Notice of Hearing

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

Allegation #1: Between April 2015 and December 2016, the Respondent obtained and possessed 4 pre-signed account forms in respect of two clients, contrary to MFDA Rule 2.1.1.

Allegation #2: Between December 2009 and June 2017, the Respondent altered ten account forms in respect of nine clients by altering information on the account form without having the client initial the alterations, contrary to MFDA 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. Since May 2007, the Respondent has been registered in Newfoundland and Labrador as a mutual fund salesperson (now known as a dealing representative)^[1] with Investia Financial Services Inc. (the “Member”), a Member of the MFDA.
2. At all material times, the Respondent conducted business in the St. John’s, Newfoundland area.

MFDA Disciplinary History

3. The Respondent was previously the subject of a MFDA Settlement Hearing^[2] that occurred on March 4, 2016. At the Settlement Hearing, an MFDA Hearing Panel accepted a settlement agreement dated November 12, 2015 where the Respondent admitted that between April 2013 and July 2014, he obtained and used 11 pre-signed order instruction forms in respect of eight clients. As part of that settlement agreement, the Respondent paid a fine of $6,000 and costs of $2,500.
4. The Respondent obtained and possessed some of the pre-signed forms and altered some of the forms described herein in the period after the March 4, 2016 Settlement Hearing.

Allegation #1 – Pre-Signed Account Forms

5. At all material times, the Member’s policies and procedures stated that under no circumstances should an Approved Person hold pre-signed documents in client files.
6. On April 28, 2016, the Member advised the Respondent through a Compliance Memorandum that the use of pre-signed forms to facilitate a transaction or account update was strictly prohibited.
7. Between April 2015 and December 2016, the Respondent obtained and possessed four pre-signed account forms in respect of two clients.
8. The pre-signed forms consisted of one new client application form, two transfer authorizations and one KYC update form.
9. By obtaining and possessing four pre-signed account forms in respect of two clients, the Respondent engaged in conduct contrary to MFDA Rule 1.1.

Allegation #2 – Altered Account Forms

10. At all material times, the Member’s policies and procedures stated that all material changes made to KYC Update Forms must be initialed by the client. The Member’s April 28, 2016 Compliance Memorandum also prohibited the use of pre-signed forms or other forms of signature falsification to facilitate account updates.
11. Between December 2009 and June 2017, the Respondent altered ten account forms in respect of nine clients by altering information on the account form without having the client initial the alterations.
12. The altered forms consisted of eight KYC Update forms, one Order Instruction form, and one Trade Ticket.
13. By altering ten account forms in respect of the accounts of nine clients by altering information on the account form without having the client initial the alterations, the Respondent engaged in conduct 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; and
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: Brendan Forbes
Email: bforbes@mfda.ca

A Reply shall be filed by:

1. providing four 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 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.

[1] In September 2009, the registration category mutual fund salesperson was changed to “dealing representative” when National Instrument 31-103 came into force.
[2] MFDA File No. 201554