MFDA Hearing Panel approves six settlement agreements

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Charles Toth
Vice President, Enforcement
(416) 943-4619
January 26, 2018

MFDA Hearing Panel approves six settlement agreements

January 26, 2018 (Toronto, Ontario) – On January 25, 2018, a three-person Hearing Panel of the Central Regional Council of the Mutual Fund Dealers Association of Canada (“MFDA”) heard the following six settlement proceedings, the particulars of which are:

David Lillie

A hearing in the matter of David Grahame Lillie (“Lillie”) was held on January 25, 2018 at which the Hearing Panel approved the settlement agreement (“Settlement Agreement”) between Staff of the MFDA and Lillie, as a consequence of which the following sanctions were imposed:

  • a fine in the amount of $30,000;
  • costs in the amount of $2,500;
  • successful completion of the Conduct and Practices Handbook course offered by the Canadian Securities Institute within six months of the date of the acceptance of the Settlement Agreement; and
  • shall in the future comply with MFDA Rules 1.1.1, 1.1.2 and 2.1.1.

In the Settlement Agreement dated August 22, 2017, Lillie admitted that:

  1. on or about November 5, 2014, he arranged for three clients to complete five new account application forms in order to facilitate the transfer of the client accounts to a new Member, prior to being registered with the new Member, thereby engaging in registerable activity and securities related business on behalf of a Member that the Respondent was not registered with, contrary to MFDA Rules 1.1.1, 1.1.2 and 2.1.1;
  2. between November 5, 2014 and February 2016, he obtained, possessed, and in some instances, used to process transactions, 26 pre-signed account forms in respect of 18 clients, contrary to MFDA Rule 2.1.1; and
  3. on December 5, 2014 and February 10, 2015, he falsified two account forms and used them to process a transaction, by altering information on the account forms without having the clients initial the alterations, contrary to MFDA Rule 2.1.1.

A copy of the Settlement Agreement is available on the MFDA website at www.mfda.ca. During the period described in the Settlement Agreement, Lillie carried on business in the Sault Ste. Marie, Ontario area.

Jose Borges

A hearing in the matter of Jose Francisco Borges (“Borges”) was held on January 25, 2018 at which the Hearing Panel approved the settlement agreement (“Settlement Agreement”) between Staff of the MFDA and Borges, as a consequence of which the following sanctions were imposed:

  • a fine in the amount of $6,500;
  • costs in the amount of $2,500; and
  • shall in the future comply with MFDA Rule 2.1.1.

In the Settlement Agreement dated October 16, 2017, Borges admitted that between January 2015 and March 2016, he obtained and possessed 22 pre-signed account forms in respect of twelve clients, contrary to MFDA Rule 2.1.1.

A copy of the Settlement Agreement is available on the MFDA website at www.mfda.ca. During the period described in the Settlement Agreement, Borges carried on business in the Waterloo, Ontario area.

Judith Aitken

A hearing in the matter of Judith Rosemary Aitken (“Aitken”) was held on January 25, 2018 at which the Hearing Panel approved the settlement agreement (“Settlement Agreement”) between Staff of the MFDA and Aitken, as a consequence of which the following sanctions were imposed:

  • a fine in the amount of $4,500;
  • costs in the amount of $2,500;
  • a prohibition from acting as a branch manager for a period of three months; and
  • shall in the future comply with MFDA Rule 2.1.1.

In the Settlement Agreement dated September 12, 2017, Aitken admitted that on November 17, 2015, she cut and pasted a client signature from an account form previously signed by a client onto a new account form, and used the new account form to process a transaction, contrary to MFDA Rule 2.1.1.

A copy of the Settlement Agreement is available on the MFDA website at www.mfda.ca. During the period described in the Settlement Agreement, Aitken carried on business in the Burlington, Ontario area.

Sudhir Khanna

A hearing in the matter of Sudhir Khanna (“Khanna”) was held on January 25, 2018 at which the Hearing Panel approved the settlement agreement (“Settlement Agreement”) between Staff of the MFDA and Khanna, as a consequence of which the following sanctions were imposed:

  • a prohibition from conducting securities related business in any capacity while in the employ of or associated with a Member of the MFDA for a period of six months;
  • a prohibition from acting as a branch manager for a period of twelve months;
  • costs in the amount of $2,500; and
  • shall in the future comply with MFDA Rule 2.1.1.

In the Settlement Agreement dated October 3, 2017, Khanna admitted that:

  1. on March 22, 2016, he signed a client’s signature on two account forms, contrary to MFDA Rule 2.1.1; and
  2. on April 21, 2016, he misled the Member in its investigation into his conduct when he falsely denied that he signed a client’s signature on two account forms, contrary to MFDA Rule 2.1.1.

A copy of the Settlement Agreement is available on the MFDA website at www.mfda.ca. During the period described in the Settlement Agreement, Khanna carried on business in the Ottawa, Ontario area.

Jeffrey Lau

A hearing in the matter of Jeffrey Chi Kin Lau (“Lau”) was held on January 25, 2018 at which the Hearing Panel approved the settlement agreement (“Settlement Agreement”) between Staff of the MFDA and Lau, as a consequence of which the following sanctions were imposed:

  • a prohibition from conducting securities related business in any capacity while in the employ of or associated with a Member of the MFDA for a period of 30 months;
  • a fine in the amount of $10,000 (“Fine”);
  • costs in the amount of $2,500 (“Costs”);
  • the Fine and Costs are payable to the MFDA in certified funds as follows:
    1. $2,500 (Costs) upon entering into the settlement agreement;
    2. $1666.67 (Fine) on February 28, 2018;
    3. $1666.67 (Fine) on March 30, 2018;
    4. $1666.67 (Fine) on April 30, 2018;
    5. $1666.67 (Fine) on May 31, 2018;
    6. $1666.67 (Fine) on June 29, 2018;
    7. $1666.67 (Fine) on July 27, 2018; and
  • shall in the future comply with MFDA Rules 2.3.1 and 2.1.1 and MFDA Policies Nos. 3 and 6.

In the Settlement Agreement dated August 21, 2017, Lau admitted that:

  1. on June 2, 2016, he falsified four client signatures or client initials on two account forms in respect of one client, contrary to MFDA Rule 2.1.1;
  2. on June 2, 2016, he opened a client account and processed a transaction without client authorization, contrary to MFDA Rules 2.3.1 and 2.1.1;
  3. between June 6, 2016 and July 18, 2016, he failed to report a complaint to the Member, contrary to the Member’s policies and procedures and MFDA Policy No. 6 and MFDA Rule 2.1.1;
  4. between about June 6, 2016 and June 22, 2016, he attempted to pay compensation directly to a client to settle the client’s complaint, without obtaining prior consent of the Member, contrary to the Member’s policies and procedures, and MFDA Policy No. 3 and MFDA Rule 2.1.1;
  5. between June 30, 2016 and June 19, 2016, he misled the Member during the course of its investigation into his conduct, thereby interfering with the Member’s ability to supervise him, contrary to MFDA Rule 2.1.1; and
  6. between June 3, 2016 and July 19, 2016, he misled the client with respect to the processing of an unauthorized transaction, contrary to MFDA Rule 2.1.1.

A copy of the Settlement Agreement is available on the MFDA website at www.mfda.ca. During the period described in the Settlement Agreement, Lau carried on business in the Markham, Ontario area.

John Kehoe

A hearing in the matter of John Charles Kehoe (“Kehoe”) was held on January 25, 2018 at which the Hearing Panel approved the settlement agreement (“Settlement Agreement”) between Staff of the MFDA and Kehoe, as a consequence of which the following sanctions were imposed:

  • a fine in the amount of $10,000;
  • costs in the amount of $2,500; and
  • shall in the future comply with MFDA Rule 2.1.1.

In the Settlement Agreement dated November 17, 2017, Kehoe admitted that:

  • between October 2014 and June 2015, he falsified, and in at least one instance, used to process a transaction, four account forms in respect of four clients, by altering information on the account forms without having the client initial the alterations, contrary to MFDA Rule 2.1.1; and
  • between May 2015 and February 2016, he obtained, possessed, and in at least 16 instances, used to process transactions, 45 pre-signed account forms in respect of eight clients, contrary to MFDA Rule 2.1.1.

A copy of the Settlement Agreement is available on the MFDA website at www.mfda.ca. During the period described in the Settlement Agreement, Kehoe carried on business in the Toronto, 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 83,000 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.

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