MFDA issues Notice of Settlement Hearing in respect of Equity Associates Inc.

June 6, 2018 (Toronto, Ontario) – The Mutual Fund Dealers Association of Canada (“MFDA”) announced that it has issued a Notice of Settlement Hearing dated May 18, 2018 regarding the presentation, review and consideration of a proposed settlement agreement by a Hearing Panel of the MFDA’s Central Regional Council.

The settlement agreement will be between Staff of the MFDA and Equity Associates Inc. (“Respondent”) and involves matters for which it may be disciplined by a Hearing Panel pursuant to MFDA By-laws. The proposed settlement agreement concerns allegations that the Respondent:

1. during the period March 1, 2013 to September 30, 2014, failed to adequately supervise, or failed to maintain adequate records of the supervision at its Head Office, sub-branch level, and branch level, of:
   1. daily trading activity;
   2. approval of new accounts;
   3. approval of amendments to know-your-client information; and
   4. leveraged accounts;

   contrary to MFDA Rules 2.2.1, 2.2.2, 2.2.3, 2.5.1, 2.9, and 5.1, and MFDA Policy No. 2;

2. during the period March 1, 2012 to September 30, 2014, failed to establish, implement and maintain adequate policies and procedures to conduct trend analysis reports to supervise its Approved Persons’ trading activity, contrary to MFDA Rules 2.2.1, 2.5.1, 2.9, and 2.10, and MFDA Policy No. 2;
3. during the period March 1, 2012 to September 30, 2014, failed to maintain adequate compliance resources, contrary to MFDA Rules 2.5.1 and MFDA Policy No. 2;
4. during the period October 1, 2014 to July 31, 2016, failed to adequately supervise, or failed to maintain adequate records of the supervision of:
   1. uniformity of certain client KYC information; and
   2. concentration of sector mutual funds in client accounts;

   contrary to MFDA Rules 2.2.1, 2.5.1, 2.9, and 5.1, and MFDA Policy No. 2;

5. commencing on or about August 19, 2014, failed to conduct a reasonable supervisory investigation in response to information it received that its Approved Person, Gilles Latour, was charged with offences pursuant to the Criminal Code of Canada for alleged conduct involving clients and other individuals, contrary to MFDA Rule 2.5.1 and MFDA Policy No. 3; and
6. commencing May 2014, failed to conduct a reasonable supervisory investigation regarding investment suitability concerns and portfolio concentration issues in the client accounts serviced by its Approved Person Lawrence Fike, contrary to MFDA Rule 2.5.1 and MFDA Policy No. 3.

The settlement hearing is scheduled to take place on June 20, 2018, commencing at 10:00 a.m. (Eastern), or as soon thereafter as the matter can be held, in the hearing room at the offices of the MFDA, located at 121 King Street West, Suite 1000, Toronto, Ontario.

MFDA settlement hearings are typically held in the absence of the public pursuant to section 20.5 of MFDA By-law No. 1 and Rule 15.2(2) of the MFDA Rules of Procedure. If the Hearing Panel accepts the settlement agreement, then the proceeding will become open to the public and a copy of the decision of the Hearing Panel and the settlement agreement will be made available at www.mfda.ca.

A copy of the Notice of Settlement Hearing is available on the MFDA website at www.mfda.ca.

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 82,000 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.