FILE NO. : 200807
MUTUAL FUND DEALERS ASSOCIATION OF CANADA
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: PORTFOLIO STRATEGIES CORPORATION
Hearing: June 19, 2008
Decision: August 6, 2008
DECISION AND REASONS
Hearing Panel of the Prairie Regional Council:
Daniel Ish, Q.C. , Chair
Terry Ford, Industry Representative
Hugh Corbett ) For the Mutual Fund Dealers Association of Canada
Tom Manson ) For Portfolio Strategies Corporation
In a Notice of Settlement Hearing dated April 25, 2008, the Mutual Fund Dealers
Association of Canada (the “MFDA”) alleged violation of the Rules of the MFDA by
Portfolio Strategies Corporation, the Respondent. The allegations are that the Respondent
create and maintain adequate records of a call from a client concerning the
conduct of one of its approved persons and the steps the Respondent took
in response to the call; and
conduct a reasonable supervisory investigation of the conduct of its
approved person in response to a client complaint to the MFDA and to
take such reasonable supervisory and disciplinary measures as would be
warranted by the results of its investigation; contrary to MFDA Rules
1.1.5(b), 2.5.1, 2.5.4 and the public interest.
The Settlement Hearing in this matter was conducted on June 19, 2008 in
Calgary, Alberta. Mr. Hugh Corbett appeared for the MFDA and Mr. Tom Manson
represented the Respondent. The Panel proceeded with two members only pursuant to
Bylaw 19.9, because the third member of the Panel was not available. The parties
indicated that they had no objection to the Panel proceeding.
Prior to the hearing, the Panel was provided with a written settlement agreement
that had been agreed to by the parties. At the hearing, Mr. Corbett, on behalf of the
MFDA, provided both written and oral submissions, and Mr. Manson, on behalf of the
Respondent, made oral submissions.
The Panel, after receiving the submissions with respect to liability and penalty,
made an order at the hearing on June 19, 2008 which will be confirmed and reproduced
in this decision.
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The facts, as agreed to by the parties, are as follows:
The Respondent is registered as a mutual fund dealer in Alberta, British
Columbia, Manitoba, Ontario and Saskatchewan and has been a Member of the MFDA
since February 8, 2002.
The Respondent has not been the subject of previous MFDA disciplinary
Summary of Jacobson’s Conduct
Rodney Jacobson (“Jacobson”) was registered as a mutual fund salesperson
in Alberta from May 1990 to January 2007. He was an Approved Person with the
Respondent from November 2001 until January 2007, at which time he was terminated
by the Respondent.
Jacobson was the Approved Person at the Respondent responsible for the
accounts of clients GL and TM.
As set out in more detail below, between December 2003 and November
2004, without the knowledge or approval of the Respondent, Jacobson obtained the
total amount of approximately $55,000 from GL and TM for the purpose of making
investments on their behalf, however, instead of purchasing investments for the clients,
Jacobson deposited the monies in a bank account that he controlled and made personal
use of the funds for his own benefit, thereby misappropriating the funds.
Between March 2004 and November 2004, Jacobson reimbursed GL and TM
in cash and kind for the monies that he had received from them, in part by using his
own money to purchase mutual funds in the clients’ investment accounts without their
knowledge or approval using blank signed forms that he had previously obtained from
GL and TM. The Respondent had no knowledge that Jacobson had obtained blank
signed forms from his clients and was using the blank signed forms to execute
unauthorized trades in the clients’ accounts.
In November 2004, when Jacobson learned that the MFDA was investigating
his activities, he borrowed monies from his personal credit line to repay the remaining
monies he had taken.
By Order dated June 11, 2007, an MFDA Hearing Panel accepted a
settlement agreement entered into between Staff and Jacobson (the “Jacobson
Settlement Agreement”), as a result of which Jacobson was permanently prohibited
from conducting securities related business in any capacity and fined $15,000.
Jacobson admitted that he had misappropriated client funds, engaged in discretionary
trading, traded outside his authority as a mutual fund salesperson and had provided
false and misleading statements to Staff during the course of Staff’s investigation.
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The Respondent was not a party to the Jacobson Settlement Agreement and
had no role in determining the facts agreed upon between Staff and Jacobson. The
Respondent is bound only by the facts in this Settlement Agreement and not by the
facts in the Jacobson Settlement Agreement.
The Respondent’s Conduct
GL is 76 years old. In October 2003, GL’s spouse died and Jacobson
handled the process of combining the spouse’s account with GL’s account. Jacobson
had been serving as a financial advisor for GL and his spouse for more than 10 years.
In December 2003, GL provided Jacobson with $20,000 to invest on his behalf in a
non-mutual fund investment that Jacobson recommended. Jacobson told GL that the
investment would generate income payments of $1,000 per month.
Jacobson did not actually have a non-mutual fund investment product in
mind for GL to purchase. Instead, Jacobson deposited the $20,000 that he obtained
from GL in a bank account that he controlled and used the money for his personal
benefit, thereby misappropriating the funds.
GL was not aware that the Respondent had no knowledge of the non-mutual
fund investment that Jacobson recommended to him and that the investment was not
processed through the books and records of the Respondent.
Between March and July 2004, GL contacted Jacobson to inquire about
overdue income payments that he expected to receive. On multiple occasions,
Jacobson used his own money to purchase money orders in the amount of $442 which
in some cases were made payable to GL personally and in other cases were used
together with blank signed forms previously obtained from GL to make mutual fund
purchases in GL’s investment account.
In late July 2004, GL attended at Jacobson’s offices with his daughter to
complain about Jacobson’s handling of his $20,000 non-mutual fund investment as the
income payments that had been promised remained in arrears. During the meeting, GL
demanded the return of the $20,000.
At the time, Jacobson did not report his meeting with GL and his daughter to
the Respondent. Jacobson did not maintain any written record of the meeting.
Jacobson had been serving as a financial advisor for TM for close to 20
years. Jacobson knew that TM’s work commitments often resulted in long absences
from home. On July 30, 2004, TM gave Jacobson $35,000 to invest in mutual funds
for TM’s account. Instead, Jacobson deposited the $35,000 in the same bank account
in which he had previously deposited funds received from GL and thereby
misappropriated the funds.
On August 5, 2004, without the knowledge of TM or the Respondent,
Jacobson used $15,000 of the $35,000 that he had received from TM to purchase
mutual funds for TM. In order to process the transaction, Jacobson used blank signed
forms that he had previously obtained from TM.
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On August 13, 2004, without the knowledge of GL, TM or the Respondent,
Jacobson used $18,381.42 of the $35,000 received from TM to purchase mutual funds
for GL’s account to reimburse GL in kind for the balance of the $20,000 that GL had
given to him to invest. In order to process the transaction, Jacobson used blank signed
forms that he had previously obtained from GL.
After receiving a trade confirmation for the August 13, 2004 mutual fund
purchase, GL was upset because he had not authorized the mutual fund purchase that
was recorded on the trade confirmation form, the amount of the purchase was less than
the $20,000 reimbursement that GL had expected to receive from Jacobson, and the
income payments of $1,000 per month that Jacobson had promised GL remained in
The Respondent recalls receiving a call from GL during which GL voiced
concerns about missing cheques and said that he had not signed for anything.
According to the Respondent, the Respondent reviewed GL’s file and called GL right
back. The Respondent recalls telling GL that it had a signed redemption form from
him for the trade in question, and that funds had been wired directly into his personal
chequing account. The Respondent also verified that the bank account void cheque on
file did belong to GL. After completing its call to GL, the Respondent was left with
the impression that GL’s concerns had been adequately addressed. However, the
Respondent did not create or maintain any notes or records of GL’s call or any steps
that the Respondent took to respond to it.
For the purposes of this Settlement Agreement, MFDA Staff accepts the
Respondent’s account of its dealings with GL as set out in paragraph 24 above.
On October 5, 2004, with the assistance of his daughter, GL submitted a
written complaint to the MFDA about Jacobson’s handling of his investments. After
receiving the complaint, the MFDA commenced its own investigation of the matter.
On October 21, 2004, Staff informed the Respondent in writing that it had
received a letter of complaint from GL concerning Jacobson’s handling of his account.
Specifically, the MFDA informed the Respondent that: “(GL) has expressed concern
regarding cheques provided to Mr. Jacobson for investments in 2003. (GL) alleges he
never received confirmation as to where the funds were invested and further alleges he
was not receiving monthly payments, he was told he would receive from the
investments, by Mr. Jacobson”.
Staff requested that the Respondent produce documentation “to aid (the
MFDA) in our review of (GL)’s complaint” and invited the Respondent and Jacobson
to provide a written response to GL’s complaint.
On November 2, 2004, before providing a written response to GL’s
complaint, Jacobson borrowed funds from his line of credit and without the knowledge
of TM or the Respondent, he reimbursed the remaining money that he had
misappropriated from TM in kind by purchasing mutual funds in TM’s account using
blank signed forms that he had previously obtained from TM.
In a letter dated November 4, 2004, Jacobson set out a lengthy and detailed
response to GL’s complaint (“Jacobson’s First Response”). Jacobson’s First Response
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was misleading in its tone and content. Jacobson claimed that GL was “competent, but
moody and forgetful”. Jacobson implied that GL’s recollection was unreliable due to
his age and infirmity and that GL frequently had difficulty understanding his financial
affairs. Jacobson acknowledged that he had recently met with GL and his daughter
and described the meeting as “confrontational and awkward”. Jacobson attributed this
to GL’s inability to accurately recall or understand his investment transactions.
Under cover of a letter dated November 5, 2004, the Respondent sent
Jacobson’s First Response to the MFDA. The Respondent advised that it had
reviewed GL’s file and determined everything to be in order.
Unknown to the Respondent, Jacobson’s First Response contained false
statements and material omissions in so far as Jacobson did not disclose:
the existence of his holding company, Investment Plus Inc., through
which he would later claim that he offered off-book investment and money
management services to clients;
that GL had given him $20,000 in December 2003 to invest in an
off-book investment; and
that he had deposited the $20,000 received from GL in the
Investment Plus Inc. bank account and had used the funds for his personal
benefit for approximately 8 months until GL had demanded reimbursement
in July 2004.
On November 16, 2004, Staff requested additional information from the
Respondent concerning GL’s complaint based on its review of Jacobson’s First
Response including copies of all of Jacobson’s bank and line of credit statements for
the relevant period.
In the course of responding to these follow-up inquiries, Jacobson disclosed
to the Respondent, for the first time, that he had a holding company called Investment
Plus Inc. and that in late 2003 he had deposited $20,000 received from GL into the
Investment Plus Inc. bank account as part of what he described as an “off-book
investment strategy” that Jacobson claimed he was carrying out for GL’s benefit.
By letter dated November 30, 2004 (the “Second Response”), the
Respondent advised Staff that Jacobson had informed the Respondent of the
that Jacobson had used Investment Plus Inc. as a temporary vehicle
to assist GL to achieve a monthly income of $442.00;
that GL had provided Jacobson with $20,000 to invest off-book
because Jacobson could offer GL a better return than was available in the
market at the time;
in August 2004, Jacobson transferred the remaining monies that he
held in his Investment Plus Inc. bank account to GL when it became apparent
that GL did not understand the investment strategy; and
Jacobson had provided a money management service off-book to one
other client with no adverse consequences.
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The Respondent also reported to Staff that it had informed Jacobson that his off book
“money management service” contravened firm policy and guidelines and that “he
must cease the activity forthwith.” The Respondent stated that Jacobson agreed to do
In the Second Response, the Respondent stated that it was its “continuing
view that Jacobson’s actions were well intended and did not result in any financial
harm to GL” and that it accepted that Jacobson’s strategy “was clearly not understood
In spite of continuing inquiries from MFDA Staff about what steps the
Respondent was taking to investigate Jacobson’s conduct, the Respondent, both
believing Jacobson and believing the matter to be at an end, did not:
(a) take any steps to verify Jacobson’s claims concerning his off-book activities;
(b) subject Jacobson to heightened supervision;
(c) subject Jacobson to formal disciplinary action; or
(d) provide a written direction to Jacobson to cease and desist from providing
off-book money management and investment services.
By virtue of Jacobson’s admissions as set out in the Second Response, the
Respondent understood or ought to have understood by no later than November 30,
2004 that Jacobson had engaged in the following conduct contrary to MFDA Rules:
(i) conducting securities related business outside the Respondent, contrary to MFDA
(ii) providing off-book “money management” services to clients without disclosure to
or approval by the Respondent, contrary to MFDA Rule 1.2.1(d); and
(iii) co-mingling client monies with his own monies.
The Respondent did not conduct a reasonable supervisory investigation into
Jacobson’s conduct, including Jacobson’s revelations concerning his purported off-
book activities. In particular,
(a) prior to November 2006, the Respondent did not:
(i)Speak to GL and TM to corroborate Jacobson’s version of events;
(ii)Review copies of the banking records of Investment Plus Inc. to
corroborate Jacobson’s version of events and verify the whereabouts of the
clients’ funds; and
(b) the Respondent did not at any time:
(i) Take steps to verify whether money from any individuals other than GL
and TM had been deposited in bank accounts that Jacobson controlled or
provided to Jacobson in connection with his purported money management
and investment services;
(ii) Require Jacobson to confirm with credible supporting documents or
records the existence of the off-book money management and investment
services that he purportedly provided through Investment Plus Inc.;
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(iii) Request an accounting from Jacobson of GL’s and TM’s holdings in
Jacobson’s purported off-book investment;
(iv) Require Jacobson to explain the significant discrepancies between his
version of events as described in the First Response and the Second
(v) Review GL’s and TM’s files and the trading activity in their accounts to
determine whether it was consistent with the purported off-book investment
described by Jacobson.
Had the Respondent conducted a reasonable supervisory investigation of
GL’s complaint, including Jacobson’s revelations concerning his purported off-book
activities, the Respondent would have determined that:
(i) Jacobson’s version of events differed with, and in key areas was contradicted
by, GL’s and TM’s version of events ;
(ii) Jacobson’s off-book investments and money management services did not
(iii) Jacobson did not have any documents, notes, records or correspondence
concerning GL’s and TM’s purported off-book investments;
(iv) The pattern of deposits and withdrawals from the Investment Plus Inc. bank
account was inconsistent with Jacobson’s version of events;
(v) Jacobson’s withdrawals from the Investment Plus Inc. bank account showed
that Jacobson had:
(i)used monies from GL to pay down a bank account overdraft;
(ii)used monies from TM to reimburse GL;
(iii)reimbursed TM using funds obtained from a line of credit two days
before the First Response; and
(iv)Jacobson had made several unauthorized trades in GL’s and TM’s
accounts using blank, pre-signed forms previously obtained from them.
Between November 2004 and December 2006, the Respondent failed to take
reasonable steps to supervise Jacobson in light of the admissions that Jacobson made
concerning his purported off-book investment and money management services. In
particular, the Respondent did not:
(i) review the files of other clients serviced by Jacobson to determine whether he
had mishandled their accounts or contravened any other MFDA Rules or internal
policies and guidelines of the Respondent; and
(ii)contact other clients serviced by Jacobson to determine whether he had
provided or was continuing to provide them with off-book money management
and investment services.
MFDA Staff’s investigation determined that Jacobson was apparently telling
the truth when he stated that his off-book activities involved only TM and GL and that
no funds had been misappropriated from any other client and Jacobson did cease
engaging in off-book activity after he reimbursed TM.
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In November 2006, two years after receiving notification about the complaint
from GL to the MFDA, the Respondent conducted a review of Jacobson’s sub-branch
including an interview with Jacobson. During the interview, Jacobson told the
Respondent that he had received no direct or indirect benefit from clients. This
statement was false but was accepted at face value by the Respondent.
On November 23, 2006, the Respondent formally reprimanded Jacobson in
writing in relation to his off-book activities but took no additional disciplinary action
against him in light of Jacobson’s assurances that he had not received any
compensation or benefit from them and the Respondent’s understanding that all
amounts obtained from GL and TM relating to the purported off-book investment and
management services had been repaid by Jacobson in 2004. The Respondent still had
not determined that Jacobson had misappropriated monies from GL and TM and that
his purported off-book investment and money management services did not exist.
The Respondent accepted the account of the facts that Jacobson provided in his
interview statement with the Respondent in November 2006 and in his other
communications with the Respondent.
On December 12, 2006, following an interview conducted by MFDA Staff
with a representative of the Respondent during MFDA Staff’s investigation of this
matter, the Respondent asked MFDA Staff to inform the Respondent if the MFDA was
in possession of information suggesting that Jacobson may pose a risk of harm to the
public. By letter dated December 19, 2006, the MFDA advised the Respondent that
based on its investigation to date, the MFDA believed that Jacobson had
misappropriated client funds that he had received from GL and TM for his personal
benefit and had reimbursed the clients when it appeared that his misconduct had been
or would imminently be discovered. The MFDA also informed the Respondent that
Jacobson had deliberately misled individuals who investigated his conduct in response
to a complaint from his client. The MFDA suggested that pending the conclusion of
its investigation and any subsequent disciplinary hearing, the Respondent should, at a
minimum, place Jacobson under heightened supervision and monitor situations in
which Jacobson was able to handle or access client funds. Upon receipt of this letter,
the Respondent set up a further interview with Jacobson on January 8, 2007.
On January 11, 2007, the Respondent terminated Jacobson for cause. In its
termination letter the Respondent advised Jacobson, among other matters, that using
client funds for personal purposes did not meet the standards expected by the MFDA
or the Respondent.
The Respondent co-operated with MFDA Staff’s investigation of the subject
matter of this Settlement Agreement.
Since the events described in this Settlement Agreement occurred, the
Respondent has hired a new Chief Compliance Officer with regulatory and compliance
experience and additional compliance staff to assist the Respondent to fulfill its
supervisory responsibilities. The Respondent has also substantially revised its Policy
and Procedures Manual particularly with respect to “Complaint Handling, Internal
Investigations, and Internal Discipline” so that in accordance with MFDA Rules and
Policies, complaints to the Respondent or to the MFDA concerning the business
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conduct of Approved Persons of the Respondent will be handled promptly and fairly,
appropriate records of complaints and investigations will be maintained and when
warranted, reasonable supervisory investigations will be conducted and internal
supervisory and disciplinary measures will be imposed.
The Respondent acknowledged and admitted responsibility in these words:
The Respondent admits that in the Fall of 2004, it failed to create and
maintain adequate records of the call from GL concerning Jacobson’s conduct and the
steps that the Respondent took in response, contrary to MFDA Rule 2.5.4.
The Respondent admits that between November 2004 and December 2006, it
failed to conduct a reasonable supervisory investigation of Jacobson’s conduct in
response to GL’s complaint to the MFDA and to take such supervisory and
disciplinary measures as would be warranted by the results of its investigation contrary
to MFDA Rules 1.1.5(b), 2.5.1, 2.5.4 and the public interest.
It is clear from the agreed facts as set out above that the Respondent did fail to
create and maintain adequate records of a call from a client concerning the conduct of
one of its approved persons, Rodney Jacobson. We are also satisfied that the agreed facts
demonstrate that the Respondent failed to conduct a reasonable supervisory investigation
of the conduct of its approved person, Mr. Jacobson, in response to a client complaint to
the MFDA and failed to take reasonable supervisory and disciplinary measures as would
be warranted by the results of its investigation. We find that Rules 1.1.5(b), 2.5.1, 2.5.4
and the public interest have been violated. These breaches were acknowledged by
Portfolio Strategies Corporation and are also found to be substantiated by this Hearing
PENALTY AND ORDER
After the Panel considered the agreed facts submitted to it, the balance of the
hearing on June 19, 2008 dealt with the matter of the appropriate penalty that should be
imposed on the Respondent. The parties made a joint submission, as part of the
Settlement Agreement, with respect to penalties. Although the parties had agreed on
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penalties, the Rules of Procedure of the MFDA require that the Panel must be satisfied
that the penalties imposed on the Respondent for the admitted infractions are appropriate
ones in the circumstances. It is within the discretion of the Panel to determine whether to
accept or reject a Settlement Agreement.
The terms of settlement proposed by the parties were:
The Respondent agrees to the following terms of settlement:
The Respondent will receive a reprimand, pursuant to s. 24.2.2(a) of
MFDA By-law No. 1; and
The Respondent will pay a fine in the amount of $5,000, pursuant to
s. 24.1.2(b) of MFDA By-law No. 1.
If this Settlement Agreement is accepted by the Hearing Panel, the
Respondent will withdraw its appeal to the Alberta Securities Commission of the
decision of the MFDA’s Hearing Panel in respect of the MFDA’s earlier settlement
with Jacobson, on consent of the MFDA and without costs.
Several previous decisions of industry tribunals, including MFDA tribunals, have
found that a number of factors must be taken into account in determining the appropriate
sanction to impose for an infraction or infractions of the rules. In determining the
appropriate penalty in this matter, the Panel took into account the following factors:
the public interest and whether the penalty imposed will protect investors.
whether the Settlement Agreement is reasonable and proportionate, having
regard to the conduct of the Respondent, as set out in the agreement.
whether the Settlement Agreement addresses the issues of both specific
and general deterrance.
whether the proposed penalty will prevent the type of conduct described in
the Agreement from occurring again in the future.
whether the Settlement Agreement will foster confidence in the integrity
of the canadian securities market.
whether the Settlement Agreement will foster confidence in integrity of
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The submissions by both the MFDA and the Respondent made a number of points
to justify the penalty, which the Panel observed appeared on its face to be a relatively
small penalty. The factors referred to by both Counsel included the fact that the
Respondent was not a primary actor in the infractions. Rather, the offending conduct was
that of Mr. Rodney Jacobson, one of the Respondent’s approved persons. Moreover,
when the Respondent initially queried Mr. Jacobson about the transactions in question, he
misrepresented the situation to the Respondent.
Another factor referred to is that the Respondent fully cooperated with the MFDA
once the facts were known to it, notwithstanding that a more thorough investigation may
have revealed the facts to the Respondent sooner. The cooperation, together with the
Settlement Agreement, avoids costs and an uncertain outcome.
Another consideration put before the Panel was that only two clients were
involved, only one of whom initially complained. In addition, the clients were fully
compensated by Mr. Jacobson and ultimately no money was lost.
Another response of both Counsel in questions from the Panel about the
adequacy of the terms of settlement was that the facts in this case occurred relatively
early, in 2003 and 2004, shortly after the time the MFDA became involved in
enforcement. In these early days of compliance regulation, the importance and awareness
of the need for strict compliance was not as heightened as it is today.
Another matter questioned by the Panel was the term of settlement that will see
the Respondent withdrawing its appeal to the Alberta Securities Commission of the
decision of an MFDA’s Hearing Panel in respect of an earlier Settlement Agreement with
Rodney Jacobson. We were advised that this perhaps may be the first case in which as
part of the settlement there has been a collateral withdrawal of proceedings. While we
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After hearing the submissions of Counsel, the Panel adjourned to consider
whether the Settlement Agreement would be accepted, including the penalty provisions.
Upon return to the hearing room, the Panel indicated that it was in agreement with the
joint submission and made an Order to that effect on June 19, 2008. In making the Order
with respect to penalty we are particularly mindful of the fact that these events occurred
early in the days of the MFDA regulatory compliance regime. In the intervening period
the MFDA has, through its policies and notices, provided considerable guidance to the
dealer community on their supervisory obligations. Issues surrounding appropriate
complaint handling procedures and diligent review of outside business activity are clearly
of concern when considering investor protection matters and market integrity. MFDA
members should now be fully aware of the importance of these issues. If the same
supervisory failures occurred today, it is our view that the penalty should and would be
considerably higher than the $5,000 penalty that we are prepared to accept in this case.
We were also influenced by the fact that no actual monetary harm was ultimately
incurred by clients and that there was no complaint history against the Respondent. In
addition, we were impressed by the remedial actions taken by the Respondent, as
reflected in paragraph 48 of the Settlement Agreement, to the effect that it has increased
its regulatory and compliance capacity subsequent to the facts of this case coming to
We hereby confirm the Order that we made on June 19, 2008 which states:
WHEREAS on Friday, April 25, 2008, the Mutual Fund Dealers Association of
Canada (the “MFDA”) issued a Notice of Settlement Hearing pursuant to section
24.4 of MFDA By-law No. 1 in respect of Portfolio Strategies Corporation (the
AND WHEREAS the Respondent entered into a settlement agreement with Staff
of the MFDA, dated Monday, March 31, 2008 (the “Settlement Agreement”), in
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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 MFDA By-law No. 1;
AND WHEREAS the Hearing Panel is of the opinion that:
(a) the Respondent failed to create and maintain adequate records of the call
from GL concerning Jacobson’s conduct and the steps that the Respondent took in
response, contrary to MFDA Rule 2.5.4; and
(b) between November 2004 and December 2006, the Respondent failed to
conduct a reasonable supervisory investigation regarding the conduct of its former
Approved Person Rodney Jacobson (“Jacobson”) in response to GL’s complaint to
the MFDA and to take such supervisory and disciplinary measures as would be
warranted by the results of its investigation contrary to MFDA Rules 1.1.5(b), 2.5.1,
2.1.1(c) and the public interest.
IT IS HEREBY ORDERED THAT the Settlement Agreement is accepted, as a
consequence of which:
1. The Respondent shall receive a reprimand, pursuant to s. 24.1.2(a) of MFDA
By-law No. 1; and
2. The Respondent shall pay a fine in the amount of $5,000, pursuant to
s. 24.1.2(b) of MFDA By-law No. 1.
Dated this 13th day of August, 2008.
Daniel Ish, Q.C., Chair
Terry Ford, Industry Representative
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