Notice of Hearing

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. Between April 10, 2014 and April 6, 2015, the Respondent was registered in Ontario as a mutual fund dealing representative (formerly known as a mutual fund salesperson) with Investors Group Financial Services Inc. (“IG”), a Member of the MFDA.

2. At all material times, the Respondent operated out of an IG branch located in Thunder Bay, Ontario.

3. The Respondent is not currently registered in the securities industry in any capacity.

Background

4. Clients FP and KP are the parents of the Respondent’s former fiancé.

5. At the time of the events described below, client FP was 86 years old and suffered from dementia, and client KP was 83 years old and terminally ill. Clients FP and KP were vulnerable clients.

Holding a Joint Account with Clients: Conflict of Interest

6. On about January 23, 2015, the Respondent accompanied clients FP and KP to their local Scotiabank branch, where clients FP and KP held a bank account. During the visit to the Scotiabank branch, clients FP and KP obtained a bank draft in the amount of $81,384 and provided it to the Respondent for the purchase of mutual funds.

7. On or about January 26, 2015, the Respondent was added as a joint account holder and signatory in respect of client FP and KP’s bank account at Scotiabank. The Respondent obtained a client card (also known as a debit card) allowing her electronic access to the bank account.

8. On or about the same day, the Respondent completed a New Account Application Form to open an account at IG for clients FP and KP, and an Investment Instruction Form to purchase mutual funds for the account using the proceeds of the bank draft.

9. At all material times IG’s policies and procedure prohibited Approved Persons from holding joint accounts with clients.

10. The Respondent did not disclose to IG that she was a joint account holder and had signing authority in respect of client FP and KP’s bank account at Scotiabank.

11. By holding an account jointly with clients FP and KP, the Respondent’s conduct gave rise to an actual or potential conflict of interest between the Respondent and clients KP and FP which the Respondent failed to address by the exercise of responsible business judgment influenced only by the best interests of clients KP and FP, contrary to MFDA Rules 2.1.4, 2.3.1 and 2.1.1.

Misappropriation of Monies from Clients

12. Between about January 28, 2015 and April 2, 2015, the Respondent misappropriated $13,460 by using the client card to make the following cash withdrawals from client FP and KP’s bank account at Scotiabank:

13. On or about February 17, 2015, client FP redeemed a Guaranteed Investment Certificate (“GIC”) in the amount of $14,052.55 that the client held at Scotiabank.

14. On or about February 18, 2015, client FP obtained a bank draft payable to the Respondent in amount of the GIC redemption proceeds, and provided it to the Respondent to purchase additional mutual funds in the account at IG. The Respondent did not use the monies to purchase mutual funds for clients FP or KP, and did not deliver the monies to IG.

15. On about February 18, 2015, the Respondent deposited the proceeds of the bank draft into an account at a credit union held by the Respondent. The Respondent thereby misappropriated $14,052.55 from client FP.

16. Between about March 7, 2015 and March 30, 2015, the Respondent misappropriated $4,189.15 from clients FP and KP by using the client card to make the following purchases, and receiving “cashback” from the retailer[1] in respect of the purchases:

17. As described above, the Respondent misappropriated at least $31,702 from clients KP and FP, thereby failing to deal honestly and in good faith with the clients, and engaging 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
• 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 Respondents 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: David Babin
Fax: (416) 361-9073
Email: dbabin@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:
   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 Director of Regional Councils by fax to fax number 416-361-9781, provided that the Reply does not exceed 16 pages, inclusive of the covering page, unless the Director of Regional Councils permits otherwise; or
3. transmitting one (1) electronic copy of the Reply to the Director of Regional Councils 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.

[1] Some retailers offer a payment option known as “cashback”, whereby the consumer purchasing items with a debit card can request that additional cash to be withdrawn from their account, on top of the purchase.