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Notice of Hearing
File No. 200805



IN THE MATTER OF A DISCIPLINARY HEARING
PURSUANT TO SECTIONS 20 AND 24 OF BY-LAW NO. 1
OF THE MUTUAL FUND DEALERS ASSOCIATION OF CANADA

Re: Brian Somerset Campbell



NOTICE OF HEARING


NOTICE is hereby given that a first appearance will take place by teleconference before
a Hearing Panel (the “Hearing Panel”) of the Regional Council of the Pacific Region of
the Mutual Fund Dealers Association of Canada (the “MFDA”), in the hearing room
located at 650 West Georgia Street, Suite 1220, Vancouver, British Columbia on
Tuesday, April 22, 2008, at 10:00 a.m. (Vancouver) or as soon thereafter as the hearing
can be held, concerning a disciplinary proceeding commenced by the MFDA against
Brian Somerset Campbell (the “Respondent”).

DATED at Toronto this 5th day of March, 2008.

“Gregory J. Ljubic”

Gregory J. Ljubic
Corporate Secretary

Mutual Fund Dealers Association of Canada
121 King St. West, Suite 1000
Toronto, Ontario
M5H 3T9
Telephone: 416-943-5836
Fax: 416-361-9781
E-mail: corporatesecretary@mfda.ca
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NOTICE is further given that staff of the MFDA alleges the following violations of the
By-laws, Rules or Policies of the MFDA:

Allegation #1: Commencing in or about 2002, the Respondent conducted trades in the
accounts of clients of the Member without first obtaining instructions from the clients for
each trade made, thereby engaging in discretionary trading beyond the terms of his
registration as a mutual fund salesperson, contrary to MFDA Rule 2.1.1.

Allegation #2: Commencing in or about 2002, the Respondent collected portfolio
management fees from clients of the Member in respect of trades made by the
Respondent in the accounts of the clients, thereby accepting remuneration from persons
other than the Member in respect of business carried out by the Respondent on behalf of
the Member, contrary to MFDA Rule 2.4.1.

Allegation #3: Commencing in or about 2002, the Respondent engaged in discretionary
trading in the accounts of clients of the Member and collected portfolio management fees
from those clients, thereby engaging in portfolio management activity contrary to the
express terms and conditions imposed on his registration as a mutual fund salesperson by
the British Columbia Securities Commission, contrary to MFDA Rule 2.1.1.

Allegation #4: On March 13, 2006, the Respondent had in his possession 68 blank pre-
signed forms, contrary to MFDA Rule 2.1.1. Specifically:

(i)
63 blank pre-signed trade execution forms which he obtained and maintained for
the purpose of conducting discretionary trading in client accounts; and
(ii)
5 blank pre-signed new account application forms which he obtained and
maintained for the purpose of altering know-your-client information to suit trades
he conducted in client accounts.

Allegation #5: On September 26, 2006 and February 14, 2007, the Respondent made
false or misleading statements to the MFDA during the course of an investigation,
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contrary to MFDA Rule 2.1.1.

Allegation #6: Commencing February 2007, the Respondent failed to produce for
inspection and provide copies of documents and other information relevant to matters
being investigated by the MFDA, contrary to section 22.1 of MFDA By-law No. 1.

PARTICULARS

NOTICE is further given that the following is a summary of the facts alleged and
intended to be relied upon by the MFDA at the hearing:

Registration History

1.
On April 25, 2001, the Respondent was granted registration in British Columbia
as a mutual fund salesperson with Sterling Mutuals Inc. (“Sterling”) on the condition that
the Respondent “not conduct any portfolio management activity, including any
discretionary trading.”

2.
Sterling became a Member of the MFDA on March 8, 2002 and is registered as a
mutual fund dealer in Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia
and Ontario. Sterling is also registered as a limited market dealer in Ontario.

3.
On April 3, 2006, the Respondent was placed on ‘close supervision’ by the British
Columbia Securities Commission (“BCSC”) as a result of the events described herein.

4.
On March 9, 2007, Sterling terminated the Respondent, in part, as a result of the
events described herein.

5.
The Respondent is not currently registered in the securities industry in any
capacity.

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Allegations #1 & #2: Discretionary Trading & Portfolio Management Fees

6.
The Respondent was, at all material times, the sole founder, owner and operator
of a non-registered entity operating under the trade name Campbell Asset Management
Ltd. (“CAML”). At no time was CAML registered to conduct securities related business
in any capacity in Canada.

7.
Commencing in or about 2002, the Respondent conducted trades in the accounts
of clients of Sterling without obtaining the client’s prior authorization for the trades,
thereby engaging in discretionary trading beyond the terms of his registration as a mutual
fund salesperson, contrary to MFDA Rule 2.1.1.

8.
Thereafter, the Respondent sent annual invoices to each of the clients on CAML
letterhead requesting payment of “portfolio management fees” of up to 3% of the client’s
account balance at year end. The invoices stated that payment was due upon receipt and
that cheques were to be made payable to CAML.

9.
In addition to not being registered to engage in discretionary trading or to provide
portfolio management services, the Respondent had not obtained the necessary
proficiency required under the Securities Act (British Columbia) to perform such
services.

10.
By engaging in discretionary trading in client accounts, the Respondent engaged
in conduct beyond the terms of his registration as a mutual fund salesperson, and thereby
failed to observe high standards of ethics and conduct in the transaction of business and
engaged in business conduct or practice that was unbecoming and detrimental to the
public interest, contrary to MFDA Rule 2.1.1(b) and (c).

11.
By collecting portfolio management fees from clients of Sterling, the Respondent
accepted remuneration from persons other than Sterling in respect of business carried out
by the Respondent on behalf of Sterling, contrary to MFDA Rule 2.4.1.
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Allegation #3: Breach of Terms & Conditions of Registration

12.
As stated in paragraph 1 above, on April 25, 2001 the BCSC granted the
Respondent’s registration as a mutual fund salesperson with Sterling on the condition that
he “not conduct any portfolio management activity, including any discretionary trading”.

13.
Commencing in or about 2002, the Respondent engaged in discretionary trading
in the accounts of clients of Sterling and collected portfolio management fees from those
clients, thereby engaging in portfolio management activity contrary to the express terms
and conditions imposed on his registration by the BCSC, contrary to MFDA Rule 2.1.1.

Allegation #4: Blank Pre-Signed Forms

14.
On March 13, 2006, MFDA investigators conducted an on-site inspection of the
Respondent’s office during which they found 63 blank pre-signed trade execution forms
and 5 blank pre-signed new account application forms in respect of 19 different client
accounts.

15.
The Respondent obtained and maintained the blank signed forms to facilitate the
provision of his portfolio management services, contrary to MFDA Rule 2.1.1. The
Respondent had clients sign blank trade execution forms in order to conduct discretionary
trades in the clients’ accounts. The Respondent had clients sign blank new account
application forms for the purpose of altering know-your-client information to suit trades
he conducted in client accounts.

16.
By obtaining and maintaining the blank pre-signed forms, the Respondent
engaged in conduct contrary to MFDA Rule 2.1.1.

Allegation #5: False or Misleading Statements

17.
The Respondent was interviewed by MFDA investigators on September 26, 2006
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and February 14, 2007, during which he made false or misleading statements concerning
his conduct in relation to these matters, as described below:

(i)
On September 26, 2006, the Respondent acknowledged having the 68 blank
pre-signed forms in his home office, but denied having used pre-signed
forms to effect transactions in client accounts. On February 14, 2007, the
Respondent admitted that he had used blank pre-signed forms to process
redemptions from client accounts; and

(ii) On February 14, 2007, the Respondent stated that he had not been in contact
with client HK after the September 26, 2006 interview. The Respondent
subsequently admitted to MFDA investigators that he had contacted HK
immediately after his interview on September 26, 2006.

18.
By making false or misleading statements to the MFDA in the course of an
investigation, the Respondent failed to observe high standards of ethics and conduct in
the transaction of business and engaged in business conduct or practice that was
unbecoming and detrimental to the public interest, contrary to MFDA Rule 2.1.1(b) and
(c).

Allegation #6: Failure to Produce Documents

19.
During the interviews of September 26, 2006 and February 14, 2007, the
Respondent undertook to provide the MFDA with certain documents, including
correspondence, notes and personal and corporate income tax returns.

20.
On February 16, 2007, MFDA Staff sent a letter to the Respondent listing four
undertakings that he had given at his interview on February 14, 2007 and two
undertakings that were still outstanding from his interview on September 26, 2006.
MFDA Staff asked the Respondent to answer the six undertakings by March 31, 2007, in
accordance with his obligations under section 22.1 of MFDA By-law No. 1.
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21.
The Respondent did not respond to the February 16, 2007 letter.

22.
On April 2, 2007, MFDA Staff sent a second letter to the Respondent requesting
that he answer his outstanding undertakings by April 9, 2007 in accordance with his
obligations under section 22.1 of MFDA By-law No. 1.

23.
The Respondent did not respond to the April 2, 2007 letter.

24.
On April 10, 2007, MFDA Staff sent a final letter to the Respondent requesting
that he answer his undertakings by April 13, 2007. The Respondent was reminded of his
obligation to cooperate with an MFDA investigation. The Respondent was also advised
that Staff would seek authorization to commence disciplinary proceedings against him
under section 22.1 of MFDA By-law No. 1 in respect of his failure to cooperate if the
undertakings were not answered by April 13, 2007.

25.
To date, the Respondent has failed to produce the documents requested by the
MFDA during the course of its investigation, contrary to section 22.1 of MFDA By-law
No. 1.

NOTICE is further given that the Respondent shall be entitled to appear and be heard
and be represented by counsel or agent at the hearing and to make submissions, present
evidence and call, examine and cross-examine witnesses.
NOTICE is further given that MFDA By-laws provide that if, in the opinion of the
Hearing Panel, the Respondent:
has failed to carry out any agreement with the MFDA;
has failed to comply with or carry out the provisions of any federal or provincial
statute relating to the business of the Member or of any regulation or policy made
pursuant thereto;
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has failed to comply with the provisions of any By-law, Rule or Policy of the
MFDA;
has engaged in any business conduct or practice which such Regional Council in
its discretion considers unbecoming or not in the public interest; or
is otherwise not qualified whether by integrity, solvency, training or experience,
the Hearing Panel has the power to impose any one or more of the following penalties:
(a) a reprimand;
(b) a fine not exceeding the greater of:
(i)
$5,000,000.00 per offence; and
(ii) an amount equal to three times the profit obtained or loss avoided by
such person as a result of committing the violation;
(c) suspension of the authority of the person to conduct securities related business
for such specified period and upon such terms as the Hearing Panel may
determine;
(d) revocation of the authority of such person to conduct securities related
business;
(e) prohibition of the authority of the person to conduct securities related business
in any capacity for any period of time;
(f)
such conditions of authority to conduct securities related business as may be
considered appropriate by the Hearing Panel.
NOTICE is further given that the Hearing Panel may, in its discretion, require that the
Respondent pay the whole or any portion of the costs of the proceedings before the
Hearing Panel and any investigation relating thereto.
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NOTICE is further given that the Respondent must serve a Reply on Enforcement
Counsel and file a Reply with the Corporate Secretary within twenty (20) days from the
date of service of this Notice of Hearing.
A Reply shall be served upon Enforcement Counsel at:

Mutual Fund Dealers Association of Canada

121 King Street West, Suite 1000

Toronto, Ontario
M5H 3T9

Attention: Jason D. Bennett

Fax: 416-943-7431

Email: jbennett@mfda.ca

A Reply shall be filed by:
(a) providing 4 copies of the Reply to the Corporate Secretary by personal
delivery, mail or courier to:
The Mutual Fund Dealers Association of Canada
121 King Street West, Suite 1000
Toronto, Ontario
M5H 3T9
Attention: Office of the Corporate Secretary; or
(b) transmitting 1 copy of the Reply to the Corporate Secretary by fax to fax
number (416) 361-9781, provided that the Reply does not exceed 16 pages,
inclusive of the covering page, unless the Corporate Secretary permits
otherwise; or
(c) transmitting 1 electronic copy of the Reply to the Corporate Secretary by e-
mail at CorporateSecretary@mfda.ca.
A Reply may either:
(i)
specifically deny (with a summary of the facts alleged and intended to be
relied upon by the Respondent, and the conclusions drawn by the Respondent
based on the alleged facts) any or all of the facts alleged or the conclusions
drawn by the MFDA in the Notice of Hearing; or
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(ii) admit the facts alleged and conclusions drawn by the MFDA in the Notice of
Hearing and plead circumstances in mitigation of any penalty to be assessed.
NOTICE is further given that the Hearing Panel may accept as having been proven any
facts alleged or conclusions drawn by the MFDA in the Notice of Hearing that are not
specifically denied in the Reply.
NOTICE is further given that if the Respondent fails:
(a) to serve and file a Reply; or
(b) attend at the hearing specified in the Notice of Hearing, notwithstanding that a
Reply may have been served,
the Hearing Panel may proceed with the hearing of the matter on the date and the time
and place set out in the Notice of Hearing (or on any subsequent date, at any time and
place), without any further notice to and in the absence of the Respondent, and the
Hearing Panel may accept the facts alleged or the conclusions drawn by the MFDA in the
Notice of Hearing as having been proven and may impose any of the penalties described
in the By-Laws.
End.

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