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MFDA Notice of Hearing

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HomeCompleted Hearings201920 - Glen Lawrence Gomes › NOH201920

This is a Third Party Document.

201920

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

Glen Lawrence Gomes

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 (“Hearing Panel”) of the Mutual Fund Dealers Association of Canada (“MFDA”) in the hearing room at the MFDA offices, 121 King Street West, Suite 1000, Toronto, Ontario on May 14, 2019 at 9:00 a.m. (Eastern), or as soon thereafter as the hearing can be held, concerning a disciplinary proceeding commenced by the MFDA against Glen Lawrence Gomes (“Respondent”).

DATED: Mar 4, 2019

"Michelle Pong"

Michelle Pong

Director, Regional Councils

Mutual Fund Dealers Association of Canada
121 King St. West, Suite 1000
Toronto, ON M5H 3T9
Telephone: 416-945-5134
Fax: 416-361-9781
E-mail: corporatesecretary@mfda.ca



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

Allegation #1: Between October 2013 and May 2014, the Respondent engaged in securities related business that was not carried on for the account of the Member and through its facilities by recommending, selling, and/or facilitating the sale of mortgage investments products to at least 3 clients totaling approximately $434,700, contrary to the Member’s policies and procedures and MFDA Rules 1.1.1, 2.1.1, 2.5.1 and 1.1.2.

Allegation #2: Between October 2013 and May 2014, the Respondent engaged in another gainful occupation, which was not disclosed to and approved by the Member, by recommending, selling, and/or facilitating the sale of mortgage investment products to at least 3 clients totaling approximately $434,700, contrary to the Member’s policies and procedures, MFDA Rules 1.2.1(c) (now MFDA Rule 1.3), 2.1.1, 2.5.1 and 1.1.2.

Allegation #3: Between October 2013 and May 2014, the Respondent referred at least 3 clients to a company that sold mortgage investment products and received at least $34,344 in referral fees for doing so, thereby participating in a referral arrangement to which the Member was not a party and which did not otherwise comply with sections 13.7 to 13.10 of National Instrument 31-103, and MFDA Rules 2.1.1 and 2.4.2.

Allegation #4: Between January 13, 2013 and March 31, 2017, the Respondent obtained and possessed 4 pre-signed account forms in respect of 3 clients, contrary to MFDA Rule 2.1.1.

Allegation #5: On October 21, 2010, the Respondent altered 2 account forms in respect of a client 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. The Respondent was registered as a mutual fund salesperson (now known as dealing representative) in Ontario commencing in 1998.
  2. From January 13, 2013 to March 31, 2017, the Respondent was registered as a dealing representative with Investia Financial Services Inc. (the “Member”), a Member of the MFDA.
  3. On March 31, 2017, the Member terminated the registration of the Respondent and he is not currently registered in the securities industry in any capacity.
  4. At all material times, the Respondent conducted business in the Markham, Ontario area.

Misconduct

  1. Between 2012 and 2015, the Respondent had a referral arrangement with Tier 1 Transaction Advisory Services Inc. (“Tier 1”), a real estate and development company that offered investments in syndicated or pooled mortgages.
  2. Tier 1 had real estate development projects, including projects known as Vaughan Crossings and Memory Care Oakville.
  3. In particular, between October 2013 and May 2014, the Respondent recommended, sold, facilitated the sale of, and/or made referrals in respect of the sale of syndicated mortgages totaling approximately $434,700 to at least 3 clients of the Member (collectively the “Syndicated Mortgages”), as described in the table below:

Date

Client

Amount of Investment

Investment

Fee Received

October 2013

AA

$189,000

Vaughan Crossings

$15,192

October 2013

DS

$126,300

Vaughan Crossings

$9,600

May 2014

NS

$119,400

Memory Care Oakville

$9,552

Total

 

$434,700

 

$34,344

  1. The Respondent engaged in one or more of the following activities in relation to the purchase by the clients of the Syndicated Mortgages:
    1. introduced the clients to the opportunity to invest in the Syndicated Mortgages;
    2. provided the clients with investment documents about the Syndicated Mortgages;
    3. discussed the terms and features of investing in the Syndicated Mortgages;
    4. recommended the investment;
    5. provided assurances to the client about the investment;
    6. provided the clients’ contact information to representatives of Tier 1; or
    7. attended meetings between the client and representatives of Tier 1 to complete paperwork to invest in the Syndicated Mortgages.
  2. As stated above, the Respondent received fees from Tier 1 totaling approximately $34,344 in respect of his activities relating to Tier 1.
  3. Prior to the completion of the Vaughan Crossings and Memory Care Oakville developments, client AA, DS and NS stopped receiving distributions. On October 31, 2016 pursuant to an Application on behalf of the Superintendent of Financial Services, a trustee was appointed for 11 corporations that were previously performing mortgage administration functions on behalf of syndicated mortgage investors in Tier 1 real estate development projects, which included Vaughan Crossings and Memory Care Oakville.
  4. The Respondent did not disclose to the Member that he was recommending, selling, facilitating the sale of and/or making referrals in respect of the sale of the Syndicated Mortgages to clients.
  5. The Member did not approve the Syndicated Mortgages for sale to its clients by its Approved Persons, including the Respondent.
  6. None of the purchases of the Syndicated Mortgages by clients described above in paragraph 7 were carried on for the account of the Member or through its facilities.
  7. The Respondent failed to disclose to, or obtain approval from, the Member to have any referral arrangement with Tier 1.
  8. The Member was not a party to any referral arrangements with Tier 1 for the sale of the Syndicated Mortgages to its clients as described above at paragraph 7.

Allegation #1 – Securities Related Business

  1. At all material times, the Member’s policies and procedures required that its Approved Persons:
    1. only offer investment products to its clients that it had approved for sale, and required all products be sold through the Member; and
    2. only participate in referral arrangements that it had approved, and that all fees or commissions must flow through the books and records of the Member.
  2. As described above, the Respondent engaged in securities related business that was not carried on for the account of the Member and through its facilities by recommending, selling, and/or facilitating the sale of the Syndicated Mortgages to at least 3 clients totaling approximately $434,700, contrary to the Member’s policies and procedures, MFDA Rules 1.1.1, 2.1.1, 2.5.1 and 1.1.2.

Allegation #2 – Undisclosed and Unapproved Outside Business Activity

  1. At all material times, the Member’s policies and procedures required its Approved Persons to disclose to, and obtain approval in order to engage in, any outside business activities.
  2. To the extent the Respondent’s activities with respect to the sale of the Syndicated Mortgages to 3 clients as described above at paragraph 7 do not constitute securities related business, then between October 2013 and May 2014, the Respondent had and continued in another gainful occupation that was not disclosed to and approved by the Member by recommending, selling, and/or facilitating the sale of the Syndicated Mortgages to at least 3 clients totaling approximately $434,700, contrary to the Member’s policies and procedures, MFDA Rules 1.2.1(c) (now MFDA Rule 1.3), 2.1.1, 2.5.1 and 1.1.2.

Allegation #3 - Unapproved Referral Arrangements

  1. As describe above, the Respondent referred at least 3 clients to a company that sold mortgage investment products and received at least $34,344 in referral fees for doing so, thereby participating in a referral arrangement to which the Member was not a party and which did not otherwise comply with sections 13.7 to 13.10 of National Instrument 31-103; and MFDA Rules 2.1.1 and 2.4.2.

Allegation #4 - Pre-Signed Account Forms

  1. At all material times, the Member’s policies and procedures prohibited its Approved Persons from using pre-signed account forms.
  2. Between January 13, 2013 to March 31, 2017, the Respondent obtained and possessed 4 pre-signed account forms in respect of 3 clients.
  3. The pre-signed account forms consisted of a 100% Investment Loan Financial Information Appendix; a B2B T2033 Purchase Instructions form; a Member RRIF Form; and a Limited Trading Authorization form.
  4. By obtaining and possessing 4 pre-signed account forms in respect of 3 clients, the Respondent engaged in conduct contrary to MFDA Rule 1.1.

Allegation #5 - Altered Account Forms

  1. At all material times, the Member’s policies and procedures prohibited its Approved Persons from altering account forms without client authorization.
  2. On October 21, 2010, the Respondent altered Self-Directed Redemption / Purchase Forms in respect of a client without having the client initial the alterations.
  3. By altering 2 account forms in respect of a client without having the client initial the alterations, the Respondent engaged in conduct contrary to MFDA Rule 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: H. C. Clement Wai
Email: cwai@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.

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