MFDA Notice of Hearing

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201973

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

Jose Ireneo Manalastas

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 February 4, 2020 at 10:00 a.m. (Eastern), or as soon thereafter as the hearing can be held, concerning a disciplinary proceeding commenced by the MFDA against Jose Ireneo Manalastas (“Respondent”).

DATED: Nov 22, 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 January 2017 and November 2017, the Respondent borrowed a total of $6,000 from 2 clients, contrary to the policies and procedures of the Member and MFDA Rules 2.1.1, 2.1.4, 2.5.1 and 1.1.2.

Allegation #2: Commencing July 27, 2018, the Respondent failed to cooperate with MFDA Staff’s investigation into his conduct, contrary to section 22 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 May 2014 to November 2, 2017, the Respondent was registered in Ontario as a Dealing Representative with CIBC Securities Inc. (the “Member”).
  2. On November 7, 2017, the Member terminated the Respondent as a result of the conduct that is the subject of this proceeding. The Respondent is no longer registered in the securities industry in any capacity.
  3. At all material times, the Respondent conducted business at a branch in the Scarborough, Ontario area (the “Branch”). The Respondent was also an employee of CIBC bank, which operated a bank branch at the Branch location.

Allegation #1: Borrowing monies from clients

  1. At all material times, the Member’s policies and procedures prohibited its Approved Persons from borrowing monies from a client.
Client RR
  1. At all material times, client RR was a client of the Member whose account was serviced by the Respondent.
  2. On or about January 3, 2017, the Respondent asked client RR to lend the Respondent $3,000. Client RR agreed to lend that amount to the Respondent by providing the Respondent with monies obtained from client RR’s personal line of credit at CIBC bank.
  3. On or about January 3, 2017, with the knowledge of client RR, the Respondent accessed CIBC bank’s internal system and withdrew $3,000 cash from client RR’s personal line of credit.
  4. The Respondent used the monies he obtained from client RR to pay personal expenses.
  5. The Respondent made the following payments to client RR as repayment of the amounts owing pursuant to the loan:
    1. $300 on or about January 13, 2017;
    2. $200 on or about February 10, 2017;
    3. $150 on or about May 30, 2017.
  6. On or about October 28, 2017, client RR attended at the Branch in order to speak with the Respondent about the monies still owing pursuant to the loan. At that time, Client RR advised a representative at the Branch about the loan he provided to the Respondent.
  7. The Member then commenced an investigation into the Respondent’s conduct, and terminated the Respondent.
  8. Subsequent to his termination, the Respondent made further payments on the amounts owing to client RR as follows:
    1. $500 in or around November 2017; and
    2. $100 on or about December 12, 2017.
  9. In total, the Respondent paid approximately $1,250 to client RR as repayment of the amounts he borrowed.
Client EM
  1. During the Member’s investigation of the Respondent, the Respondent advised the Member that on or about February 7, 2017, the Respondent borrowed $3,000 from client EM, which the Respondent used to pay personal expenses.
  2. The Respondent did not disclose to the Member that he obtained monies from clients RR and EM as described above.
  3. By borrowing a total of $6,000 from 2 clients as described above, the Respondent engaged in conduct that gave rise to a conflict or potential conflict of interest that the Respondent failed to disclose to the Member or otherwise address by the exercise of responsible business judgment influenced only by the interests of the client, contrary to the Member’s policies and procedures and MFDA Rules 2.1.1, 2.1.4, 2.5.1 and 1.1.2.

Allegation #2: Failure to Cooperate

  1. On November 10, 2017, MFDA Staff commenced a review of the Respondent’s conduct in response to a report from the Member relating to the events described above.
  2. In November and December 2017, MFDA Staff sent two letters by registered mail to the Respondent’s last known address, asking him to provide a written statement about the loans he obtained from the clients as described above. Canada Post returned both these letters to the MFDA because the Respondent could not be located at the address provided.
  3. On June 14, 2018, after receiving an updated address from the Member, MFDA Staff sent the Respondent an interview request letter by regular and registered mail. On June 18, 2018, the Respondent signed for the registered letter. The Respondent did not respond to MFDA Staff’s letter.
  4. On July 3, 2018, MFDA Staff sent a further letter to the Respondent requesting an interview, which was served personally upon him.
  5. On July 17, 2018, the Respondent emailed MFDA Staff stating that he had received MFDA Staff’s letter requesting an interview and would respond by July 20, 2018 with his availability to schedule an interview.
  6. On July 17, 2018, MFDA Staff replied to the Respondent by email and provided him with potential dates for the interview and asked him to confirm his availability.
  7. On August 8, 2018, after the Respondent failed to reply to MFDA Staff’s email, MFDA Staff emailed the Respondent and asked him to confirm whether he will attend for an interview by August 14, 2018.
  8. The Respondent failed to contact MFDA Staff to schedule an interview.
  9. As a result of the Respondent’s failure to cooperate, MFDA Staff is unable to determine the full nature and extent of the Respondent’s conduct.
  10. By failing to cooperate with Staff’s investigation into his conduct, the Respondent acted contrary to section 22 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: Sarah Glickman
Email: sglickman@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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