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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. 201364


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: Sanjeev Kumar Duggal



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 February 3, 2015 at 12:30 p.m. (Eastern), or as soon thereafter as the
appearance can be held, concerning a disciplinary proceeding commenced by the MFDA against
Sanjeev Kumar Duggal (the “Respondent”). The Hearing on the Merits will take place in
Toronto, Ontario.

DATED this 19th day of December, 2014.

“Sarah Rickard”

Sarah Rickard

Director of Regional Councils

Mutual Fund Dealers Association of Canada
121 King Street West, Suite 1000
Toronto, Ontario
M5H 3T9
Telephone: 416-945-5134
Facsimile: 416-361-9781
Email: [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 in or about December 2009 and June 2011, the Respondent referred one
client to a company that sold mortgage investment products and received $60,500 in referral fees
for doing so, thereby participating in a referral arrangement to which the Member was not a party
and which did not otherwise comply with:

a) sections 13.7 to 13.10 of National Instrument 31-103; and
b) MFDA Rule 2.4.2.

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 the securities industry since April 1990.

2.
Since December 20, 2010, the Respondent has been registered in Ontario as a mutual
fund salesperson with FundEX Investments Inc. (“FundEX”).

3.
Prior to FundEX, the Respondent was registered as a mutual fund salesperson with IPC
Investment Corporation (“IPC”) from April 3, 2000 until December 20, 2010.

4.
At all material times, the Respondent has conducted business in the Oakville, Ontario
area.

Undisclosed referral arrangement

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5.
In May 2012, the Ontario Securities Commissions advised Staff that the Respondent had
received payments from Waterview Capital Corp. (“Waterview”) in connection with a referral by
the Respondent of an investor to purchase investments in Waterview.

6.
Waterview was an exempt market dealer whose registration, as well as its principal’s,
was suspended by the Ontario Securities Commission (“OSC”) on April 25, 2011 following a
compliance examination by OSC Staff which identified numerous violations, including that
Waterview did not maintain know-your-client forms for some investors, traded without
registration while suspended, and sold investments to a non-accredited investor.

7.
Prior to its suspension, Waterview sold investments that included interests in mortgage
securities on certain properties.

8.
In or about December 2008, a representative of Waterview advised the Respondent that
he was raising money for real estate investments. Subsequently, client AS, whose accounts the
Respondent serviced at IPC, advised the Respondent that he was interested in investing in real
estate. The Respondent provided client AS with the contact information of the Waterview
representative.

9.
There is no evidence that the Respondent acted in any further capacity as an intermediary
between client AS and Waterview.

10.
Over a period of approximately one and a half years, Client AS invested a total of
$850,000 in Waterview on three occasions, and Waterview made payments to the Respondent in
the total amount of $60,500 for referring client AS to Waterview, as follows:

Amount client AS
Referral fee paid to the
Date of referral fee
Respondent registered
invested in Waterview
Respondent
payment to Respondent
with Member
$100,000
$8,000
December 29, 2009
IPC
$250,000
$12,500
May 4, 2010
IPC
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Amount client AS
Referral fee paid to the
Date of referral fee
Respondent registered
invested in Waterview
Respondent
payment to Respondent
with Member
$500,000
$40,000
June 29, 2011
FundEX
Total: $850,000
Total: $60,500

11.
Waterview was not an investment approved by IPC or FundEX for sale by its Approved
Persons, including the Respondent. The transactions involving Waterview were not processed for
the account or through the facilities of IPC or FundEX.

12.
The Respondent did not disclose to IPC or FundEX that he was making referrals in
respect of Waterview. IPC and FundEX did not have a referral arrangement with Waterview.

13.
During the material time, IPC and FundEX each had written policies and procedures that
prohibited their Approved Persons from, among other things, entering into a referral arrangement
directly with another person or entity.

14.
The Respondent knew or ought to have known that the policies and procedures of IPC
and of FundEX prohibited him from engaging in the conduct described herein.

15.
FundEX issued a letter of reprimand to the Respondent on May 28, 2012 for the
undisclosed referral arrangement and commission payment. FundEX placed the Respondent on
strict supervision which expired in January 2013. A total of approximately $27,934 was
deducted from the Respondent’s commissions in respect of the strict supervision.

16.
By engaging in the conduct described above, the Respondent referred one client to a
company that sold mortgage investment products and received $60,500 in referral fees for doing
so, thereby participating in a referral arrangement to which the Member was not a party and
which did not otherwise comply with:
a) sections 13.7 to 13.10 of National Instrument 31-103; and
b) MFDA Rule 2.4.2.

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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

 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
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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.

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: David Halasz

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
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(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:

(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
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proven and may impose any of the penalties described in the By-laws.
END.

DM 407560 v2

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