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MFDA Hearing Panel makes findings of misconduct and impose sanctions against Christopher Davies

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Charles Toth
Vice President, Enforcement

MFDA Hearing Panel makes findings of misconduct and impose sanctions against Christopher Davies

April 16, 2020 (Toronto, Ontario) – The Mutual Fund Dealers Association of Canada (“MFDA”) commenced a disciplinary proceeding in respect of Christopher John Davies (“Respondent”) by Notice of Hearing dated November 18, 2019.

A disciplinary hearing in this matter was held on April 15, 2020 in Toronto, Ontario before a three-member Hearing Panel of the MFDA’s Central Regional Council. Prior to the hearing, the parties filed an Agreed Statement of Facts dated March 30, 2020 (“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:

  1. between February 2014 and July 2017, he misappropriated or failed to account for at least $134,252.35 received from four clients, contrary to the Member’s policies and procedures and MFDA Rules 2.1.1, 1.12, and 2.5.1;
  2. between May 2015 and September 2015, he solicited and received $300,000 from a client, to invest in a film production related investment, for which he has failed to account, contrary to the Member’s policies and procedures and MFDA Rules 2.1.1, 1.1.2, and 2.5.1;
  3. in or about April 2, 2014, he solicited and received $25,000 from two clients to make a joint investment with the clients in an unapproved investment outside the Member, thereby:
    1. engaging in securities related business that was not carried on for the account of the Member and through the facilities of the Member, contrary to the Member’s policies and procedures, and MFDA Rules 1.1.1, 2.1.1, 1.1.2, and 2.5.1; and
    2. engaging in personal financial dealings with the clients, which gave rise to a conflict or potential conflict of interest which the Respondent failed to disclose to the Member, or failed to address 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, 1.1.2, and 2.5.1;
  4. between May 2015 and July 2017, he entered false or misleading notes regarding his communications with clients relating to trades on the Member’s back office system, contrary to MFDA Rules 2.1.1, 1.1.2, and 5.1(b); and
  5. commencing in or about August 2017, he made false or misleading statements to the Member during the course of an investigation into his conduct, contrary to the Member’s policies and procedures and MFDA Rules 2.1.1, 1.1.2, and 2.5.1.

After receiving evidence and hearing submissions by the parties, the Hearing Panel also found that commencing on or about November 29, 2018, the Respondent failed to cooperate with an investigation by Staff of the MFDA into his conduct, contrary to section 22.1 of MFDA By-law No. 1.

Following submissions from the parties with respect to penalty, the Hearing Panel imposed the following sanctions on the Respondent and advised that it will issue written reasons in due course:

  • a permanent prohibition from conducting securities related business in any capacity while in the employ of or associated with any MFDA Member;
  • a fine in the amount of $709,252.35; and
  • costs in the amount of $20,000.

Copies of the Notice of Hearing and the Agreed Statement of Facts are available on the MFDA website at www.mfda.ca. During the period described in the Agreed Statement of Facts, the Respondent conducted business in St. Thomas and London, Ontario area.

The MFDA is the self-regulatory organization for Canadian mutual fund dealers, regulating the operations, standards of practice and business conduct of its Members and their approximately 81,000 Approved Persons with a mandate to protect investors and the public interest. For more information about the MFDA’s complaint and enforcement processes, as well as links to ‘Check an Advisor’ and other Investor Tools, visit the For Investors page on the MFDA website.

DM 736277