permanently prohibited from conducting securities related business in any capacity while in the employ of, or in association with, any MFDA Member, pursuant to s. 24.1.1(e) of MFDA By-law No. 1;

2. The Respondent shall pay a fine in the amount of $225,000, pursuant to s. 24.1.1(b) of MFDA By-law No. 1, apportioned as follows:
   1. $125,000 – Unauthorized redemptions and misappropriation
   2. $25,000 – Creating and distributing fictitious statements and misleading clients and Member
   3. $75,000 – failure to cooperate; and

3. The Respondent shall pay costs in the amount of $10,000 pursuant to s. 24.2 of MFDA By-law No. 1.