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Notice of Hearing

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:

Amended Notice of Hearing
File No. 201317


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: Reginald Jens Roskaft



AMENDED NOTICE OF HEARING 1

NOTICE is hereby given that a first appearance will take place by teleconference before a
hearing panel of the Central Regional Council (the “Hearing Panel”) of the Mutual Fund Dealers
Association of Canada (the “MFDA”) in the hearing room located at 121 King Street West, Suite
1000, Toronto, Ontario on August 19, 2013 at 10:00 a.m. (Eastern), or as soon thereafter as the
hearing can be held, concerning a disciplinary proceeding commenced by the MFDA against
Reginald Jens Roskaft (the “Respondent”).

DATED this 4th day of June, 2013. Amended on the 14th day of April, 2014.

“Jason D. Bennett”

Jason D. Bennett

Corporate Secretary

Mutual Fund Dealers Association of Canada
121 King Street West, Suite 1000
Toronto, Ontario, M5H 3T9
Telephone: 416-943-7431
Facsimile: 416-361-9781
Email: [email protected]

1 Notice of Hearing amended by Hearing Panel Order dated April 14, 2014.
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NOTICE is further given that the MFDA alleges the following violations of the By-laws, Rules
or Policies of the MFDA:

Allegation #1: Between June 2010 and January 2011, the Respondent misappropriated $2,200
from client AD, and between 2009 and 2010, the Respondent misappropriated $109,599 from
clients HF and BL, thereby failing to deal fairly, honestly and in good faith with client AD,
contrary to MFDA Rule 2.1.1.

Allegation #2: Commencing November 2011, the Respondent failed to cooperate with an
MFDA investigation by failing to comply with requests by MFDA Staff (“Staff”) that he provide
a written statement concerning the matters under investigation, 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.
From September 5, 2007 to June 24, 2011, the Respondent was registered in Ontario as a
mutual fund salesperson with Sterling Mutuals Inc. (“Sterling”), a Member of the MFDA. At all
material times, the Respondent was employed at a sub-branch of Sterling located in Barrie,
Ontario.

2.
Prior to being registered with Sterling, the Respondent was registered as a mutual fund
salesperson with several other mutual fund dealers since June 1993.

3.
On or about June 24, 2011, the Respondent was terminated by resigned from Sterling.

4.
The Respondent is currently not registered in the securities industry in any capacity.
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Allegation #1 – Misappropriation

Client AD

5.
At all material times, AD was a client of Sterling whose account was serviced by the
Respondent. Client AD was retired.

6.
At all material times, in addition to being a mutual fund salesperson employed by
Sterling, the Respondent prepared income tax returns for clients of Sterling and other
individuals.

7.
The Respondent had previously sought and obtained approval from Sterling to provide
the tax preparation services. In the course of seeking the approval, the Respondent had not
identified a company through which he would be providing the services. As it turned out, the
Respondent provided the services through a company of his that he sometimes referred as
Corporate Receivables Agency – or “CRA” for short.

8.
The Respondent prepared client AD’s income tax returns for the tax years 2008, 2009
and 2010 and each year charged her a nominal fee for this service which she paid in cash.

9.
On or about June 2, 2010, client AD instructed the Respondent to redeem $5,000 net
from her RRSP account. The Respondent processed a gross redemption of $7,677 from client
AD’s account; the withholding tax applied was $1,525, resulting in a net redemption of $6,152.

10.
On or about June 14, 2010, the Respondent asked client AD to provide him with a cheque
in the amount of $1,100 made payable to “CRA”. By his representations or omissions, the
Respondent led or allowed client AD to believe that the cheque was required to pay taxes owing
on the redemption from her RRSP account. Client AD complied with the Respondent’s request
on the understanding that she was paying taxes to the Canada Revenue Agency.

11.
On or about January 3, 2011, client AD instructed the Respondent to redeem $5,000 net
from her RRSP account. The Respondent processed a gross redemption of $8,000 from AD’s
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account; the withholding tax applied was $1,567, resulting in a net redemption of $6,433.

12.
On or about January 13, 2011, the Respondent asked client AD to provide him with a
cheque in the amount of $1,100 made payable to “CRA”. By his representations or omissions,
the Respondent led or allowed client AD to believe the cheque was required to pay taxes owing
on the redemption from her RRSP account. Client AD complied with the Respondent’s request
on the understanding that she was paying taxes to the Canada Revenue Agency.

13.
The Respondent did not remit any amounts to the Canada Revenue Agency on client
AD’s behalf and there is no evidence that any such amounts were owing. Rather, the Respondent
deposited both of client AD’s cheques in an account belonging to a company for which the
Respondent was the signing officer without client AD’s knowledge or consent, thereby
misappropriating the monies.

14.
On June 24, 2011, the Respondent was terminated by resigned from Sterling.

15.
In or about August 2011, client AD instructed the Respondent to redeem $5,000 net from
her RRSP account. The Respondent asked client AD to provide him with a cheque for $2,665
made payable to “CRA” prior to him doing so.2 Client AD again complied with this request on
the understanding that she was paying taxes to the Canada Revenue Agency owing on the
requested redemption from her RRSP account.

16.
In or about August or September 2011, client AD contacted the Respondent because she
had not received the $5,000 she had requested. The Respondent told client AD he would follow
up and disclosed to client AD at that time that he was no longer employed by Sterling.

17.
On or about September 28, 2011, client AD met with OM, the new Approved Person
assigned to her accounts at Sterling. OM was concerned about the cheques client AD had made
payable to “CRA”, and assisted client AD to confirm that these cheques were not received by

2 Since the Respondent was no longer registered with Sterling, he was incapable of processing such a redemption in
client AD’s account and he did not in fact do so.
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Canada Revenue Agency. Subsequently, client AD stopped payment on the $2,665 cheque she
had previously provided to the Respondent.

18.
On or about October 5, 2011, with the assistance of Sterling, client AD sent the
Respondent a letter by registered mail asking that he return $2,200 to her, being the sum of the
two previous cheques she had provided to the Respondent payable to “CRA”.

19.
On or about December 2011, the Respondent repaid $2,200 to client AD.

Clients HF and BL

20.
At all material times, HF and BL were clients of Sterling whose accounts were serviced
by the Respondent. Clients HF and BL were retired.

21.
In 2009, the Respondent prepared income tax returns for clients HF and BL for the tax
year 2008 and did not charge them a fee for this service. The Respondent advised clients HF and
BL to expect a tax refund for the tax year 2008, and they subsequently did receive a refund by
direct deposit to their bank account.

22.
From 2010 to 2012 inclusive, clients HF and BL gave all their relevant documents to the
Respondent in order for him to prepare their tax returns. Each year, the Respondent represented
to clients HF and BL that he had prepared and submitted income tax returns on their behalf, and
further represented to them that they could expect annual tax refunds; however, they received no
such refunds.

23.
In or about 2009, the Respondent requested that clients HF and BL loan monies to him
using advances from their credit cards, which the Respondent represented he would invest on
their behalf, and provide them with an unspecified profit on their investment.

24.
Clients HF and BL loaned the Respondent a total of at least $34,599, using advances on
their credit cards. On or about December 9, 2009, the Respondent provided clients HF and BL
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with a Loan Agreement stating that BL had loaned the Respondent’s numbered company
$34,599, that the loan had no maturity date, and that it was interest free until 2014.

25.
The Respondent has not repaid clients HF and BL any of the principal or the interest
owing on the $34,599 he borrowed from them.

26.
In or about June 2010, clients HF and BL were expecting proceeds in the amount of
$75,000, and the Respondent recommended to them that they invest the anticipated $75,000 in
their Sterling accounts.

27.
On or about June 2, 2010, the Respondent directed clients HF and BL to have a cheque
drawn up in the amount of $75,000 and payable to one of the Respondent’s numbered
companies. Clients HF and BL followed the Respondent’s instructions, on or about the next day,
the cheque was cashed by the Respondent’s numbered company.

28.
In or about a short while later, the Respondent represented to clients HF and BL that he
had used $25,000 of the $75,000 (all of which clients HF and BL had been led to believe by the
Respondent was invested in their Sterling accounts) in order to pay taxes to CRA on their behalf.
The Respondent did not provide clients HF and BL any documentation showing that there was a
requirement to pay an amount of $25,000 to CRA, or showing that such a payment had in fact
been made.

29.
When clients HF and BL periodically questioned the Respondent as to the status of their
Sterling accounts, the Respondent showed them screenshots on his computer purporting to be
their accounts, such that clients HF and BL did not realize that some of their funds had not been
invested in their Sterling accounts.

30.
In or about 2012, clients HF and BL received some payments from the Respondent on
account of the funds owing to them; however, the Respondent has failed to return or account for
the majority of their funds.

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31.
By misappropriating clients HF and BL’s funds, the Respondent has not dealt fairly,
honestly and in good faith with the clients, contrary to MFDA Rule 2.1.1.

Allegation # 2 – Failure to Cooperate

20. 32. As set out in chart below, the Respondent has failed to cooperate with Staff’s
investigation into the matters alleged herein, notwithstanding that Staff has made a number of
attempts to contact the Respondent:
Date
Communication
Method of
Result
Delivery
November 11, 2011 Staff requested the Respondent
Ordinary and
Respondent did not respond.
provide a written response
registered mail
concerning AD’s complaint.
Registered mail copy was

unclaimed and returned to
Deadline: December 12, 2011
Staff.
Ordinary mail copy was not
returned.
December 15, 2011 Staff reiterated their request for a
Ordinary and
Respondent did not respond.
written response to AD’s
registered mail Registered mail copy was
complaint and advised the matter
unclaimed and returned to
could be escalated to MFDA
Staff.
Investigations.
Ordinary mail copy was not
Deadline: December 30, 2011
returned.
January 18, 2012
Respondent sent Staff an e-mail
e-mail
The Respondent did not
indicating he was responding to
answer the majority of
Staff’s letter of November 2011.
questions outlined in the
November and December
letters.
January 24, 2012
Staff requested the Respondent
e-mail
Respondent did not respond.
provide further information.
Deadline: February 7, 2012
February 2, 2012
Staff advised the Respondent the
e-mail
Respondent did not respond.
matter was reassigned to a
different MFDA Staff member
and reminded him to provide a
response to AD’s complaint.
Deadline: February 7, 2012
Page 7 of 11

February 14, 2012
Matter escalated to MFDA
Ordinary and
Respondent did not respond.
Investigations group.
registered mail Registered mail copy was
unclaimed and returned to
Staff.
Ordinary mail copy was not
returned.
February 21, 2012
Staff outlined the Respondent’s
Process server
Personal service effected
failure to respond to Staff’s
February 26, 2012.
requests and reiterated their
request to respond to AD’s
The Respondent did not
respond.
complaint. Staff advised the
matter could be escalated to

MFDA Enforcement.
Deadline: March 7, 2012
August 7, 2012
Matter escalated to MFDA
Ordinary mail
Respondent did not respond.
Enforcement branch.

21. 33. To date, the Respondent has not provided Staff with a response to AD’s complaint and
other requested information.
22. 34. Due to the Respondent’s failure to cooperate with the MFDA’s investigation, Staff has
not been able to determine the full nature and extent of the Respondent’s conduct in relation to
client AD, and possibly other clients.
23. 35. Commencing November 2011, by failing to comply with Staff’s requests that he provide
a written response concerning the matters under investigation, the Respondent has failed to
cooperate with an MFDA 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;
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 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;

 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
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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.

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: Lyla Simon

Fax: 416-361-9073

Email: [email protected]

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
[email protected].

A Reply may either:

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(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

(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.

DM 342899 v2

DM 376243 v1
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