MFDA Notice of Hearing

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2016101

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

Steven Thomas Bott

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 at the MFDA offices, located at 121 King Street West, Suite 1000, Toronto, Ontario on January 25, 2017 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 Steven Thomas Bott (the “Respondent”).

DATED: Nov 24, 2016

"Sarah Rickard"

Sarah Rickard

Director of Regional Councils

Mutual Fund Dealers Association of Canada
121 King Street West, Suite 1000
Toronto, ON M5H 3T9
Telephone: 416-945-5143
Facsimile: 416-361-9781
Email: corporatesecretary@mfda.ca



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 at the MFDA offices, located at 121 King Street West, Suite 1000, Toronto, Ontario on January 25, 2017 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 Steven Thomas Bott (the “Respondent”).

NOTICE is further given that the MFDA alleges the following violations of the By-laws, Rules or Policies of the MFDA:

Allegation #1: Between May 16, 2013 and February 27, 2015, the Respondent was indebted to a client in the amount of approximately $14,050 and was a joint owner of a bank account with the client, thereby engaging in personal financial dealings with a client which gave rise to a conflict or potential conflict of interest between the Respondent and the client that the Respondent failed to address by the exercise of responsible business judgment influenced only by the best interests of the client, contrary to MFDA Rules 1.1.2, 2.1.1, 2.1.4 and 2.5.1.

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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 February 18, 2009 to February 27, 2015 when he was terminated as a result of the events described below, the Respondent was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with Sun Life Financial Investment Services (Canada) Inc. (“Sun Life”), a Member of the MFDA.
  1. At all material times, the Respondent conducted business in Kingsville, Ontario.
  1. The Respondent has not been registered in the securities industry in any capacity since February 27, 2015.
  1. The Respondent was also licensed to sell insurance through Sun Life Financial Distributors (Canada) Inc. (“Sun Life Financial”), an affiliate of Sun Life.

The Respondent Borrowed Monies from Client SS

  1. In about 2008, client SS became an insurance client of the Respondent at Sun Life Financial.
  1. On or about May 4, 2011, the Respondent borrowed $16,500 from client SS. At the time of the loan, client SS was 72 years old.
  1. Client SS and the Respondent executed two agreements, namely a Financial Loan Agreement and Interest on Loan Agreement, which detailed the following terms of the loan:
    1. the Respondent was required make monthly principal payments of $350 to client SS for four years or until the sum of $16,500 was paid in full;
    2. the Respondent was required to make interest payments of $125 to client SS every four months starting June 2011 during the first year of the loan; and
    3. in June 2012, the $125 interest amount would be reassessed and adjusted if the prevailing interest rates increased by more than 1% over the then-current 3% rate.
  1. To facilitate the repayment of the loan and interest payments, the Respondent and client SS opened a joint bank account into which the Respondent was to deposit monies towards repayment of the loan and interest.
  1. On about May 16, 2013, client SS became a mutual fund client of Sun Life. The Respondent and another Approved Person became joint mutual fund advisors on client SS’s non-registered mutual fund account.
  1. At all material times, Sun Life prohibited its Approved Persons from borrowing funds from clients.
  1. At the time client SS became a mutual fund client, client SS was a vulnerable client by virtue of her age.
  1. The Respondent did not disclose to Sun Life that he had borrowed monies from client SS which he continued to owe, or that he was the joint owner of a bank account with client SS.
  1. On or about November 4, 2013, the Respondent made a loan payment to client SS in the amount of $500 and client SS and the Respondent executed a new Interest on Loan Agreement which replaced the previous interest payment schedule and set out the following:
    1. the Respondent was in arrears on the interest payments in the amount of $1,000; and
    2. the interest rate would be reduced from 3% to 2% on the $14,050 outstanding balance of the loan.
  1. The Respondent did not disclose to Sun Life that he entered into the new Interest on Loan Agreement with client SS on or about November 4, 2013.
  1. The Respondent failed to make any further principal or interest payments to client SS in respect of the loan.
  1. As of May 15, 2015, the Respondent owed $15,391 to client SS.

Allegation #1: Personal Financial Dealings

  1. By virtue of the foregoing, between May 16, 2013 and February 27, 2015, the Respondent was indebted to a client in the amount of approximately $14,050 and was a joint owner of a bank account with the client, thereby engaging in personal financial dealings with a client which gave rise to a conflict or potential conflict of interest between the Respondent and the client that the Respondent failed to address by the exercise of responsible business judgment influenced only by the best interests of the client, contrary to MFDA Rules 1.1.2, 2.1.1, 2.1.4 and 2.5.1.

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
  • 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:

  1. a reprimand;
  2. a fine not exceeding the greater of:
    1. $5,000,000.00 per offence; and
    2. an amount equal to three times the profit obtained or loss avoided by such person as a result of committing the violation;
  3. 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;
  4. revocation of the authority of such person to conduct securities related business;
  5. prohibition of the authority of the person to conduct securities related business in any capacity for any period of time;
  6. 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.

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: H. C. Clement Wai
Fax:  416-361-9073
Email: cwai@mfda.ca

A Reply shall be filed by:

  1. providing four (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

  2. transmitting one (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
  3. transmitting one (1) electronic copy of the Reply to the Office of the Corporate Secretary by e-mail at corporatesecretary@mfda.ca.

A Reply may either:

  1. 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
  2. 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:

  1. to serve and file a Reply; or
  2. 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.