New SRO Hearing Panel issues Decision and Reasons in the matter of Stephen Smockum
March 10, 2023 (Toronto, Ontario) – A Hearing Panel of the Mutual Fund Dealers Association of Canada, now New Self-Regulatory Organization of Canada (“New SRO”), has issued its Decision and Reasons dated February 8, 2023 (“Decision and Reasons”), in connection with a disciplinary hearing held electronically by videoconference in Toronto, Ontario on September 23, 2022, in the matter of Stephen Scott Smockum (the “Respondent”).
Prior to the hearing on September 23, 2022, the parties filed an agreed statement of facts dated March 22, 2022 (the “Agreed Statement of Facts”), in which the Respondent admitted to facts constituting contraventions of MFDA By-laws, Rules or Policies, for which the Respondent could be penalized by a Hearing Panel pursuant to section 24.1 of MFDA By-law No. 1. In particular, the Respondent admitted that:
- between August 2016 and July 2019, he borrowed monies from clients, thereby engaging in personal financial dealings with clients which gave rise to conflicts or potential conflicts of interest that he failed to disclose to the Member or otherwise ensure were addressed by the exercise of responsible business judgment influenced only by the best interests of the clients, contrary to the Member’s policies and procedures and MFDA Rules 2.1.4, 2.1.1, 2.5.1, and 1.1.2;
- between August 2016 and February 2019, he engaged in an outside activity without prior written approval from the Member, contrary to the Member’s policies and procedures and MFDA Rules 1.3, 2.1.1, 2.5.1, and 1.1.2;
- between April 18, 2017 and January 3, 2018, he recorded false notes in the Member’s system regarding the reason for redemptions of mutual funds in the accounts of two clients, contrary to MFDA Rule 2.1.1; and
- between August 2016 and July 2019, he provided false or misleading statements to a Member on annual update checklists, and during the course of the Member’s investigation into his conduct, contrary to MFDA Rule 2.1.1.
In its Decision and Reasons, the Hearing Panel outlined its findings of misconduct and announced the following sanctions on the Respondent:
- has been permanently prohibited from conducting securities related business in any capacity while in the employ of, or in association with, any New SRO Member;
- shall pay a fine of $275,000 on or before February 8, 2025; and
- shall pay costs of $10,000.
A copy of the Decision and Reasons is available on the MFDA website at www.mfda.ca. During the period described in the Decision and Reasons, the Respondent carried on business in the Norwood, Ontario area.
New Self-Regulatory Organization of Canada is the national self-regulatory organization that oversees all investment dealers, mutual fund dealers and trading activity on Canada’s debt and equity marketplaces. New SRO is carrying on the regulatory functions of the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada, and is committed to the protection of investors, providing efficient and consistent regulation, and building Canadians’ trust in financial regulation and the people managing their investments. For more information, visit www.newselfregulatoryorganizationofcanada.ca.