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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: Re: Adam Kryn Vandermey

NOTICE is hereby given that a first appearance will take place by teleconference before a hearing panel of the Central Regional Council (“Hearing Panel”) of the Mutual Fund Dealers Association of Canada (“MFDA”) in the hearing room at the MFDA offices, located at 121 King Street West, Suite 1000, Toronto, Ontario on April 12, 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 Adam Kryn Vandermey (“Respondent”).

  • Sarah Rickard
    Sarah Rickard
    Sarah Rickard

    Mutual Fund Dealers Association of Canada
    121 King St. West, Suite 1000
    Toronto, ON M5H 3T9
    Telephone: 416-945-5143
    Fax: 416-361-9781
    E-mail: [email protected]

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

Allegation #1: Between December 10, 2013 and August 1, 2014, the Respondent misappropriated approximately $48,018 from two (2) clients and a bank account used to conduct charitable activities, thereby failing to deal fairly, honestly and in good faith with clients and engaging in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1.

Allegation #2: Commencing on May 5, 2015, the Respondent failed to cooperate with an investigation into his activities conducted by Staff of the MFDA, contrary to section 22.1 of MFDA By-law No. 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 June 21, 2002 to March 14, 2003, the Respondent was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with Clarica Investco Inc., a former Member of the MFDA.
  1. From March 14, 2003 to April 24, 2003 and from January 6, 2005 to October 3, 2014, the Respondent was registered in Ontario as a mutual fund salesperson with Sun Life Financial Investment Services (Canada) Inc. (“Sun Life”), a Member of the MFDA.
  1. At all material times, the Respondent was also licensed to sell insurance products.
  1. The Respondent is not currently registered in the securities industry in any capacity.
  1. At all material times, the Respondent carried on business in the Kitchener-Waterloo, Ontario area.

Misappropriation of Monies from Client JK

  1. Client JK was a client of Sun Life. At all material times, the Respondent was the mutual fund salesperson responsible for servicing client JK’s accounts at Sun Life.
  1. On December 10, 2013, client JK met with the Respondent to discuss the investment of proceeds from an insurance claim received by client JK.
  1. At that time, client JK provided with the Respondent with a cheque in the amount of $120,000 payable to Sun Life Assurance Co. (“Sun Life Assurance”), an insurance affiliate of Sun Life. Client JK instructed the Respondent to open an account at Sun Life Assurance and deposit the cheque into the account in order to purchase insurance products.
  1. Client JK also provided the Respondent with a cheque in the amount of $30,000 payable to “Vandermey Financial Services”. Client JK instructed the Respondent to open an account at Sun Life and deposit the cheque into the account in order to purchase mutual funds.
  1. Sun Life was not aware that the Respondent was purporting to conduct business using the name, Vandermey Financial Services.
  1. On December 18, 2013, the Respondent cashed the $30,000 cheque to Vandermey Financial Services and misappropriated the proceeds.
  1. On December 19, 2013, the Respondent provided client JK with a “Daily Interest Confirmation” form bearing account number AN-J933 152-1, and a handwritten note on Sun Life letterhead, confirming receipt of $30,000 from client JK and falsely representing that these funds had been deposited into an account at Sun Life.
  1. The Respondent fabricated the Daily Interest Confirmation form. The form was not issued by Sun Life and account number AN-J933 152-1 does not exist.
  1. On or about January 7, 2014, the Respondent opened a new account for client JK at Sun Life Assurance and arranged for the $120,000 cheque to be deposited into the account.
  1. In January 2014, client JK requested a redemption in the amount of $10,000 from her mutual fund account at Sun Life which she believed held her previous deposit of $30,000.
  1. On January 27, 2014, the Respondent processed a $10,000 redemption from client JK’s insurance account at Sun Life Assurance and provided these monies to client JK. Client JK was not aware that these monies had been redeemed from her Sun Life Assurance insurance account rather her Sun Life mutual fund account.
  1. In about July 2014, client JK requested a further redemption in the amount of $20,000 from her mutual fund account at Sun Life.
  1. On August 7, 2014, the Respondent processed a $20,000 redemption from client JK’s insurance account at Sun Life Assurance and provided these monies to client JK. Client JK was not aware that these monies had been redeemed from her Sun Life Assurance insurance account rather her Sun Life mutual fund account.
  1. On October 3, 2014, the Respondent resigned from the Member.
  1. In January 2015, Sun Life became aware of the Respondent’s conduct with respect to client JK and it commenced an investigation.
  1. On February 17, 2015, Sun Life reimbursed client JK for the losses caused by the Respondent.

Misappropriation of Monies from Client JR

  1. Client JR was a client of Sun Life. At all material times, the Respondent was the mutual fund salesperson responsible for servicing client JR’s accounts at Sun Life.
  1. On March 14, 2014, client JR’s employer QCC sent a cheque to the Respondent in the amount of $7,718.80 payable to Sun Life (the “QCC Cheque”). The QCC Cheque represented QCC’s employer contribution for client JR’s Registered Retirement Savings Plan (“RRSP”) account for 2014.
  1. The Respondent did not deposit the QCC Cheque into client JR’s RRSP account. Instead, the Respondent deposited the QCC Cheque into a bank account he controlled and misappropriated the monies.
  1. Sun Life assisted client JR in recovering the monies taken by the Respondent.

Misappropriation of Monies from a Charity Golf Tournament

  1. At all material times, the Respondent and another Approved Person at Sun Life, MF, ran a charity golf tournament sponsored by Sun Life (the “Charity Tournament”).
  1. The Respondent and MF held a bank account in order to operate the Charity Tournament (the “Charity Bank Account”). The Respondent and MF had signing authority with respect to the Charity Bank Account, and any cheques written from the Charity Bank Account required the signatures of both the Respondent and MF.
  1. On May 15, 2014, the Respondent wrote a cheque in the amount of $5,000 payable to himself from the Charity Bank Account. The Respondent falsified MF’s signature on the cheque.
  1. On July 26, 2014, the Respondent wrote a second cheque in the amount of $5,300 payable to himself from the Charity Bank Account. The Respondent falsified MF’s signature on the cheque. This withdrawal caused the Charity Bank Account to be overdrawn.
  1. Shortly thereafter, MF became aware that the Charity Bank Account was overdrawn and he notified the Respondent.
  1. On August 5, 2014, the Respondent deposited a cheque in the amount of $2,000 into the Charity Bank Account to cover the overdraft.
  1. On November 26, 2014, the Respondent provided a cheque to MF in the amount of $8,300 in order to repay the monies he had misappropriated from the Charity Bank Account. However, when MF attempted to deposit the cheque into the Charity Bank Account, it was returned due to insufficient funds.
  1. MF borrowed monies and repaid the monies taken by the Respondent from the Charity Bank Account. The Respondent did not repay MF.

Allegation #1 – Misappropriation of Monies

  1. By virtue of the conduct described above, the Respondent misappropriated approximately $48,018 from two clients and a bank account used to conduct charitable activities, thereby failing to deal fairly, honestly and in good faith with clients and engaging in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1.

Allegation #2 – Failure to Cooperate

  1. On April 16, 2015, during the course of its review of the events described above, Staff of the MFDA (“Staff”) requested that the Respondent provide records for any bank accounts in which he had a direct or indirect interest. The Respondent responded to this request but did not provide the records requested by Staff.
  1. On May 5, 2015, Staff emailed the Respondent to follow-up on its request for copies of the Respondent’s bank records. The Respondent did not respond to this email.
  1. On May 12, 2015, Staff emailed the Respondent again to follow up on its request for copies of the Respondent’s bank records and to request a statement responding to a complaint received by client JR. The Respondent did not respond to this email.
  1. On May 21, 2015, Staff emailed the Respondent to advise him that his failure to respond to Staff’s request for bank records and a statement with respect to the complaint by client JR could result in an allegation of “failure to cooperate” should the matter proceed to a disciplinary hearing. The Respondent did not respond to this email.
  1. Between June 22, 2015 and August 12, 2015, Staff made additional attempts to contact the Respondent by registered and regular mail in order to obtain copies of bank records and a statement with respect to the Respondent’s conduct. The Respondent did not respond to these letters.
  1. On October 2, 2015, a process server retained by Staff served the Respondent personally with a letter requesting copies of the Respondent’s bank records and a statement regarding the complaint of client JR. The letter also advised the Respondent that Staff had become aware that he had misappropriated funds from the Charity Bank Account.  The letter requested that the Respondent attend at an interview with Staff at the MFDA’s offices on November 11, 2015.
  1. To date, the Respondent has failed to provide the information requested by Staff or attend an interview with Staff, thereby failing to cooperate with an investigation into his conduct, contrary to section 22.1 of MFDA By-law No. 1 and 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
  • 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: Maria L. Abate
Fax:  416-361-9073
Email: [email protected]

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:
    1. 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 [email protected].

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.