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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. 201439


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: Richard J. Dhur



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 23, 2015 at 10:00 a.m. (Eastern), or as soon thereafter as the
appearance can be held, concerning a disciplinary proceeding commenced by the MFDA against
Richard J. Dhur (the “Respondent”).

DATED this 19th day of December, 2014.

“Paige L. Ward”

Paige L. Ward

Corporate Secretary
Mutual Fund Dealers Association of Canada
121 King Street West, Suite 1000
Toronto, Ontario
M5H 3T9

Telephone: 416-943-5838
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 about July 2008 and May 2013, while acting in the capacity of a Branch
Manager, the Respondent reviewed and approved 24 account forms or photocopies of account
forms in respect of 10 clients, which he knew were blank or only partially complete at the time
the clients signed the account forms or were previously-used account forms which had been
altered in order to process transactions, contrary to MFDA Rules 2.5.5(d) (now Rule 2.5.5(f))
and Rule 2.1.1.

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.
The Respondent has been registered in the mutual fund industry since November 1995.

2.
Since November 1999, the Respondent has been registered in Ontario and Quebec as a
mutual fund salesperson (now known as a Dealing Representative) with WFG Securities Inc.1
(“WFG”), a Member of the MFDA.

3.
Commencing in November 2006, the Respondent was registered in Ontario and Quebec
as a Branch Manager with WFG. At all material times, the Respondent acted as the alternate
Branch Manager at his branch office, and reviewed and approved the trades submitted by the
designated Branch Manager, Frank K. Shaw (“Shaw”).

4.
On April 10, 2014, WFG suspended the Respondent from acting as a Branch Manager
(but not as a mutual fund salesperson) as a result of the events described below.

1 Previously, named WFG Securities Canada Inc. and Transamerica Securities Inc.
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5.
At all material times, the Respondent conducted business in the Orleans, Ontario area.

The Respondent Approved Shaw’s Use of Blank Pre-Signed and Photocopied Trade Forms

6.
Between about July 2008 and May 2013, Shaw obtained, maintained and used to process
transactions, 24 account forms or photocopies of account forms in respect of 10 clients, which
were blank or only partially complete at the time the clients signed the account forms or were
previously-used account forms which Shaw altered in order to process transactions. In particular,
Shaw:

(a)
obtained, altered and used to process trades, 19 Trade Tickets or photocopies of
Trade Tickets, which were blank or only partially complete at the time the clients
signed the Trade Tickets or were previously-used Trade Tickets;
(b)
added Know-Your-Client information contained in 4 New Account Application
Forms (“NAAFs”) after the clients had signed the NAAFs; and
(c)
obtained, and maintained in the client file, 1 photocopy of a blank pre-signed
Trade Ticket.

7.
Shaw’s conduct is the subject of an MFDA proceeding against him.

8.
The Respondent, while acting as alternate Branch Manager, reviewed and approved each
of the 24 account forms or photocopies of account forms in respect of the 10 clients submitted by
Shaw as described in paragraph 6 above, which the Respondent knew were blank or only
partially complete at the time the clients signed the account forms or were previously-used
account forms which Shaw had altered in order to process transactions.

9.
WFG’s compliance staff detected the conduct described in this Notice of Hearing during
a routine audit of the Respondent’s branch office in March and April 2014, and immediately
commenced an investigation.

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10.
In response to WFG’s investigation, the Respondent provided the following statement to
explain why he had approved transactions where Shaw had used blank or partially complete pre-
signed account forms or photocopies of account forms:

At the clients’ verbal requests that we maintain a supply of authorized trade tickets to
assist in their redemptions I agreed to the various requests. In these cases it was often
distance that was the prime factor. None of these situations resulted in a misuse or
misappropriation of the clients (sic) funds. No malice was intended. All trades were
executed with the clients (sic) specific direction.

11.
By approving transactions where he knew that Shaw had used blank or only partially
complete pre-signed account forms or photocopies of previously-used account forms which
Shaw had altered, the Respondent engaged in conduct unbecoming an Approved Person,
contrary to MFDA Rule 2.1.1.

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;

 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 Office of 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: Shelly Feld

Fax: 416-361-9073

Email: [email protected]

A Reply shall be filed by:
(a) providing 4 copies of the Reply to the Office of 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 Office of 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 Office of the Corporate Secretary permits otherwise; or
(c) transmitting 1 electronic copy of the Reply to the Office of 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.
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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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DM 407619 v2

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