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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: Jay Kim

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 July 9, 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 Jay Kim (“Respondent”).

  • 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: [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: Commencing in August 2017, the Respondent failed to cooperate with MFDA Staff during the course of an investigation into his conduct, contrary to section 22.1 of MFDA By-law No. 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. From October 2010 to August 2012, the Respondent was registered in Ontario as a dealing representative (formerly known as a mutual fund salesperson)[1] with WFG Securities Inc. (“WFG”), a Member of the MFDA.
  2. From March 2015 to August 2016, the Respondent was registered in Ontario as a dealing representative with Shah Financial Planning Inc. (“Shah”), a Member of the MFDA.
  3. The Respondent is not currently registered in the securities industry in any capacity.
  4. At all material times, the Respondent conducted business in the Oakville, Ontario area.

Background

  1. In May 2016, Investors Group Financial Services Inc. (“Investors Group”), a Member of the MFDA, filed a report on the MFDA’s Member Event Tracking System (“METS”) which indicated, among other things, that the Respondent had referred Neil Kumar (“Kumar”)[2] to an Approved Person registered with Investors Group, and that Kumar submitted and/or arranged for other individuals to submit falsified documents to the Approved Person in order to apply for and obtain loans and lines of credit offered by Solutions Banking.
  2. After receiving the METS Report, MFDA Staff (“Staff”) commenced an investigation.
  3. During the investigation, Staff became aware that in November 2015, the Respondent submitted a $200,000 loan application on behalf of client AM that contained fabricated supporting documents.
  4. The fabricated supporting documents consisted of:
    • a fabricated account statement purportedly issued by WFG, which falsely stated that on September 30, 2015, client AM held assets at WFG valued at $143,276.28 (in fact, client AM did not hold any assets at WFG); and
    • a fabricated account statement purportedly issued by Sun Life Financial, which falsely stated that on September 30, 2015, client AM held assets at Sun Life Financial valued at $105,429.16 (in fact, client AM did not hold any assets at Sun Life Financial).
  5. As described below, the Respondent failed to cooperate with Staff’s investigation into the matters described above.

Allegation #1 – Failure to Cooperate

  1. As set out in the table below, Staff has made a number of requests to the Respondent to provide information and to attend an interview with Staff. The Respondent failed to attend an interview and failed to respond to several requests that he contact Staff.

Date

Communication

Method of Delivery

Result

11/14/2016

Staff sent a letter requesting a written response from the Respondent concerning the matters under review.

Response requested by December 6, 2016.

Registered and regular mail

The Respondent did not respond.   

12/7/2016

Staff sent a letter requesting that the Respondent respond to Staff’s requests in the November 14, 2016 letter by December 21, 2016.

Registered and regular mail

On December 28, 2016, the Respondent sent an email to Staff stating, among other things, that he had recently moved and “had only come yesterday to pick up [his] mail at [his] old place.”

In the email, the Respondent advised Staff that he did not refer Kumar to the Investors Group Approved Person described above in paragraph 5 in order to apply for a loan, mortgage or line of credit offered by Solutions Banking. 

7/27/2017

Staff sent a letter advising the Respondent that he was required to attend an interview on September 6, 2017, and was required to confirm by August 8, 2017 that he would attend the interview.

Personal service (at the Respondent’s last known address as shown on a driver’s license search report conducted on July 26, 2017)

Process server was unable to locate the Respondent.

7/31/2017

Staff sent another letter advising the Respondent that he was required to attend an interview on September 6, 2017, and was required to confirm by August 8, 2017 that he would attend the interview.

Email

The Respondent did not respond and he did not attend the interview on September 6, 2017.

11/9/2018

Staff requested that the Respondent contact Staff.

Voice message

The Respondent did not respond.

11/12/2018

Staff again requested that the Respondent contact Staff.

Voice message

The Respondent did not respond.

11/12/2018

Staff requested that the Respondent contact Staff by November 16, 2018.

Email

The Respondent did not respond.

  1. The Respondent has not communicated with Staff in any way since sending the email on December 28, 2016 described above.
  2. As a result of the Respondent’s failure to cooperate with Staff’s investigation, Staff has been unable to determine the full nature and extent of his conduct, including whether he knew that the loan documents described above were fabricated, his role in producing the fabricated loan documents, and whether he had knowledge of the falsified loan applications submitted by Kumar.
  3. By virtue of the foregoing, the Respondent failed to cooperate with Staff’s investigation into his conduct, contrary to section 22.1 of MFDA By-law No. 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: Paul Blasiak
Email: [email protected]

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 [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.

[1] In September 2009, the registration category mutual fund salesperson was changed to “dealing representative” when National Instrument 31-103 came into force.
[2] Kumar was the respondent in MFDA Case No. 201859. Following a disciplinary hearing, an MFDA Hearing Panel determined that Kumar, among other things, submitted falsified loan applications for himself, arranged for two individuals to submit falsified loan applications, and processed a falsified loan application for a client.