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Decision and Reasons

Re:

Decision and Reasons


Decision and Reasons (Misconduct)
File No. 201425



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: Bemelekot W. Tewahade

Heard: October 19, 2015 in Toronto, Ontario
Decision and Reasons (Misconduct): January 13, 2016.


DECISION AND REASONS
(Misconduct)


Hearing Panel of the Central Regional Council:

W.A. Derry Millar
Chair

David W. Kerr
Industry Representative

Colleen Waring
Industry Representative

Appearances:

Maria Abate
)
Counsel for the Mutual Fund Dealers

)
Association of Canada
)

Bemelekot W. Tewahade
)
In Person
)

)

)

Page 1 of 33

link to page 2
I.
INTRODUCTION

1.
By notice of hearing dated December 22, 2014, Staff of the Mutual Fund Dealers
Association of Canada (“MFDA”) alleged that Bemelekot W. Tewahade (the “Respondent”)
violated the By-laws, Rules or Policies of the MFDA set out below:

Allegation #1: Between May 6, 2005 and June 18, 2012, the Respondent had and continued
in another gainful occupation that was not disclosed to and approved by the Member by
carrying on business as a registered representative of two FINRA1 Member firms in
succession, contrary to MFDA Rules 1.2.1(c) and 2.1.1.

Allegation #2: Between May 6, 2005 and June 18, 2012, the Respondent failed to comply
with the policies and procedures of the Member by:

(a) failing to provide his correct permanent residential address to the Member; and
(b) engaging in outside business activities which were not disclosed to and approved by
the Member,

thereby interfering with the ability of the Member to supervise the Respondent, contrary
to MFDA Rules 1.1.2 and 2.5.1 and MFDA Rule 2.1.1.

2.
The hearing was held on October 19, 2015. Staff called Lucy Alfenore, a staff
investigator, as its witness. During the course of Ms. Alfenore’s evidence, Exhibits 4 to 31 were
introduced into evidence. The Respondent attended the hearing. He was not represented by
counsel. The Respondent gave evidence and called one witness, Mr. Kwame Yeboah, who
worked with him during the relevant period. Mr. Yeboah was a registered representative with
Investia who worked in the same office as the Respondent.

3.
There was very little disagreement on the facts.

1 The Financial Industry Regulatory Authority or “FINRA” is the American self-regulatory organization responsible
for the regulation and oversight of securities firms and their registered representatives in the United States.
Page 2 of 33

link to page 3 link to page 3 II.
THE FACTS

4.
The Respondent has been registered as a mutual fund salesperson in Ontario from at least
2003 to 2012 with Cartier Partners Financial Services Inc. (“Cartier Partners”), Dundee Private
Investors Inc. (“Dundee”)2 and Investia Financial Services Inc. (“Investia”).

5.
The Respondent entered into an Agent Agreement3 with Cartier Partners dated
February 19, 2002, in which he is described as “Bemelekot Tewahade of the City of
Toronto in the Province of Ontario.” The Agent Agreement provided, among other
things, the following:

a. 4.02
Approved Non-Cartier Business

Except as provided in Schedule “C” or unless otherwise permitted
pursuant to Cartier Partners’ Policy Manual or by any specific written
approval of a senior officer of Cartier Partners (which approval shall not
be unreasonably withheld), during the term of this Agreement, the Agent
shall not”

(a)
Engage in any gainful occupation, other than Cartier Partners
Business; or

(b)
Become a director, officer or employee of, and agent, consultant,
contractor or advisor to, or provide any services in any capacity through or
on behalf of, any person or entity carrying on an undertaking of business
for profit, other than Cartier Partners or an affiliate of Cartier Partners.
The Agent agrees that in respect of such services and activities which are
Approved Non-Cartier Business, the Agent will comply with the
provisions of section 4.04 of this Agreement. The Agent shall not conduct
any securities related business (as defined by Applicable Securities Laws)
with, in respect of or on behalf of any person other than Cartier Partners.
The parties agree that, in respect of deposit-taking activities only, the
Agents complying shall be in accordance with Section 4.04 of this
Agreement (if such deposit-taking activities of such Agent are conducted
outside Cartier Partners) or in accordance with Section 4.03 of this
Agreement (if such deposit-taking activities such agent are conducted
through Cartier Partners), depending upon the election of the Agent to.
The Agent shall ensure that the terms or basis on which the Agent is
engaged in or carries on any Approved Non-Cartier Business complies

2 Prior to 2005, Dundee acquired Cartier Partners.
3 Exhibit 4.
Page 3 of 33

with the terms of this Agreement and Applicable Securities Laws and does
not prevent or repair the ability of Cartier Partners or the SRO for
monitoring and enforcing the compliance with the terms of this Agreement
and the Applicable Securities Laws.

b. 4.04
Responsibilities of the Agent in respect of Approved Non-
Cartier Business

During the term of this Agreement, the Agent shall in respect of Approved
Non-Cartier Business only:

a)
Prior Consent

Prior to agreeing to sell any products and/or performing any activity or
service which does not constitute Cartier Partners Business, the Agent will
seek and obtain the prior written approval of Cartier Planners (which
approval will not be unreasonably withheld), to the extent it is not already
permitted or provided pursuant to the terms of this Agreement.

b)
Disclosure of Business Activities

The Agent certifies that he/she has disclosed to Cartier Partners in
Schedule “C” to this Agreement all of his/her business activities which do
not constitute Cartier Partners Business. The Agent agrees to notify
Cartier Partners immediately of any change in his/her business activities
are, including the commencement of any new business activity, and to
provide full disclosure of such activities.

c. The Respondent indicated on page 17 that his address was: ***********, Ajax,
ON ******.
d. Schedule “C” BUSINESS ACTIVITIES OF THE AGENT NOT
CONSTITUTING CARTIER PARTNERS BUSINESS (subject to the
provisions of Section 4.04)

1. After March 31, 2002 NON-Securities Related Financial Planning
Activities
2. Insurance
3. Deposit taking activities
“- Independent Insurance Producer through Equinox Canada, saling (sic)
policies for Manual life and RBC Insurance.” (Hand written Entry).
Page 4 of 33

link to page 5 link to page 5 6.
The Cartier Partners Compliance Manual updated April 22, 20034 provides, under the
section of the Compliance Manual dealing with Conflicts of Interest, in section 3.2.2 “Outside
Business Interests” as follows:

In accordance with MFDA regulations, you may engage in outside (non-
Cartier Partners) business interests if you obtain the prior express, written
permission of Cartier Partners compliance. Where permission has been
given enough for you to engage in outside business interests, it is your
responsibility to ensure that a “Business Interest Disclosure” document is
signed by each client conducting Cartier Partners business and submitted
to Cartier Partners compliance. A copy of this signed disclosure should
also be maintained in the representative client file.

7.
On March 5, 2005, the Respondent completed an Application for Transfer of
Registration5 for Investia. He listed his current employer as Dundee, 75 The Donway West
#1201, North York, Ont. He stated in the application in response to the “Address Where
Applicant Will Be Working” – “855 Matheson Boulevard, Miss, Ont L4W 4L6.” In the
Application for Transfer contain the following questions and answers provided by the
Respondent:

a. “#of hours devoted to this business or employment” ___2__
b. “Is this business or employment with your sponsoring mutual fund dealer?” – He
checked “yes”;
c. “If you answered yes, please complete (A), if you answered no, please complete
(B)”

i. “(A) If the business or employment described above is with the sponsoring
firm and if you are working less than 30 hours per week for the firm,
please explain” – “Answer: ______N/A__Also sell insurance “;

ii. “(B) If the business or employment described above is not with the
sponsoring firm, disclose any potential for confusion by clients and any
potential for conflicts of interest arising from your proposed activities as a
registrant in the business or employment described above (include whether
the business is listed on an exchange): Answer:_____N/A_________”;
d. The Respondent certified that the statements in the Application for Transfer were
true and correct to the best of his knowledge, information and belief.

4 Exhibit 5.
5 Exhibit 6.
Page 5 of 33

link to page 6 link to page 6 link to page 6 8.
On the same date, March 5, 2005, the Respondent completed an Investia Personal History
Form6. In it he listed his “Home Address” as *************, Ajax, ON ******.

9.
The Respondent also completed an Investia “Information Disclosure Consent”7 #. In that
document, he indicated as follows:

a. “1. (iii) Are you licensed to sell other investment products? If yes, list all other
products.” The Respondent circled “No”.
b. “1. (iv) Other business activities:
– List all other professional activities such as insurance…” The Respondent
filled in “Insurance, Disability policy, Term life and RESP”.
– “Do you have any corporate holdings?” The Respondent circled “No”;
– Do you maintain personal holdings in a private corporation? The Respondent
circled “No”.
– …
c. “1. (v) Other activities:”
– “Any other activities? Compensated or non-compensated?” The Respondent
filled in “N/A.”

10.
Exhibit 9 is the Respondent’s insurance licence which was received by the Investia
Ontario Regional Office on April 15, 2005. The header at the top of the document indicates that
the sheet of paper was faxed “Apr 15 2005 – 09:12 – FR IND ALLIANCE – INVESTIA6 487
3988 17057430075 – P. 02”. It also has a fax header “Jan 19 2005 7:28 PM

INFINITY#WEALTH#MANAGEMENT 3036913455 p. 3”.

11.
The Respondent entered into a Representative Contract with Investia signed by him on
May 8, 2005 to take effect on August 9, 20058. The Representative Contract provided, among
other things:

a. “5. COMPLIANCE

6 Exhibit 7.
7 Exhibit 9.
8 Exhibit 11.
Page 6 of 33

5.2 The Representative’s conduct related to the business must be compliant with
the applicable laws, regulations, policies and industry standards relating to trading
in all financial products through the Dealer, including, without limitation, the
Rules and By-laws of the MFDA and with any and all compliance, supervisory
and operational procedures as dictated by the Dealer.”

b. “6. THE MUTUAL FUND DEALERS ASSOCIATION (HEREAFTER “MFDA”
COMPLIANT:

6.1 The Representative and the Dealer, in order to fully comply with the MFDA
rules, undertake to respect the following:

(d) the Representative must be in compliance with the legislation, By-laws and
Rules applicable to the Representative;

(g) all such business conducted by the Representative is in the name of the Dealer
subject to the provisions of MFDA Rule 1.1.7;
(h) the Representative shall not conduct securities related business with or in
respect of any other person other than the Dealer.”

c. “10. PROCEDURES AND POLICIES GUIDE AND CODE OF ETHICS

10.1 The Dealer provides written prudent Business procedures for the sell (sic) of
its approved products, services and for dealing with clients in compliance with
securities legislation and governing SRO: the Policies and Procedures Guide
(hereafter the “Guide”). The Representative acknowledges receipt of a copy of the
Guide, and undertakes to conform with the provisions of the Guide and any future
amendment thereto made from time to time.
10.2 The Representative also acknowledges having read and understood the
Dealer’s Code of Ethics and undertakes to conform with its provisions. This
acknowledgment should be made in signing the code included at Schedule C.”

d. In Schedule B to the Representative Contract entitled “Agreement of Approved
Person” which was signed by the Respondent on May 8, 2005, the Respondent
agrees:

“1. to notify the Member Firm of which I am an Approved Person in writing of
any change in information relating to me as an Approved Person is prescribed by
any applicable law or any by-law, rule or policy of the MFDA (herein referred to
as the “MFDA Rules”);

2. to be bound by, observe and comply with the MFDA Rules as they are from
time to time amended or supplemented;

Page 7 of 33

link to page 8 3. that I am conversant with the MFDA Rules, and to keep myself fully informed
about the MFDA Rules as they are amended or supplemented from time to
time;…”

12.
Investia advised the Respondent by letter dated August 9, 2005, that the Ontario
Securities Commission had approved his request to work for Investia as a mutual fund
representative.

13.
In his “Annual Review of Professional Activities” dated May 18, 20069 and received by
the Investia Ontario Regional Office on May 29, 2006, the Respondent indicated as follows:

a. With respect to “1. Outside Business Activities”:

i. In response to the question, “do you have other professional activities
resulting in the compensation outside of your mutual fund registration”,
the Respondent checked “Yes” and stated under the heading “Details”
“Selling Life Insurance”;
ii. In response to the question, “do you have any corporate holdings”, the
Respondent checked “Yes” and stated under “Details” “50% owner of
Force Infinity Inc.”;

b. With respect to “4. Other Product Offerings”, in response to the question “please
indicate if you have ever sold any of the following instant investments. If yes,
please provide details:”, for the question “other investments, please specify” the
Respondent checked “Yes” and stated under “Details” “Seg fund for Life
insurance companies”;

c. With respect to “6. Update of Personal Details:”, in response to the question
“have you had a change in residential address or phone number within the last 12
months”, the Respondent checked “No”.

9 Exhibit 12.
Page 8 of 33

link to page 9 14.
Extracts from the Investia “Compliance Policies and Procedures Manual dated January
2008” (“Manual”) were marked10. Chapter 9 of the Manual is entitled “Dual Occupation and
Other Activities”. The Manual provides, among other things:

a. With respect to “i. Business Activities Allowed Outside of Investia”, the
Manual provides:

“Pursuant to MFDA Rule 1.2.1(d) a Representative can only be gainfully
employed in a dual occupation provided that:

• The Representative is permitted by legislation to devote less than his/her
full-time to the business of Investia for which he/she acts on behalf of;
• The activity is not prohibited by a securities commission in the jurisdiction
in which the Representatives (sic) carries on business;
• Investia is aware of and has pre-approved the outside activity;
• The activity does not bring the MFDA, Investia, or the mutual fund
industry into disrepute;
• Clear written disclosure is provided to clients that any activities are related
to such other gainful occupation are not the business of Investia and are
not the responsibility of Investia.
• In addition, Investia and the Representative must comply with provincial
securities legislation, which generally requires full disclosure of any
outside business activity and prior approval from the applicable security
commission(s).”

b. With respect to “ii. Investia Approval of Outside Activities”, the Manual
provides, among other things:

“Investia must be aware and approve of Representatives engaging in another
occupation. The Representative must notify his/her PCO in writing via the use of

10 Exhibit 13.
Page 9 of 33

link to page 10 link to page 10 the “Outside Business Activity Approval” Form of any employment or occupation
proposed other than as a Representative dealing in mutual funds and related
products for Investia. The approval form provides details such as:
• Name and nature of the business;
• The title or position of the Representative;
• The number of hours to be devoted to the business;
• A description of any potential for confusion or conflicts of interest; and
• Place of work

A Representative must notify Investia in the event of any material changes to
significant aspects of the activity.”

15.
The Investia “December 2008 Compliance Policy & Procedure Manual”11 contains the
same provisions with respect to “Business Activities Allowed Outside of Investia” and “Investia
Approval of Outside Activities”.

16.
In April, 2010, an issue arose as to the number of hours the Respondent was spending on
the mutual fund business and whether he was involved in any other activity “insurance or else?”
The email exchange between the Respondent and Odile Zénidé of Investia12 disclosed:

a. The Respondent was not spending two hours a week in the mutual fund business
as indicated on one of the forms filed with Investia but 20 to 25 hours;
b. He had been selling insurance since 1987 under the name of Infinity Retirement
Solutions of which he was the founder and sole owner;
c. The Respondent’s email signature was: “Mel Tewahade, Infinity Retirement
Solutions Inc (sic), 855 Matheson Blvd., E, Suite 1A, Mississauga, Ontario L4W
4L6.

11 Exhibit 14.
12 Exhibit 15.
Page 10 of 33

link to page 11 link to page 11 17.
On April 20, 2010, the Respondent completed an Investia “Outside Business Activity
Approval Form”13 which indicated, among other things:

a. He was operating his business under the “business trade name Infinity Retirement
Solutions Inc.”;
b. In response to the question “number of hours per week devoted to this business”,
he indicated “48 weeks”;
c. The “nature/type of the business was mutual fund sales and Insurance” and he
was the “Insurance/owner Agency” since July 1987;
d. He would receive no “annual compensation…for engaging in this outside
business”; and
e. “I have no other business activity other than Insurance Sales.”

18.
By email dated May 13, 2010,14 the Respondent was advised by Investia:

We are in receipt of your OBA (outside business activity form) and note
the following:

1. We have removed Mutual Funds as this activity can only be done
through the member Investia.

2. You have indicated in # of hours – 48 Weeks, please confirm your
intent was 48 hours.

3. Please provide an estimated dollar amount earned for these activities.
The above is required in order to provide the information to the regulators
and process the form.

19.
The Respondent’s Outside Business Activity Approval Form with the changes noted was
attached to the May 13, 2010 email from Investia.

13 Exhibit 16.
14 Exhibit 17 a.
Page 11 of 33

link to page 12 link to page 12 20.
On May 20, 2010, the Respondent signed an Investia “Acknowledgment” that he had
read and understood the information contained in the Investia Compliance Policies & Procedures
Manual, December 2008 Version.15

21.
In August, 2011, an exchange of emails took place between the vice president/COO of
Sunset Financial Services, Inc. in Kansas City, MO, and the Assistant Chief Compliance Officer
of Investia16 which disclosed the following:

a. The Respondent was a registered representative of Sunset in the United States for
the sale of mutual funds;
b. Sunset had been investigating the Respondent’s outside business activities related
to Infinity Retirement Solutions, Inc., in Mississauga;
c. The Respondent had indicated to Sunset that he was in the process of acquiring
Infinity Retirement Solutions and had been provided with a fax from Kwame
Yeboah indicating that the Respondent was in the process of acquiring Infinity
Retirement Solutions. The fax indicated that Mr. Yeboah was from Investia;
d. Sunset accessed the Ontario Securities Commission’s website which indicated
that the Respondent was registered with Investia as a Mutual Fund Dealing
Representative;
e. During an office visit on July 28, 2011, the Sunset vice president asked the
Respondent whether he was licensed with Investia and was told by the
Respondent that “he may have been in the past, but did not know if he was
currently licensed;”
f. Investia advised Sunset that the Respondent had been registered with Investia
since 2005 and was currently registered with Investia;
g. Investia advised Sunset that the Respondent had approximately 40 mutual fund
clients with Investia and attended the branch office “once a month to take care of
his customers”;

15 Exhibit 19.
16 Exhibit 20.
Page 12 of 33

link to page 13 h. Sunset was terminating the Respondent’s employment with Sunset effective
August 10, 2011 “for failing to disclose his association with Investia Financial
Services”;
i. Sunset advised Investia that the Respondent was “currently the representative for
over 850 mutual fund, variable annuity, and variable universal life accounts.”

22.
On August 8, 2011, Investia conducted an emergency audit of the Respondent’s office in
Mississauga as a result of the information provided by Sunset17. Sunset had advised Investia that
the Respondent had been a registered broker-dealer with Sunset since 2006 and with another US-
based firm since 1993. Investia was advised that the Respondent lived and maintained an office
in Inglewood, Colorado. The Investia representatives met with Mr. Yeboah who advised them
that the Respondent was in the United States where he lived and that the Respondent visited
Canada and the office once a month.

23.
The Investia representatives contacted the Respondent by telephone who advised them as
follows:

a. He moved to the United States in 1993 and maintained permanent residence in the
United States;
b. He is a “resident alien” in Canada;
c. He owns a property in Ajax but while in Canada he stays in a hotel as the property
in Ajax is out of town and is not in close proximity to his office;
d. He files taxes in both countries;
e. He owns 100% of Infinity Retirement Solutions Inc. He bought out his other
shareholder, Robert (‘David’) Lee;
f. He spends about 15 to 20 hours per week on his Canadian book of business; and
g. He set up a 1-800 line with a forward feature to his cell phone which his Canadian
clients can use to contact him.

17 Exhibit 21.
Page 13 of 33

link to page 14 link to page 14 link to page 14 link to page 14 link to page 14 24.
During the audit, it was discovered that the Respondent had a secondary website,
www.infrs.com, outside his mutual fund practice. The auditor inquired of Investia’s sales
communication department whether the website was approved.18 By email dated August 12,
2011, Investia’s sales communications department asked a number of questions of the
Respondent in relation to the website including whether he was licensed in the United States.19

25.
On August 11, 2011, Sunset terminated the Respondent’s association with Sunset. The
Respondent took the position that Sunset had no basis upon which to terminate him and he
resigned from Sunset.20

26.
On April 24, 2012, the Respondent completed the French version of the Investia “Annual
Review of Professional Activities (January 1, 2010, to December 31, 2010)” in which he
indicated among other things:

a. His residential address was: *************, Ajax, Ont., ****** and that his
residential address had not changed in 2010;
b. He indicated that he did engage in other remunerated activities outside of his
professional activities with Investia;
c. He indicated that his Internet site was: www.infrs.com;
d. He indicated that he did not have any clients who lived in the United States.

This disclosure of the secondary website www.infrs.com occurred after the website had been
discovered during the audit in August, 2011.21

27.
On May 16, 2012, Investia terminated the Respondent for the reasons set out in its letter
dated May 16, 2012,22 including the use of pre-signed forms and his activities in the United
States where he lived and was licensed with a United States securities dealer without Investia’s
knowledge or approval. In an email dated May 21, 2012, to Investia, with a copy to Torce

18 Exhibit 22.
19 Exhibit 22.
20 Exhibit 23.
21 Transcript of Examination of Lucy Alfenore, October 19, 2015, at p. 108, ll. 11 to 14.
22 Exhibit 24.
Page 14 of 33

link to page 15 link to page 15 Financial, the Respondent stated “due to my current health and unable to travel very much, I am
hereby resigning from my position as a Sales Rep for Investia.”23

28.
In a letter dated July 12, 2012, from the Respondent to the MFDA24 responding to
Investia’s reasons for termination, the Respondent stated:

a. Investia raises concern about my previous activities in the United States and
alleges that I have become affiliated with a US Securities Dealer without
Investia’s knowledge and approval. In addition to my Canadian Securities
License, I do in fact have Securities Licenses in the United States (of which I am
also a Citizen). After I commenced my securities business in the United States, I
informed Investia of the same. All transactions with Canadian residents were
conducted through my Toronto Office, which I still maintain today (with 3 or 4
Canadian Agents of Infinity Wealth Management presently working out of such
office). Assertions by Investia that activities in the U.S. were undertaken without
their approval are simply baseless, as I previously informed them and at no time
have I ever attempted to hide any such facts from Investia.

b. Investia’s termination of my Appointment has resulted not from any misconduct
on my part. Instead, it was prompt as a direct result of their being notified by
Sunset Financial Services, that I had been terminated by Sunset Financial
Services, a Broker-Dealer which I was affiliated with in the U.S. since 2006.
Sunset asserts that I was terminated, due to the fact that I had failed to disclose
my affiliation with Investia in Canada. This simply is untrue, as Sunset (like
Investia) was fully aware of all my business affiliations; I intend to file legal
action against Sunset Financial for substantial damages I have sustained as a
result of such termination. The bottom line is that I have at no time during my
long career in the financial services industry in Canada or the United States,
violated any laws or regulation and Investia’s present claim of “not being
notified” is simply untrue. (Emphasis added)

23 Exhibit 25.
24 Exhibit 26.
Page 15 of 33

link to page 16
29.
Ms. Alfenore testified that she had been unable to locate any documentation where the
Respondent disclosed the nature and extent of his U.S. activities to any of Cartier, Dundee or
Investia. She testified that the Respondent had not provided any documentation to her where he
disclosed this information to Cartier, Dundee or Investia.

30.
Marked as Exhibit 27 was the Respondent’s registration history from the National
Registration Database. Ms. Alfenore testified that the National Registration Database is
maintained by the provincial securities commission which inputs information on to the database
relating to the registration of individual representatives. Each dealer has the ability to update the
information on the database based on information provided to it by its representative.25

31.
Exhibit 27 discloses the following:

a. At page 140, page 1 of Form 33, in response to a question “Provide all of your
residential addresses, including any foreign residential addresses, for the past 10
years”, the information provided for the Respondent’s residential address is 855
Matteson Blvd. E Suite 1A, Mississauga, Ontario, Canada, L4W 4L6. The Form
notes that “lived at this address since – 1999/04”. There are no foreign addresses
provided and the box is checked for the question “check here if your mailing
address is the same as your current residential address provided above.”
b. The Respondent’s country of citizenship is checked as Canada. The box “other,
specify” is not checked and there is no indication of the Respondent’s US
citizenship.
c. Nowhere in the form is the Respondent’s US licenses disclosed nor are the names
of the US dealers disclosed even though there are questions which elicited this
information. The only outside business activity disclosed was Infinity Retirement
Solutions Inc. commencing on May 15, 1987.

25 Transcript of Examination of Lucy Alfenore, October 19, 2015, at p. 110-111.

Page 16 of 33

32.
Staff filed as Exhibit 28 the FINRA BrokerCheck Broker Summary which sets out the
history of a broker’s registration in the United States. Exhibit 28 disclosed:

a. The Respondent was licensed in the United States from 1993 to 1994 and 2002 to
2014, with a number of securities dealers in the United States, including:

i. Main Street Securities, LLC – Denver, CO – 01/2003 – 10/2006;
ii. Sunset Financial Services, Inc. – Englewood, CO – 09/2006 – 08/2011;
iii. Ridgeway & Conger, Inc. – Englewood, CO – 09/2011 – 10/2013; and
iv. First Financial Equity Corporation – Aurora, CO – 10/2013 – 02/2014.

b. The Respondent’s employment with Cartier, Dundee and Investia are not
disclosed on the FINRA Summary. Other outside business activities of the
Respondent are disclosed including his ownership of Infinity Retirement
Solutions, Inc.

c. The Respondent was disciplined by FINRA which was resolved on consent on
April 15, 2014. The details of which are as follows:

i. “Allegations: Without admitting or denying the findings, Tewahade
consented to the sanctions and to the entry of findings that he engaged in
an outside business activity without providing his member firm with the
requisite written notice. The findings stated that Tewahade did not
provide written notice to and receive written approval from the firm prior
to engaging in private security transactions through a mutual fund entity.
ii. “Resolution: Acceptance, Waiver & Consent (AWC).”
iii. “Sanction Type: Suspension;” “Duration: 20 Business Days;” “Start date:
04/21/2014 – End date: 05/16/2014;” “Monetary Related Sanction: Civil
and the Administrative Penalty(ies)/Fine(s);” “Total Amount: $7,500.00;”
“Portion Levied Against Individual: $7,500.00;” “Payment Plan:
Deferred.”
Page 17 of 33


d. A copy of the “Financial Industry Regulatory Authority – Letter of Acceptance,
Waiver and Consent” executed by the Respondent on March 17, 2014, and on
behalf of FINRA on April 15, 2014.

33.
Mr. Yeboah was examined on August 15, 2013, by Staff. The transcript was marked
Exhibit 29. Mr. Yeboah’s examination revealed the following:

a. The Respondent traveled back and forth from the United States to Toronto;
b. He lived in the United States and came to Toronto approximately one week a
month and worked at the Matheson Boulevard office;
c. He understood that Investia’s policy was that a representative should report
outside business activities to Investia including any additional job as there may be
a conflict of interest between the two positions;
d. He was aware that the annual questionnaire asked about any outside business
activities and the requirement for him to report any outside business activities. He
disclosed that he was working for a church. He was aware that any changes had
to be reported;
e. He was audited by Investia in 2011; although, he thinks that it was at a different
time than the audit of the Respondent.

34.
The Respondent’s office manager, Joyce Reid, was examined by Staff on August 15,
2013. The transcript was marked Exhibit 30. Ms. Reid’s examination disclosed the following:

a. The Respondent maintained a residence and conducted a mutual fund and
insurance business in the United States;
b. Ms. Reid was at the office during the audit by Investia in August 2011;
c. She provided files to the auditor as requested.

35.
The Respondent was examined by Staff on September 17, 2013. The transcript was
marked Exhibit 31. The examination revealed the following:
Page 18 of 33


a. The Respondent confirmed that he was licensed both in Ontario and in the United
States for the sale of securities and insurance;
b. He had tried to make disclosure but there was no method for disclosure. He stated
that he tried to do that in 1996 and after. He spoke to the Ontario Securities
Commission. There was no methodology or system in place that he was aware of
for him to make disclosure of his US license.
c. There was no regulatory obligation by the MFDA to make disclosure of his US
license;
d. He was aware of the requirement of the MFDA to disclose outside business
activities;
e. He received a copy of Investia’s policies and procedural manual and was familiar
with it. He received updates to the manual.
f. He had no other business activity other than his US business;
g. He disclosed the insurance business to Investia but did not disclose the US
business because the form asked the question if he was selling mutual funds
which he was doing both in Ontario and in the United States. He said he did not
distinguish between the two;
h. His book of business with Sunset was “probably $25 million – mutual funds”.

36.
During the MFDA investigation, Ms. Alfenore located no written evidence from the
Respondent or anyone else that the Respondent disclosed his U.S. business activity.

37.
Mr. Yeboah was called by the Respondent and testified as follows:

a. He was told by the Respondent that the Respondent was going to be the subject of
an audit;
b. He received a letter from Investia regarding an audit of his activities and he made
an appointment with Investia for the audit. The auditor came to the office and it
was after that he learned of the audit of the Respondent. He could not recall
Page 19 of 33

whether his audit was before or after the Respondent’s audit but they were
separate audits;
c. He was in Ghana when he received an email from Investia regarding his
relationship with the Respondent and providing him time to find another broker;
d. He was asked by the Respondent if he remembered Mr. Bruce Tian in August
2012 when Mr. Tian was at the office to audit the Respondent asking questions
about the Respondent’s U.S. business. He could not recall the date of the audit
but did recall the conversation where the Respondent told Mr. Tian he did the
same thing in the U.S.;
e. He believed the audit of the Respondent was either 2010 or 2011;
f. The Respondent was speaking to Mr. Tian on the telephone when he disclosed
that Mr. Tian of his dual occupations in Ontario and the United States. Ms. Reid
was in the office but the Respondent was not. The Respondent was on a
speakerphone.
g. He did not see any written disclosure by the Respondent to Investia of his U.S.
business activities.

38.
The Respondent testified about his immigration to Canada and his success as a
salesperson for Metropolitan Life. By 1991, he was the number two salesperson in Canada for
Metropolitan Life. He then decided to join the rest of his extended family in the United States.
Two sisters who lived in Ontario had left for the United States. He joined them in the United
States in 1993. He came back to Canada in 1996 and then moved back to the United States in
1997.

39.
He testified that:

a. In 1997 he got a mutual fund license in Ontario with Regal Capital which was
bought out by Dundee;
b. He did not have the securities license in the United States until 2000. He only had
an insurance license;
Page 20 of 33

c. He had cancer in 2005 and 2011 which made it difficult for him to travel even for
clients in Colorado;
d. He told the Sunset vice president while he was in Colorado that he had a
securities license in Ontario;
e. He tried to tell Investia of his US business but there was no methodology in place
to properly disclose anything;
f. He never sold a U.S. product to a Canadian citizen nor a Canadian product to the
U.S. public;
g. It was never his intent not to disclose what he was doing and how he was doing it;
h. He lived at ***********, Ajax, from 2005 to about 2012. He simultaneously
lived in the United States “because sometimes I have two residence.” He had a
condo on Lakeshore Boulevard for three years which he sold. In his view, he had
an address at ************, Ajax, Lakeshore Boulevard and 855 Matheson
Blvd.;
i. The residence at ***********, Ajax, is owned by his in-laws;
j. He spends most of his time in Colorado;
k. He does not recall whether he disclosed a US address to Investia. He said that he
had been faxing and sending stuff from the United States;
l. he currently operates Infinity Retirement Solutions in Canada and Infinity Wealth
Management in Colorado.

III.
MFDA RULES

40.
MFDA Rule 1.2.1 sets out the required individual qualifications of salespersons and in
Rule 1.2.1(c) provides for “Dual Occupations”. The rule states that “an Approved Person may
have, and continue in, another gainful occupation, provided that:

(iii) Member Approval. The Member for which the Approved
Person carries on business either as an employee or agent is aware
and approves of the Approved Person engaging in such other
gainful occupation.”

41.
MFDA Rule 1.1.2 provides:
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1.1.2 Compliance by Approved Persons. Each Approved Person
who conducts or participates in any securities related business in
respect of a Member in accordance with Rule 1.1.1(c)(i) or (ii)
shall comply with the By-laws and Rules as they relate to the
Member or such Approved Person.

42.
MFDA Rule 2.1.1 sets out the standard of conduct to be met by Members and Approved
Persons. It states:

2.1.1 Standard of Conduct. Each Member and each Approved
Person of a Member shall:
(a) deal fairly, honestly and in good faith with its clients;
(b) observe high standards of ethics and conduct in the transaction
of business;
(c) not engage in any business conduct or practice which is
unbecoming or detrimental to the public interest; and
(d) be of such character and business repute and have such
experience and training as is consistent with the standards
described in this Rule 2.1.1, or as may be prescribed by the
Corporation.

43.
MFDA Rule 2.5 sets out the minimum standards of supervision required of each
Member. Rule 2.5.1 sets out the Members Responsibilities as follows:

2.5.1 Member Responsibilities. Each Member is responsible for
establishing, implementing and maintaining policies and procedures
to ensure the handling of its business is in accordance with the By-
laws, Rules and Policies and with applicable securities legislation.

IV.
Submissions

A. MDFA Staff

44.
Staff provided written submissions to the panel setting out in detail their position on the
issues before us.

Page 22 of 33

45.
Staff submits that the Respondent has breached Rule 1.2.1(c) as he did not disclose to
Investia his outside business activities in the United States and failed to obtain its approval to
carry on his outside business activities in the United States.

46.
Staff provided us with its view of the rationale for the need to disclose outside business
activities and provided case law in support of its position.

47.
Staff submits that the conduct of the Respondent in failing to disclose his outside
business activity in the United States was a breach of the standard of conduct of the Respondent
as he was obliged to by both the MFDA Rules and his contractual obligations with Investia to
disclose to it his outside business activities and obtain its approval which he failed to do.

48.
Staff further submits that MFDA Rules 1.1.2 and 2.5.1 require Members to establish,
maintain and implement policies and procedures to ensure that its business is handled in
accordance with the By-laws, Rules and Policies of the MFDA and any applicable securities
legislation.

49.
MFDA Rule 1.1.2 provides that the Respondent has an obligation as an Approved Person
to comply with the By-laws and Rules as they relate to the Member or the Approved Person.

50.
Staff submits where Approved Persons disregard their obligations, the Member’s ability
to supervise the conduct of such Approved Persons and protect the interests of clients and the
public is undermined. They submit that the Respondent in disregarding his obligations
undermined the Member’s ability to supervise his conduct.

51.
Staff submits that:

a. sufficient evidence exists to find that the Respondent failed to disclose his outside
business activities to his Member;
b. by failing to do so, the Respondent also breached the policies and procedures of
the Member;
Page 23 of 33

c. the Respondent’s actions constitute misconduct contrary to MFDA Rules 1.2.1(c),
1.1.2 and 2.5.1.

B. Respondent’s Submissions

52.
The Respondent filed written submissions in response to Staff’s Submissions.

53.
The Respondent submits:

a. Although he did engage in outside business activities in the United States, such
outside business activities were in fact disclosed to and approved of by the
Member.
b. His residential address was disclosed to the Member.
c. Even if he failed to make the required disclosures to the Member and to obtain
approval of his Outside Business Activities (which he “expressly and
vehemently” denies), such failure to disclose was a technical violation of MFDA
Rules, and does not constitute “misconduct” on his part.

54.
The Respondent submits that after moving to the United States in 1993 and establishing a
business relationship with a FINRA Broker-Dealer, he spoke in 2005 with representatives of
Investia and explained to them that he had set up a business in the United States and he needed
guidance as to how this needed to be disclosed to MFDA and the Member. He further submits
that he spoke with the Ontario Securities Commission, seeking similar guidance and was told
that there was only a handful of Canadian Brokers that were also licensed in the United States.
He submits that these attempts to seek guidance (in order to comply with the “Outside Business
Activities” reporting and approval requirements) proved to be futile inasmuch as everyone he
spoke to simply responded “they did not know what I needed to do.” He submits that he omitted
disclosure of his Outside Business Activities on subsequent required Reporting Forms, “with a
good faith belief that he did not have to make such a disclosure, given the lack of direction given
to me by appropriate personnel of the Member.”

Page 24 of 33

55.
The Respondent submits that even though he had his permanent residential address in the
United States after 1993, he listed a Canadian address on disclosures made to the Member,
because he also maintained a residence in Ajax, Ontario. He submits that he believed that he
was to provide an address whereby any legal notices could be served on him in Canada. He
further submits that as he was spending one week a month in Canada, he considered the address
in Canada to be his permanent residential address as it related to his business activities in
Canada.

56.
The Respondent submits that he never concealed from anyone, including the Member,
that he had moved to the United States and that he was conducting securities business in the
United States. He submits that the Member had actual knowledge of his business activities in the
United States and the Member never raised any concerns or objected to his outside business
activities. He further submits that the Member knew that he was traveling back and forth from
the United States to Canada in order to service clients in Canada. He submits that in 2010 he
expressly disclosed his Outside Business Activities to Investia’s auditor, Mr. Bruce Tian.

57.
The Respondent submits that given the Member’s failure to provide him with proper
guidance as to how to disclose his outside business activities and its’ failure to object at any time
to his outside business activities, he has complied with MFDA Rules and/or Member Rules with
respect to disclosure of his outside business activities. He further submits that given the
Member’s actual knowledge of his Outside Business Activities and its failure to object, the
Member implicitly approved of his Outside Business Activities.

58.
The Respondent submits that each of the cases referred to by Staff, Re: Jose Luis
Bautista, [2012], MFDA File No. 201143, decision dated July 24, 2012, Re: Bayant S. Dhindsa,
[2012], MFDA File No. 201119, decision dated May 15, 2012 and Re: Meiz Mohammed
Majdoub, [2010], MFDA File No. 201010, decision dated November 12, 2010, are
distinguishable because in each case in addition to the failure to disclose and obtain approval for
outside business activities, each of the cases had additional factors which are not present in this
case. He submits that there is no evidence of any independent wrongdoing arising out of his
United States business interest; at no time during the transaction of his business in the United
Page 25 of 33

States, did the Member want him to cease-and-desist from such activities and he never attempted
to conceal from anyone that he was conducting outside business activities in the United States.

59.
The Respondent also submits that the decision in Puri (Re), [2014], 2014 IIROC 6,
decision dated January 20, 2014, is also distinguishable because even though there were dual
registrations in the United States and Canada, there was evidence of misconduct by the
representative in that case independent of the failure to disclose outside business interests.

60.
The Respondent submits that even if he failed to disclose and secure approval of his
Outside Business Activities, which he denies, the facts and circumstances of this case do not
support any finding that he is engaged in any misconduct. He submits that all of the evidence
supports a finding that at all relevant times during which he conducted business in the United
States and Canada, he has dealt fairly, honestly and in good faith with all of his clients and there
is no evidence that any of the actions undertaken by him with respect to his clients constitute a
conflict of interest. He submits that he never solicited any of his Canadian clients to open
accounts with him as part of his United States business activities or vice versa; he has maintained
high standards of ethics and conduct in the conduct of his business; none of his business
activities can be considered unbecoming or detrimental to the public interest; his conduct has
been consistent with the standards described in MFDA Rule 2.1.1; and there is no evidence to
support any finding that his absence from Canada in any way was detrimental to the best interest
of his clients.

V.
Analysis and Decision

A. Introduction

61.
The By-laws, Rules and Policies of the MFDA support its mandate to regulate the
distribution side of the Canadian mutual fund industry in order to protect the investor public and
strengthen public confidence in the Canadian mutual fund industry. These By-laws, Rules and
Policies require mutual fund dealers to adopt the policies and procedures which meet the
regulatory requirements of the MFDA.

Page 26 of 33

62.
We agree with Staff that failure to disclose outside business activities and dual
occupations impedes a Member’s ability to supervise an Approved Person to ensure that he or
she is acting in accordance with the policies and procedures of the Member and the By-laws,
Rules and Policies of the MFDA as well as applicable securities legislation.

63.
We also agree with Staff that failure to disclose outside business activities/dual
occupations prevents a Member’s ability to ensure that clients and the general public are aware
that the outside business activity is not the business or responsibility of the Member and that any
actual or potential conflicts are dealt with appropriately.

B. Allegation #1

64.
Allegation #1 is:

Allegation #1:
Between May 6, 2005 and June 18, 2012, the
Respondent had and continued in another gainful occupation that
was not disclosed to and approved by the Member by carrying on
business as a registered representative of two FINRA Member
firms in succession, contrary to MFDA Rules 1.2.1(c) and 2.1.1.

65.
MFDA Rules 1.2.1(c) (Dual Occupations) and 2.1.1 read:

1.2.1(c)(iii) Member Approval. The Member for which the
Approved Person carries on business either as an employee or
agent is aware and approves of the Approved Person engaging in
such other gainful occupation.

2.1.1 Standard of Conduct. Each Member and each Approved
Person of a Member shall:

(a) deal fairly, honestly and in good faith with its clients;
(b) observe high standards of ethics and conduct in the transaction
of business;
(c) not engage in any business conduct or practice which is
unbecoming or detrimental to the public interest; and
(d) be of such character and business repute and have such
experience and training as is consistent with the standards
described in this Rule 2.1.1, or as may be prescribed by the
Corporation.

Page 27 of 33

66.
There is no question that in the documents completed by the Respondent for Investia that
he did not disclose that he was carrying on business as a registered representative of Sunset
Financial Services, Inc. nor Ridgway & Conger, Inc., two FINRA Member firms, operating in
the United States.

67.
In our view, the documents completed by the Respondent in connection with his
employment by Investia over the years clearly indicated that he was to disclose any outside
business activities.

68.
Nowhere in these documents did he disclose that he was, during the relevant period, a
registered representative for the sale of securities in the United States for Sunset Financial
Services, Inc. or Ridgway & Conger, Inc.

69.
The Respondent acknowledges that he was employed by Sunset Financial Services, Inc.
or Ridgway & Conger, Inc., among others. He seeks to avoid responsibility for failing to
disclose his employment by these two firms on the basis that he tried to make disclosure by that
there was no method for disclosure. He says that he tried to do so in 1996 and after. He takes
the position that there was no regulatory obligation by the MFDA requiring him to make this
disclosure. We note that the Respondent states that he told the Investia representative at the
audit of his business of his securities business and licenses in the United States in 2010. The
date of the audit of his business was in August 2011 after Investia had learned of his dual
occupations in the United States with Sunset Financial Services, Inc.

70.
We disagree with the Respondent. First, under Rule 1.2.1(c), there was an obligation for
him to make Investia aware and obtain Investia’s approval for him engaging in other gainful
occupation. Acting as a registered representative for two security firms in the United States is
clearly engaging in another gainful occupation. The Respondent failed to do this. There are no
letters or emails from the Respondent to Investia disclosing his employment by the two security
firms and requesting approval. The Respondent has been under such an obligation since at least
2003 when he entered into the Agent Agreement with Cartier Partners referred to in paragraph 5
above. He agreed not to engage in any gainful occupation, other than Cartier Partners business
Page 28 of 33

without that the approval of Cartier Partners. He also agreed not to “conduct any securities
related to business …with, in respect of, on behalf of any person other than Cartier Partners.” It
was clear that the approval had to be in writing in accordance with Cartier Partners policies. The
Respondent has produced no approval in writing from Cartier Partners.

71.
When he completed the Application for Transfer referred to in paragraph 7, he was asked
to “include all current employment and business information. This is to include any positions
you hold outside of the mutual fund industry. Attach additional page(s) if space is insufficient.”
He did not disclose that as of March 5, 2005, he was employed by Main Street Securities, LLC,
in the United States as a registered representative for the sale of securities. There was no
ambiguity in this question. The Respondent could have and should have made the disclosure
about his employment with Main Street Securities, LLC.

72.
There was an opportunity to disclose the same information when he completed the
Investia “Information Disclosure Consent” which he failed to do.

73.
The Representative Contract the Respondent entered into with Investia on May 8, 2005,
referred to in paragraph 11, obligated him to comply with the MFDA Rules, By-laws and
legislation and to comply with the policies and procedures of Investia. He agreed to notify
Investia in writing of any change in information relating to himself as an Approved Person. In
our view, this also obligated the Respondent to disclose that he was licensed to carry on business
in the United States and obligated him to advise Investia when he changed his employment from
Main Street Securities, LLC to Sunset Financial Services, Inc. and then to Ridgway & Conger,
Inc.

74.
We simply do not accept the Respondent’s evidence and assertion that he was unable to
disclose to Cartier Partners, Dundee and Investia that he was licensed to sell securities in the
United States.

75.
We disagree with the Respondent’s submissions in relation to Re: Jose Luis Bautista, Re:
Bayant S. Dhindsa and Re: Meiz Mohammed Majdoub. These cases are not distinguishable on
Page 29 of 33

the basis suggested by the Respondent. In each of these cases, the failure to disclose and obtain
approval of outside business activities was the basis for the finding of misconduct with respect to
that issue. It was the Respondent’s obligation to obtain approval. The onus in this hearing was
on the Respondent to prove that he had obtained approval. On the evidence before us, he has not
done so.

76.
We agree with the decision in Puri (Re), [2014], 2014 IIROC 6, decision dated January
20, 2014, that failure to disclose dual registrations in the United States and Canada was
misconduct. Clearly, being a registered representative in the United States is engaging in another
gainful occupation.

77.
We also agree that the failure to make disclosure as required was a contravention of Rule
1.2.1(c) and Rule 2.1.1 (Standard of Conduct). The failure to comply with his contractual
obligations and the policies and procedures of the Canadian Member firm during the period May
6, 2005, to June 18, 2012, by disclosing his outside business activities/another gainful occupation
was a failure to meet the high standards of ethics required by Approved Persons. This failure
was found to be a failure to meet the high standards of ethics in Re: Jose Luis Bautista and Re
Tonnies, [2005] MFDA No. 200503.

78.
We find that Allegation #1 has been established.

C. Allegation #2

79.
Allegation #2 is:

Allegation #2: Between May 6, 2005 and June 18, 2012, the
Respondent failed to comply with the policies and procedures of
the Member by:

(a) failing to provide his correct permanent residential address to
the Member; and
(b) engaging in outside business activities which were not
disclosed to and approved by the Member;

Page 30 of 33

thereby interfering with the ability of the Member to supervise the
Respondent, contrary to MFDA Rules 1.1.2 and 2.5.1 and MFDA
Rule 2.1.1.

80.
MFDA Rule 1.1.2 provides:

1.1.2 Compliance by Approved Persons. Each Approved Person
who conducts or participates in any securities related business in
respect of a Member in accordance with Rule 1.1.1.(c)(i) or (ii)
shall comply with the By-laws and Rules as they relate to the
Member or such Approved Person.

81.
Rule 2.5.1 sets out the Members Responsibilities as follows:

2.5.1 Member Responsibilities. Each Member is responsible for
establishing, implementing and maintaining policies and procedures
to ensure the handling of its business is in accordance with the By-
laws, Rules and Policies and with applicable securities legislation.

82.
Staff relies as well on Rule 2.1.1 (Standard of Conduct) which is set out above.

83.
As found above, the Respondent notwithstanding his obligation to disclose his outside
business activities to Investia in relation to his employment as a registered representative in the
United States, failed to do so. He breached Rule 1.1.2. In failing to comply with Investia’s
policies and procedures with respect to disclosure of outside business activities which Investia
was required to establish, implement and maintain by virtue of Rule 2.5.1, he interfered with the
ability of Investia to supervise him.

84.
With respect to the allegation that he failed “to provide his correct permanent residential
address to the Member”, we find that he did fail to do so. Based on the evidence before us
including the acknowledgment by the Respondent, during the relevant period his permanent
residence was in Colorado and not in Ontario. His permanent residence was not
******************, Ajax. This was the address of his in-laws. He appeared to use it as a
mail drop although he may have stayed there from time to time. The evidence was that when he
visited Ontario approximately one week per month, he stayed near his office at 855 Matheson
Blvd., Mississauga. At no time on any of the material filed with Investia did he disclose his
Page 31 of 33

address in the United States although the forms requested that information. In order for Investia
to meet its regulatory obligations and to properly supervise the Respondent, it needs to know
where he lives and if he lives in more than one place, it needs to know all of the addresses used
by the Respondent.

85.
These two failures by the Respondent constitute a failure to observe high standards of
ethics and conduct contrary to Rule 2.1.1.

86.
We accordingly find that Allegation #2 has been established.

VI.

Conclusion

87.
We find that the Staff of the MFDA have established on the evidence before us that the
Respondent has committed violations of the MFDA Rules as set out in the two allegations made
against the Respondent.

88.
As a result of these findings of misconduct, we need to address the issue of penalty. We
direct that the Manager of Hearings Administration proceed to set a date for hearing of
submissions with respect to the appropriate penalty.

89.
A number of the submissions of the Respondent were submissions that go to penalty as
opposed to liability. The Respondent may make those submissions at the penalty hearing.

DATED this 13th day of January, 2016.

“W.A. Derry Millar”
W.A. Derry Millar

Chair

“David W. Kerr”
David W. Kerr

Industry Representative
Page 32 of 33


“Colleen Waring”
Colleen Waring

Industry Representative

DM 460605 v1
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