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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:

Notice of Hearing
File No. 200917

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: Paul Anthony Henry



NOTICE OF HEARING


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 October 1, 2009 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 Paul Anthony Henry (the “Respondent”).

DATED: June 25th, 2009

“Jason D. Bennett”

Jason D. Bennett
Corporate Secretary

Mutual Fund Dealers Association of Canada
121 King St. West
Suite 1000
Toronto, Ontario
M5H 3T9
Telephone: 416-943-7431
Fax: 416-361-9781
E-mail: [email protected]

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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 6, 2006 and July 6, 2007, the Respondent accepted $6,440
for investment from client LG, of which amount he failed to invest, return or otherwise
account for $2,440, thereby misappropriating those monies and failing to deal fairly,
honestly and in good faith with client LG, contrary to MFDA Rules 2.1.1.
Allegation #2: On or about November 2, 2006, the Respondent fabricated and mailed an
“Investment Statement” to client LG that was untrue, misleading and detrimental to the
interests of client LG, contrary to MFDA Rules 2.8.2(a) and (c) and Rule 2.1.1.
Allegation #3: On or about June 8, 2007, the Respondent received a written complaint
from client LG which he failed to report to the Member, contrary to MFDA Policy 6,
section 4.1(b)(ii) and MFDA Rules 1.1.2 and 2.11.
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.
The Respondent has been registered in Ontario in various capacities since 1991
and most recently was registered as a mutual fund salesperson with Dundee Private
Investors Inc. (“Dundee”) from June 2, 2004 to February 1, 2008.
2.
The Respondent is not currently registered in the securities industry in any
capacity.
3.
Dundee became a Member of the MFDA on February 8, 2002.
Allegation #1 – Misappropriation
4.
Between June 6, 2006 and July 6, 2007, client LG provided the Respondent with
four cheques totaling $6,200 made payable to BSAM Investment Corp. (“BSAM”), a

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company incorporated by the Respondent. LG also provided the Respondent with $240 in
cash during this period. LG provided all of the monies, totaling $6,440, to the Respondent
to invest on his behalf.
5.
The Respondent deposited LG’s cheques in BSAM’s bank account and kept the
$240 cash he received from LG in his office.
6.
Of the total amount of $6,440 the Respondent received from LG, he invested only
$4,000 on LG’s behalf by purchasing units of the CI Global Science & Technology fund
for LG’s account. The Respondent used the remaining $2,440 he had received from LG
to pay personal expenses, thereby misappropriating those monies.
7.
The following chart sets out the dates and amounts of the transactions carried out
by the Respondent with respect to LG’s monies:

Date
Paid To BSAM
Invested On LG’s Behalf
June 6, 2006
$1,000

July 16, 2006
$1,000

August 18, 2006
$3,200

Sept 11, 2006

$1,000
January 16, 2007 –
$1,000
March 21, 2007

$1,000
June 8, 2007
$1,000

July 6, 2007

$1,000
(unknown)
$240 cash

TOTAL
$6,440
$4,000
8.
By misappropriating $2,440 from LG, the Respondent failed to deal fairly,
honestly and in good faith with LG, contrary to MFDA Rule 2.1.1.
Allegation #2 – False and Misleading Client Communications
9.
On or about November 2, 2006, the Respondent fabricated an “Investment
Statement” on Dundee’s letterhead and mailed it to LG.

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10.
The fabricated account statement falsely represented that LG held $3,200 in cash
and $2,215.29 in the CI Global Science & Technology fund in his account, for a total
account balance of $5,415.29.1 The true value of LG’s account as stated on the books and
records of Dundee was $1,000.
11.
By creating and sending a false and misleading account statement to LG, the
Respondent acted contrary to MFDA Rules 2.8.2(a) and (c) and Rule 2.1.1.
Allegation #3 – Failure to Report Client Complaint
12.
On June 8, 2007, LG sent a letter to the Respondent complaining about the rate of
return on his investments and inquiring as to why he had only received confirmation for a
single investment of $1,000.
13.
The Respondent received LG’s complaint but did not report it to Dundee, contrary
to Dundee’s policies and procedures and the requirements of MFDA Policy 6, section
4.1(b)(ii). Instead, the Respondent called LG to discuss the performance of his
investments.
14.
Shortly thereafter, LG moved from Ontario to Vancouver, British Columbia. On
October 15, 2007, Dundee first learned of the complaint when LG met with JB, the
Dundee mutual fund salesperson in Vancouver responsible for servicing his account, and
raised his concerns. LG informed JB that he had given cash and cheques to his previous
Dundee mutual fund salesperson, the Respondent, and that he was unsure what had
happened to the funds.
15.
That same day, JB sent an email to his branch manager to report his concerns
about his meeting with LG.
16.
On October 16, 2007, JB’s branch manager forwarded the email to Dundee’s
Chief Compliance Officer, who directed an immediate review of the Respondent’s files.
By November 1, 2007, Dundee’s compliance staff had completed a review of every client
file assigned to the Respondent.

1 By November 2006, LG had provided the Respondent with $5,200 to invest on his behalf, see paragraph 10.

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17.
On November 21, 2007, LG redeemed his investments and closed his account.
18.
During the course of Dundee’s investigation, the Respondent disclosed his use of
the BSAM bank account to conduct securities related business. On February 1, 2008, the
Respondent was terminated by Dundee.
19.
On February 4, 2008, Dundee compensated LG for the monies the Respondent
misappropriated from him and the decline in the value of his account (had the monies
been invested as contemplated).
20.
By failing to report LG’s complaint to Dundee, the Respondent prevented Dundee
from dealing with LG’s complaint promptly.
21.
By engaging in the conduct described above, the Respondent failed to comply
with MFDA Policy 6, section 4.1(b)(ii) and MFDA Rules 1.1.2 and 2.11.
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;

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

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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.
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.

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A Reply shall be served upon Enforcement Counsel at:

Mutual Fund Dealers Association of Canada

121 King Street West

Suite 1000

Toronto, ON M5H 3T9

Attention: Maria Abate, Enforcement Counsel

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, ON 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:
(a) 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
(b) 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.

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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.

Doc 177753

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