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Decision and Reasons

Re:

Decision and Reasons

Decision and Reasons
File No. 200602

MUTUAL FUND DEALERS ASSOCIATION OF CANADA

IN THE MATTER OF A DISCIPLINARY HEARING
PURSUANT TO SECTIONS 20 and 24 OF BY-LAW NO. 1
OF THE MUTUAL FUND DEALERS ASSOCIATION OF CANADA

RE: SHAWN SANDINK

DISCIPLINARY HEARING

Hearing: June 22, 2006
Decision: July 19, 2006

DECISION and REASONS

Hearing Panel of the Ontario Regional Council:

The Hon. Fred Kaufman, C.M., Q.C.

Chair
Robert Hovianseian

Industry Representative

Paul Griffin

Industry Representative

Appearances:

Robert DelFrate

)
for the Mutual Fund Dealers Association

)
of Canada

Shawn Sandink
)
in attendance personal y
)



Decision

As set out in the Notice of Hearing, the Respondent, Shawn Sandink, was
accused of conduct contrary to the By-laws, Rules or Policies of the MFDA and,
more particularly, that, between January 1999 and August 2003, he
misappropriated $34,250 from one of his mutual fund clients, “thereby failing to
deal fairly, honestly and in good faith with his client and engaging in business
conduct that was unbecoming and detrimental to the public interest, contrary to
MFDA Rule 2.1.1.”
The facts, as stated in the Agreed Statement of Facts, are as fol ows:

Registration History
6.
From December 1996 to December 2004, the Respondent
was registered in Ontario as a mutual fund salesperson for
PFSL Investments Canada Ltd. ("PFSL"). PFSL became a
Member of the MFDA on January 31, 2002.
7.
On December 31, 2004, the Respondent was terminated by
PFSL. He is not currently registered in the securities industry
in any capacity.

The Respondent's Conduct
8.
As described in greater detail below, between January 27,
1999 and August 20, 2003, the Respondent misappropriated
approximately $34,250.00 from a mutual fund client.
9.
In 1998, the Respondent opened an account for JY.
Between 1998 and 2001, JY deposited $140,000 into the
Trimark Interest Fund (the "Trimark Fund"). The Trimark
Fund al ows clients to have cheque writing redemption
privileges. JY made regular withdrawals from the Trimark
Fund by this means.
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10.
As set out in the table below, between January 1999
and August 2003, the Respondent, without JY's knowledge
or consent, forged ten cheques on the Trimark Fund, totaling
$34,250, payable to the benefit of the Respondent or the
Respondent and his wife. Each of these cheques was
deposited into the Respondent's or the Respondent and his
wife's bank account.
Date
Amount
Cheque Payable To
January 27, 1999 $10,600
Shawn and Sharon Sandink
April 6, 1999
$3,000
Shawn Sandink
April 15, 1999
$5,000
Shawn Sandink
May 20, 1999
$5,000
Shawn Sandink
July 25, 1999
$500
Shawn Sandink
August 13, 2002 $2,500
Shawn Sandink
September 21,
$1,500
Shawn Sandink
2002
May 25, 2003
$2,000
Shawn Sandink
July 25, 2003
$2,150
Shawn Sandink
August 20, 2003 $2,000
Shawn Sandink
Total
$34,250

11.
In order to conceal his conduct, the Respondent listed the
client address for JY on the account documentation in
respect of JY's investment in the Trimark Fund as 202 Huron
St., Woodstock ON, N4S 7A1. This is the address of the
PFSL sub-branch office at which the Respondent worked. As
a result, al of JY's account statements in respect of the
Trimark Fund were sent to this address and JY was unaware
of the unauthorized withdrawals.
12.
In 1999, the Respondent relocated from the sub-branch
office at 202 Huron St. to the PFSL branch office located at
30 Metcalfe St., Woodstock On, N4S 3E7. On June 14,
Page 3 of 5

1999, the Respondent directed his assistant to change
the address on JY's account to 30 Metcalfe St.
13.
In 1999, the Respondent told JY that he was going to use
$24,000, more or less, from the Trimark Fund to purchase
gold options on JY's behalf. The Respondent never
purchased the gold options. The Respondent later told JY
that the gold options had expired on a fictitious strike date
and were worthless. The Respondent fabricated this story in
order to conceal the misappropriation.
14.
In May 2005, PFSL commenced an investigation of the
Respondent in response to a complaint made by JY. The
Respondent admitted to the misconduct. In November 2005,
PFSL compensated JY for losses attributable to the
Respondent's conduct.
15.
The Respondent has not repaid any of the misappropriated
funds.
It is clear from the above that the offence al eged was, in fact, committed, and
that the Respondent has violated MFDA Rule 2.1.1.
That established, the parties were invited to speak to the penalty.
Enforcement counsel stressed the gravity of the offence, the course of the
Respondent’s conduct over a long period of time, the harm to investors which
conduct of this type occasions, the damage to market integrity, the personal
benefit to the Respondent, and the aggravating factor of concealment by listing
an incorrect address in order to divert statements away from his client.
On the other hand, this was the Respondent’s first offence. Once discovered, he
cooperated ful y with MFDA staff, and in his Reply, as wel as at the hearing, he
conveyed his remorse to his client and to the the MFDA. He is married and has
three young children.
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As was said on previous occasions, the duty to deal fairly, honestly and in good
faith with clients is a fundamental requirement for everyone engaged in the
industry, and any breach of the Rules must be punished severely. Previous
cases suggest that a permanent prohibition should be imposed in cases of this
kind. They also suggest that fine be imposed, as wel as an amount for costs.
We propose to take this course.
We note that part of the Respondent’s misappropriation occurred before the
MFDA acquired jurisdiction. But, as was said in Re Crackower (2005, MFDA
Case No. 200506), when a Respondent’s il egal activities “were in existence at
the time of his membership and continued thereafter,” the entire amount can be
taken into consideration, and we wil do so.
In the result, the sanctions imposed, and announced at the conclusion of the
hearing, were as fol ows:
1.
A permanent prohibition on the authority of the Respondent to engage in
any securities related business in any capacity;
2.
A fine in the amount of $35,000.00; and
3.
Costs in the amount of $2,500.00.

Given at Toronto, Ontario, this 19th day of July, 2006.

“Fred Kaufman”

The Hon. Fred Kaufman, C.M., Q.C.

“Robert Hovianseian”

Robert Hovianseian, Industry Representative

“Paul Griffin”

Paul Griffin, Industry Representative

Doc 87716
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