MFDA Hearing Panel approves settlement agreement with Kenneth Fialho
April 18, 2018 (Toronto, Ontario) – A settlement hearing in the matter of Kenneth John Fialho (“Respondent”) was held on April 16, 2018 in Toronto, Ontario before a three-member Hearing Panel of the Central Regional Council of the Mutual Fund Dealers Association of Canada (“MFDA”).
The Hearing Panel approved the settlement agreement dated April 13, 2018 (“Settlement Agreement”) between Staff of the MFDA and the Respondent, as a consequence of which the following sanctions were imposed on the Respondent:
- a prohibition from conducting securities related business in any capacity while in the employ of or associated with any MFDA Member for a period of two years;
- costs in the amount of $5,000 (“Costs”);
- the Costs are payable to the MFDA in certified funds as follows:
- $1,250 (costs) shall be paid upon acceptance of the Settlement Agreement;
- $1,250 (costs) shall be paid on or before June 29, 2018;
- $1,250 (costs) shall be paid on or before August 31, 2018;
- $1,250 (costs) shall be paid on or before October 26, 2018; and
- should he fail to make any of the payments described above, any outstanding balance of the Costs shall immediately become due and payable to the MFDA and he shall continue to be prohibited from conducting securities related business while in the employ of or associated with a Member of the MFDA until such time as the total amount outstanding of the Costs is paid to the MFDA.
In the Settlement Agreement, the Respondent admitted that:
- between April 16, 2012 and November 27, 2013, he submitted four trades in four client accounts to the Member, without sufficient authorization or evidence of instructions from the clients, contrary to the policies and procedures of the Member and MFDA Rules 2.1.1, 2.3.1, 2.10 and 1.1.2.
- in January 2014, he attempted to process two trades in reliance upon LTAs in contravention of a direction from the Member prohibiting the use of LTAs by the Respondent, contrary to MFDA Rule 2.1.1(b) and (c).
- between December 2009 and October 2013, he:
- submitted four client account forms to the Member containing signatures or initials that of someone other than the account holder;
- did not take adequate steps to ensure that the four client account forms had been signed by the account holder; and
- processed a trade based on instructions that he received from someone other than the account holder, contrary to MFDA Rules 2.1.1, 2.3.1 and 1.1.2.
- on September 8, 2015, he provided notes to MFDA Staff during the course of its investigations that purported to demonstrate that he had obtained instructions from a client to process a trade, when he knew or ought to have known he had processed the trade in question based on the instructions of someone other than the client, 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 Notice of Settlement Hearing, the Respondent carried on business in the Mississauga, 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.