July 23, 2018 (Toronto, Ontario) – A Hearing Panel of the Central Regional Council of the Mutual Fund Dealers Association of Canada (“MFDA”) has issued its Reasons for Decision (Penalty) dated July 20, 2018 in connection with a penalty hearing held in Toronto, Ontario on July 3, 2018 in the matter of Ronald Morrell Schwartz (“Respondent”).
In its Reasons for Decision (Misconduct) dated June 8, 2018, the Hearing Panel outlined is reasons for its findings of misconduct against the Respondent. In particular, the following findings were made:
Allegation #1: Between January 2009 and October 24, 2014, the Respondent processed a series of unauthorized redemptions and misappropriated at least $69,035 from six clients, contrary to MFDA Rules 2.1.1 and 2.3.1.
Allegation #2: Between January 2009 and October 24, 2014, the Respondent created and distributed fictitious account statements, and misled clients and his Members in response to inquiries regarding his trading activities, in order to conceal that he had processed unauthorized redemptions in client accounts and misappropriated client monies, contrary to MFDA Rules 2.8.2 and 2.1.1.
Allegation #3: Commencing on June 1, 2015, the Respondent failed to cooperate with an investigation by MFDA Staff into his conduct, contrary to section 22.1 of MFDA By-law No. 1.
In its Reasons for Decision (Penalty) dated July 20, 2018, the Hearing Panel confirmed the sanctions imposed on the Respondent:
- a permanent prohibition from conducting securities related business in any capacity while in the employ of, or in association with, any MFDA Member;
- a fine in the amount of $225,000, apportioned as follows:
- $125,000 – Unauthorized redemptions and misappropriation
- $25,000 – Creating and distributing fictitious statements and misleading clients and Member
- $75,000 – Failure to cooperate; and
- costs in the amount of $10,000.
Copies of the Reasons for Decision (Misconduct) and the Reasons for Decision (Penalty) are available on the MFDA website at www.mfda.ca. During the period described in the Reasons for Decision (Penalty), the Respondent conducted business in the Kitchener-Waterloo, 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 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.