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Order

Re:

Order

Order
File No. 200827

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: John Joseph Hanson


ORDER


WHEREAS on June 30, 2010, the Mutual Fund Dealers Association of Canada (the
“MFDA”) issued a Notice of Settlement Hearing pursuant to section 24.4 of By-law No. 1 in
respect of John Joseph Hanson (the “Respondent”);

AND WHEREAS the Respondent entered into a settlement agreement with Staff of the
MFDA, dated July 2, 2010 (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 Farm Mutual Financial Services Inc. (“Farm Mutual”) has been
disciplined for deficiencies in its due diligence assessment of FactorCorp Financial Inc.
(“FactorCorp”) debentures, deficiencies in its approval of FactorCorp debentures for sale to
clients, and deficiencies in its supervision of such sales, including its failure to conduct second-
tier supervisory reviews. The Respondent’s contraventions, as admitted to in this proceeding,
occurred in the context of those deficiencies and, in large part, as a result of those deficiencies.

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AND WHEREAS in making these admissions, the Respondent acknowledges that his
regulatory obligations as a mutual fund salesperson and a branch manager were not limited to the
training and information he received from Farm Mutual with respect to the risks associated with
the FactorCorp debentures but extended to include a knowledge of the essential regulatory
framework associated with the sale of exempt securities and an understanding of his Member’s
capacity to conduct second-tier reviews.

AND WHEREAS the Hearing Panel is of the opinion that:

(i)
Between June 25, 2003 and April 1, 2007, the Respondent, in his capacity as an
Approved Person of Farm Mutual, conducted sales of exempt securities – specifically
FactorCorp debentures – using training and information provided by the Respondent’s
Member Farm Mutual, and as a result of deficiencies in that training and deficiencies in
that information the Respondent sold FactorCorp debentures to clients who did not
qualify as accredited investors in accordance with Ontario Securities Commission Rule
45-501 and subsequently National Instrument 45-106 and to clients whose risk tolerance
was less than high, thereby contravening MFDA Rule 2.1.1(c) and thereby engaging the
jurisdiction of the Hearing Panel to impose a penalty on the Respondent pursuant to s.
24.1.1(h) of By-law No. 1.

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 requests production of or access to exhibits
in this proceeding that contain intimate financial or personal information, 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 intimate financial or personal information,
pursuant to Rules 1.8(2) and (5) of the MFDA Rules of Procedure;

2.
The Respondent shall be reprimanded, pursuant to section 24.1.1 (a) of By-law No. 1;

3.
The Respondent shall be prohibited from conducting any securities related business in
any capacity while in the employ of, or in association with, any MFDA Member for a period of
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one year, pursuant to section 24.1.1(e) of By-law No. 1;

4.
In the event that the Respondent seeks to become an Approved Person of a MFDA
Member, the Respondent shall successfully complete the IFSE (IFIC) Mutual Fund Dealer
Compliance course prior to becoming an Approved Person unless he has already done so within
the last three (3) years from the date that the Respondent seeks to become an Approved Person,
pursuant to section 24.1.1(f) of By-law No. 1;

5.
In the event that the Respondent becomes an Approved Person of a MFDA Member, the
Respondent is prohibited from acting in a supervisory capacity including specifically from acting
as a branch manager or an alternate branch manager, compliance officer or UDP, for a period of
seven (7) years from the date of commencing to be an Approved Person, pursuant to section
24.1.1(f) of By-law No. 1;

6.
In the event that the Respondent becomes an Approved Person of a MFDA Member, the
Respondent shall successfully complete a six (6) month period of close supervision from the date
of commencing to be an Approved Person, pursuant to section 24.1.1(f) of By-law No. 1;

7.
The Respondent will attend in person or by teleconference, on the date set for the
Settlement Hearing.

DATED this 6th day July, 2010.

“Edward Saunders”
The Hon. Edward Saunders, Q.C.,

Chair

“Jeanne Beverly”
Jeanne E. Beverly,

Industry Representative

“Linda Anderson”
Linda J. Anderson,

Industry Representative

Doc 220439
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