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MFDA Notice of Hearing

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HomeCurrent Hearings202027 - Amin Mohammed Ali › NOH202027

This is a Third Party Document.

202027

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

Amin Mohammed Ali

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”) on September 8, 2020 at 10:00 a.m. (Eastern), or as soon thereafter as the appearance can be held, concerning a disciplinary proceeding commenced by the MFDA against Amin Mohammed Ali (“Respondent”). Members of the public who would like to listen to the teleconference should contact hearings@mfda.ca to obtain particulars.

DATED: Jun 4, 2020

"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 2006 and February 13, 2018, the Respondent engaged in outside activities that were not disclosed to or approved by the Member or entered into unauthorized referral arrangements with third parties by:

  1. acting as an officer and director of a corporation that produces software and provides services in the American healthcare sector and its subsidiary corporation;
  2. offering financial planning, consulting, estate planning, tax preparation or other services to clients or other individuals for which he charged fees;
  3. charging fees to clients or other individuals for referrals to third party professionals;
  4. owning, maintaining and renting out at least three rental properties;

contrary to the Member’s policies and procedures and MFDA Rules 1.2.1(d)[1] [now Rule 1.3.2], 2.4.2, 2.5.1, 2.10 and 1.1.2.

Allegation #2: Between 2006 and February 13, 2018, the Respondent provided false and misleading responses to the Member, contrary to MFDA Rule 2.1.1(b) and (c).

Allegation #3: Commencing no later than June 18, 2019, the Respondent failed to cooperate with an investigation  of his conduct by Staff of the MFDA (“Staff”), 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 May 4, 2006 to February 13, 2018, the Respondent was registered in Ontario as a mutual fund salesperson / dealing representative,[2] with Quadrus Investment Services Inc. (the “Member”), a Member of the MFDA
  2. The Respondent is no longer registered in the securities industry.
  3. At all material times, the Respondent conducted business in Burlington, Ontario.

Allegation #1 – The Respondent Engaged in Undisclosed Outside Business Activities

  1. At all material times, the Member required its dealing representatives such as the Respondent to obtain approval from the Member prior to engaging in any outside business activities.
  2. The Respondent requested and received approval from the Member to act as an insurance agent and sell insurance products.
  3. In 2007, the Respondent disclosed to the Member that he incorporated and operated a personal corporation called Anusha Financial Group Inc. (“Anusha Financial”) and he obtained approval from the Member to operate Anusha Financial and to maintain a bank account in its name.
  4. The Respondent did not request or obtain approval from the Member to engage in any outside business activities other than acting as an insurance agent and operating his personal corporation Anusha Financial to receive his compensation from securities and insurance business.
  5. The Respondent engaged in the following outside activities without the knowledge or approval of the Member: the provision of financial planning services, consulting services, estate planning and tax preparation services. The Respondent charged fees to clients or otherwise earned or intended to earn income or profit from these activities.
  6. The Respondent also received referral fees from third party professionals pursuant to referral arrangements that he personally entered into with them for his referral of clients. The Respondent did not inform the Member that he had entered into referral arrangements with third parties and was receiving referral fees from third parties and such referral arrangements were not compliant with the requirements of MFDA Rule 2.4.2, as, for example:
    1. no referral arrangements were documented in an agreement between the Member and the third parties to whom referrals were made as required by MFDA Rule 2.4.2(b)(i); and
    2. the referral fees received by the Respondent were not disclosed to the Member or recorded in its records, contrary to MFDA Rule 2.4.2(b)(ii).
  7. The Respondent or a company that he controlled received fees or other payments or profits totaling more than $10,000 for services that he claims that he provided to clients by engaging in the unapproved activities that are referenced in paragraphs 8 and 9 above.
  8. The Respondent also failed to disclose to the Member or obtain prior written approval from the Member prior to engaging in the following additional outside activities:
    1. he was an officer and director of two corporations:
      1. The Shams Group Ltd. (“TSG”), an American healthcare software and service provider located in Texas, USA; and
      2. The Shams Group Canada Ltd., a subsidiary of, or corporation related to, TSG; and
    2. he owned, maintained and rented out at least three rental properties.
  9. By engaging in the conduct described above, the Respondent engaged in unapproved outside activities or unauthorized referral arrangements with third parties, contrary to the policies and procedures of the Member and MFDA Rules 1.2.1(d) [now Rule 1.3.2], 2.4.2, 2.5.1, 2.10, 1.1.2 and 2.1.1.

Allegation #2 – The Respondent Provided False Responses to the Member

  1. At all times while he was registered with the Member, the Respondent was required to sign annual Member “Statements of Acknowledgment” concerning his activities as an Approved Person.
  2. The Respondent completed and signed Statements of Acknowledgement every year while he was registered with the Member. In each of these Statements of Acknowledgement, the Respondent certified, among other things, that:
    1. he had “received and read” the Member’s “Code of Business Conduct” and agreed to abide by it; and
    2. he did not have or engage in any undisclosed outside activities or referral arrangements.
  3. On November 29, 2016, the Respondent was interviewed by a compliance officer of the Member as part of the Member’s audit of his branch. During the interview, the Respondent made the following statements to the Member, among others, which he knew or ought to have known were false:
    1. he did not have, nor did he engage in, disclosed or undisclosed outside business activities such as, among other things, tax preparation services, acting as an officer or director of a corporation, or owning rental properties; and
    2. he did not have, nor did he maintain, undisclosed referral arrangements with third parties for which he received compensation in the form of referral fees.
  4. By making false and misleading statements to the Member as described above, the Respondent contravened MFDA Rule 2.1.1(b) and (c).

Allegation #3 – The Respondent Failed to Provide Records Requested by Staff

  1. In April 2018, Staff commenced an investigation of the Respondent’s activities after complaints were received by the Member and reported to the MFDA concerning alleged misconduct of the Respondent. The Member raised concerns about the fact that client money that was received by the Respondent had been deposited into bank accounts that he controlled.
  2. On February 28, 2019, Staff requested that the Respondent provide, no later than April 5, 2019, copies of statements for all bank accounts held in the Respondent’s name or under his control during the period when he was an Approved Person of the Member, as well as copies of cheques, transfers and e-transfers over $1,000 during the same time period.
  3. On April 30, 2019, the Respondent provided to Staff a copy of the bank statement for his personal corporation, Anusha Financial, for the period of November 30, 2017 to January 31, 2018.
  4. On May 28, 2019, the Respondent provided to Staff a copy of the bank statement for Anusha Financial for the period of January 5, 2010 to December 30, 2013.
  5. On May 2, 2019 and on May 30, 2019, the Respondent informed Staff that he would provide the rest of the bank records that Staff had requested as soon as he was able to obtain them from the bank.
  6. On June 4, 2019, following an interview that the Respondent attended with Staff, Staff again requested that the Respondent provide, the banking records that had previously been requested.
  7. On June 18, 2019, the Respondent’s counsel sent an email to Staff stating, among other things:
    1. [The Respondent] … no longer wishes to participate in the interview process with the MFDA. As such, he will not provide any further bank statements, nor provide information … to respond to the [the information requested by Staff], or provide information to … provide responses to the written interrogatories.
  8. The Respondent has not provided many of the banking records requested by Staff during the course of its investigation of his conduct.
  9. As a result of the failure of the Respondent to provide the banking records requested by Staff, Staff has been unable to fully investigate the extent of the Respondent’s deposits of client monies into bank accounts that he controlled.
  10. By failing to provide banking records requested by Staff during the course of its investigation of his conduct, the Respondent has failed to cooperate with Staff’s investigation, 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: Francis Roy
Email: froy@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]Effective December 3, 2010, former MFDA Rule 1.2.1(d) was renumbered as MFDA Rule 1.2.1(c).  Effective March 17, 2016, former MFDA Rule 1.2.1(c) was amended and renumbered as MFDA Rule 1.3.
[2] On September 28, 2009, the registration category mutual fund salesperson was changed to “dealing representative” when National Instrument 31-103 came into force.

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