Skip to Main Content

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: Arman Pekel

NOTICE OF HEARING

NOTICEis 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 March 31, 2020 at 10:30 a.m. (Eastern), or as soon thereafter as the hearing can be held, concerning a disciplinary proceeding commenced by the MFDA against Arman Pekel (“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: Between August 17, 2014 and March 8, 2018, the Respondent opened a new account for a client and falsely recorded the client’s address on the records of the Member as the Respondent’s personal address, contrary to the Member’s policies and procedures, and MFDA Rules 2.1.1, 2.10, 2.5.1, or 1.1.2.

Allegation #2: Between February 1, 2017 and March 8, 2017, the Respondent deposited four cheques payable to a client, which constituted the proceeds of redemptions from the client’s investment account totaling approximately $14,038.25, into his personal bank account, thereby engaging in personal financial dealings with a client which gave rise to a conflict of interest that he failed to disclose to the Member or address by the exercise of responsible business judgment influenced only by the best interests of the client, contrary to MFDA Rules 2.1.4 or 2.1.1.

Allegation #3: Between March 6, 2017 and January 2, 2018, the Respondent engaged in an outside activity which was not disclosed to and approved by the Member, contrary to the Member’s policies and procedures, and MFDA Rules 1.3, 2.1.1, 2.5.1, or 1.1.2.

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 31, 2013 to January 2, 2018, the Respondent was registered in Ontario as a dealing representative (formerly known as a mutual fund salesperson) with Investors Group Financial Services Inc. (the “Member”), a Member of the MFDA.
  2. On January 2, 2018, the Member terminated the Respondent.
  3. The Respondent is not currently registered in the securities industry in any capacity.
  4. At all material times the Respondent carried on business in Toronto, Ontario.

Allegation #1 – Opening an Account for a Client Using the Respondent’s Address

  1. At all material times, the Member’s policies and procedures provided that the address of any client on the records of the Member must be that of the client and cannot be the Respondent’s personal or business address.
  2. On or about April 2, 2008, client AU became a client of the Member. Initially, she opened a joint account with her spouse that was serviced by a different Approved Person of the Member.
  3. Commencing in August 2014, the Respondent became the Approved Person responsible for servicing client AU’s accounts at the Member.
  4. On August 17, 2014, the Respondent prepared a New Account Application Form (“NAAF”) for client AU and open a registered retirement savings plan (“RRSP”) with the Member in client AU’s name. The Respondent falsely recorded client AU’s address on the NAAF as the Respondent’s personal residential address in Toronto, Ontario.
  5. At the time the Respondent prepared the NAAF, client AU was teaching at a university in Turkey.
  6. In or about January 2016, the Respondent moved to a different residence in Toronto, Ontario.
  7. On or about February 1, 2017, the Respondent falsely updated client AU’s address on the records of the Member to the Respondent’s new personal residential address.
  8. As described in greater detail below, on or about February 1, 2017, client AU instructed the Respondent to redeem her investments in her RRSP account and close the account with the Member.
  9. By opening a new account with the Member for a client and falsely recording the client’s address on the records of the Member as the Respondent’s personal residential address, the Respondent engaged in conduct contrary to the Member’s policies and procedures, and MFDA Rules 2.1.1, 2.10, 2.5.1, or 1.1.2.

Allegation #2 – Personal Financial Dealings with a Client

  1. On or about February 1, 2017, client AU instructed the Respondent to redeem her investments in her RRSP account with the Member and close the account.
  2. Commencing February 1, 2017, the Respondent facilitated four separate redemptions from client AU’s account. On each occasion, he submitted the redemption to the Member for processing, and arranged for the redemption proceeds to be paid by cheque payable to client AU and delivered to client AU’s address on record with the Member. As described above, the Respondent had recorded client AU’s address on record with the Member as the Respondent’s personal residential address in Toronto.
  3. The Respondent received the four cheques comprising the proceeds of redemptions from client AU’s accounts at his personal residential address.
  4. The Respondent endorsed the four cheques himself or applied a stamp of the client’s signature on the cheques.
  5. The Respondent deposited the four cheques into his own personal bank account on the dates and in the amounts listed below:
    1. February 1, 2017 – $4,000;
    2. February 2, 2017 – $4,000;
    3. February 27, 2017 – $4,200; and
    4. March 8, 2017 – $1,838.25
  6. The Respondent’s conduct gave rise to an actual or potential conflict of interest which the Respondent failed to disclose to the Member, or address by the exercise of responsible business judgment influenced only by the best interests of the client.
  7. By virtue of the forgoing, the Respondent engaged in personal financial dealings with client AU, contrary to MFDA Rules 2.1.4 or 2.1.1.

Allegation #3 – Undisclosed and Unapproved Outside Activities

  1. At all material times, the Member’s policies and procedures required its Approved Persons to disclose to, and obtain approval from, the Member prior to engaging in any outside activities.
  2. On April 6, 2017, the Respondent entered into an agreement with a medical supply company that specializes in low intensity light therapy. Under the terms of the agreement, the Respondent agreed to, among other things, act as an independent agent of the medical supply company to identify international distributors or a purchaser for the company. Pursuant to the agreement, the Respondent was eligible to receive a “success fee” from the company, including 10% commission for any sales of systems of the company that the Respondent initiated and closed.
  3. The Respondent did not inform the Member or obtain approval from the Member to engage in outside business activities with the medical supply company.
  4. Pursuant to his agreement with the medical supply company, the Respondent engaged in the following activities:
    1. in or about May 2017, he travelled to Turkey to solicit international purchasers or distributors for the medical supply company;
    2. in September 2017, he organized meetings between a delegation from a Turkish company and the principal of the medical supply company; and
    3. between April 2017 and December 2017, the Respondent also pursued opportunities for the medical supply company in the insurance industry.
  5. In December 2017, a Turkish company that had been introduced to the medical supply company by the Respondent signed a distribution agreement. As a result, the Respondent received a total of approximately $7,438 in fees from the medical supply company.
  6. On January 2, 2018, the Member terminated the Respondent’s registration.
  7. By virtue of the foregoing, the Respondent engaged in an outside activity which was not disclosed to and approved by the Member, contrary to the Member’s policies and procedures, and MFDA Rules 1.3, 2.1.1, 2.5.1, or 1.1.2.

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: David Barbaree
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) 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.

721907