Notice of Hearing

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

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 February 23, 2012 and May 25, 2016, the Respondent was registered in Ontario as a Dealing Representative with TD Investment Services Inc. (“TD”), a Member of the MFDA.

2. At all material times, the Respondent conducted business in the Woodbridge, Ontario area.

3. On May 25, 2016, TD terminated the Respondent’s registration as a result of the conduct described herein. The Respondent is not currently registered in the securities industry in any capacity.

Allegation #1: Unauthorized Trades

4. At all material times, TD’s policies and procedures prohibited its Approved Persons, including the Respondent, from placing an order without client authorization.

5. At all material times, client JC was a client of TD whose personal retirement income fund account (“TD Account”) was serviced by the Respondent. Concurrently, client JC also had a retirement income fund account at TD Canada Trust (the “RIF Account”).

6. Without client JC’s authorization, the Respondent processed 2 transfers of cash from the RIF Account to the TD Account to purchase mutual funds (the “Purchases”) for client JC, as follows:
   1. on March 29, 2016, $20,000 from the RIF Account to the TD Account; and
   2. on March 30, 2016, $13,742.04 from the RIF Account to the TD Account.

7. On or about May 11, 2016, client JC advised TD that he did not authorize the Purchases.

8. On May 25, 2016, TD terminated the Respondent’s registration.

9. By processing the Purchases without client JC’s authorization, the Respondent failed to observe high standards of ethics and conduct in the transaction of business and engaged in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1. 

Allegations # 2, 3 and 4: Failed to use due diligence to learn essential facts relative to the client, failed to comply with Member directives and misled the Member

10. On or about April 4, 2016, as part of its review of the Purchases, TD identified that client JC’s asset allocation profile (20% income, 80% growth) was inconsistent with the composition of the holdings in the TD Account and directed the Respondent to conduct a suitability review with client JC.

11. On April 4, 2016, without contacting client JC to do a suitability review, the Respondent prepared a new account form containing the same Know-Your-Client information that TD had on file for client JC (the “KYC Form”), and submitted the KYC Form to TD for processing.

12. On April 4, 2016, based on the information contained in the KYC Form, TD’s back-office system automatically directed the Respondent to confirm with client JC his risk tolerance information in respect of the TD Account.

13. The Respondent did not have a discussion with client JC as directed by TD. Without communicating with client JC, the Respondent falsely advised TD: “(r)isk tolerance has been reviewed. Customer understands risk/return relationship and is comfortable with the market fluctuations.”

14. By failing to meet or discuss the information to be completed on the KYC Form with client JC, the Respondent failed to use due diligence to learn the essential facts relative to client JC, contrary to MFDA Rules 2.2.1 and 2.1.1.

15. By failing to comply with two Member directives to contact client JC, the Respondent failed to observe high standards of ethics and conduct in the transaction of business and engaged in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1.

16. By falsely representing to the Member that client JC had reviewed and approved the risk tolerance for the client’s account, the Respondent failed to observe high standards of ethics and conduct in the transaction of business and 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
• 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: Sarah Glickman
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 Director of Regional Councils 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.