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MFDA Notice of Hearing

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HomeCurrent Hearings202034 - Jewel Mary Henricks › NOH202034

This is a Third Party Document.

202034

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

Jewel Mary Henricks

NOTICE OF HEARING

NOTICE is hereby given that a first appearance will take place by teleconference before a hearing panel of the Pacific Regional Council (“Hearing Panel”) of the Mutual Fund Dealers Association of Canada (“MFDA”) on September 8, 2020 at 10:00 a.m. (Pacific), or as soon thereafter as the appearance can be held, concerning a disciplinary proceeding commenced by the MFDA against Jewel Mary Henricks (“Respondent”). Members of the public who would like to listen to the teleconference should contact hearings@mfda.ca to obtain particulars.

DATED: Jul 6, 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: In June 2017, the Respondent accepted a $5,000 cheque from a client to place in a “gifting program”, which the Respondent deposited into her personal bank account, thereby engaging in personal financial dealing with a client that gave rise to a conflict of interest that the Respondent did not disclose to the Member or address by the exercise of responsible business judgment influenced only by the best interests of the client, contrary to the Member’s policies and procedures and MFDA Rules 2.1.4, 2.1.1, 1.1.2, and 2.5.1.

Allegation #2: On or around July 7, 2017, the Respondent deposited proceeds of redemptions from the account of a client at the Member totaling $3,508.82 into her personal bank account, thereby engaging in personal financial dealings with a client which gave rise to a conflict of interest that she did not disclose to the Member or address by the exercise of responsible business judgment influenced only by the best interests of the client, contrary to the Member’s policies and procedures and MFDA Rules 2.1.4, 2.1.1, 1.1.2, and 2.5.1.

Allegation #3: Between February 2016 and February 2018, the Respondent falsely recorded the home address of two clients using her own business address on three client account application forms and falsely recorded the email addresses of three clients using her own personal email address on five client account application forms, contrary to the Member’s policies and procedures and MFDA Rules 2.1.1, 1.1.2, and 2.5.1.

Allegation #4: Commencing on or about September 21, 2018, the Respondent failed to cooperate with MFDA Staff’s investigation into her 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 April 9, 2015 to October 9, 2018, in British Columbia, and from August 25, 2015 to October 9, 2018, in Alberta, the Respondent was registered as a dealing representative with PFSL Investments Canada Ltd. (the “Member”), a Member of the MFDA.
  2. On October 9, 2018, the Respondent was terminated by the Member as a result of the conduct that is the subject of this proceeding.
  3. At all material times, the Respondent conducted business in the Prince George, British Columbia area.
  4. The Respondent is not currently registered in the securities industry in any capacity.

Allegation #1 – Personal Financial Dealings with Client CM

  1. At all material times, the Member’s policies and procedures required that its Approved Persons address conflicts of interest by the exercise of responsible business judgment influenced only by the best interests of the client.
  2. At all material times, client CM was a client of the Member whose accounts were serviced by the Respondent.
  3. In June 2017, client CM attended at the Respondent’s office, at which time he overheard the Respondent discussing a “gifting program” with a friend.
  4. The “gifting program” is a pyramid scheme, wherein individuals were asked to pay $5,000 into the “gifting program” on the promise of obtaining an increased payment in return for recruiting other individuals into the scheme.
  5. After hearing about the “gifting program”, client CM told the Respondent that he wished to participate. He gave the Respondent a cheque for $5,000 with the payee line of the cheque left blank. Client CM asked the Respondent to provide the $5,000 to the “gifting program” on client CM’s behalf so that he could participate.
  6. The Respondent filled in the payee line on the cheque with her own name. On or about June 16, 2017, the Respondent deposited the cheque into her personal bank account.
  7. The Respondent did not disclose to the Member her acceptance of the $5,000 cheque from client CM and the deposit of the monies into her bank account.
  8. Client CM did not receive any payment from the “gifting program”, and did not receive the return of his monies from the “gifting program” or from the Respondent.
  9. The acceptance by the Respondent of $5,000 from client CM that she deposited into her personal bank account gave rise to a conflict or potential conflict of interest, which she 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 the Member’s policies and procedures and MFDA Rules 2.1.4, 2.1.1, 1.1.2, and 2.5.1.

Allegation #2 – Personal Financial Dealings with Client RL

  1. On February 2, 2016, client RL opened an RRSP investment account with the Member that was serviced by the Respondent.
  2. On the New Account Application Form (the “NAAF”), the Respondent falsely recorded client RL’s mailing address on the NAAF using the Respondent’s business address in St. George, British Columbia. This was done at client RL’s request because client RL travelled frequently for his employment and was therefore unavailable or unable to receive documents that were delivered by mail such as account statements.
  3. Commencing on June 27, 2017, the Respondent facilitated the processing of two redemptions totaling $3,902 from client RL’s RRSP investment account, resulting in net proceeds of $3,509.82. The Respondent arranged for the redemption cheques to be sent to client RL’s address on record with the Member. As described above, client RL’s address was recorded as the Respondent’s business address.
  4. The Respondent received the cheques comprising the proceeds of redemptions from client RL’s account at her business address, and on or about July 7, 2017, the Respondent deposited the redemption cheques into her personal bank account.
  5. The Respondent did not disclose to the Member her deposit of client RL’s redemption cheques into her personal bank account.
  6. Subsequently, the Respondent met with client RL and provided the redemption proceeds to him in cash.
  7. By engaging in the conduct described above, the Respondent had a conflict or potential conflict of interest, which she 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 the Member’s policies and procedures and MFDA Rules 2.1.4, 2.1.1, 1.1.2, and 2.5.1.

Allegation #3 – False Recording of Client Contact Information

  1. At all material times, the Member’s policies and procedures required its Approved Persons to honestly and accurately complete all account applications and/or service forms.
  2. The Respondent falsely recorded client contact information as follows:
    1. on or about February 2, 2016, as described above at paragraph 14, the Respondent falsely recorded client RL’s home address using the Respondent’s business address on a NAAF;
    2. on or about November 23, 2016, the Respondent falsely recorded client WM’s home address using the Respondent’s business address on a NAAF and an Application for Investment Account;
    3. on or about January 30, 2018, the Respondent falsely recorded client RS’s email address using the Respondent’s email address on two NAAFs;
    4. on or about February 1, 2018, the Respondent falsely recorded client CM’s email address using the Respondent’s email address on a NAAF; and
    5. on or about February 2, 2018, the Respondent falsely recorded client JT’s email address using the Respondent’s email address on two NAAFs.
  3. Clients’ home addresses and email addresses are used by the Member and fund companies to deliver mandatory disclosure and reporting including, among other things, point of sale documentation, transaction activity, confirmations from fund companies, quarterly account statements from the Member, and annual account statements from fund companies.
  4. By engaging in the conduct described above, the Respondent failed to observe high standards of ethics and conduct in the transaction of business, and engaged in business conduct or practice which is unbecoming or detrimental to the public interest, contrary to the Member’s policies and procedures and MFDA Rules 2.1.1, 1.1.2, and Rule 2.5.1.

Allegation #4 – Failure to Cooperate

  1. On June 13, 2018, the Staff of the MFDA (“Staff”) commenced a review of the Respondent’s conduct in response to a report on the Member Event Tracking System, concerning a complaint made by client CM against the Respondent.
  2. From June 13, 2018 to September 21, 2018, Staff directed questions and requests for documents to the Respondent through the Member, which the Respondent answered.
  3. On September 21, 2018, Staff sent an email to the Member, requesting that the Respondent, among other questions, advise whether she had invested in the “gifting program” and provide additional bank statements.
  4. On September 28, 2018, the Member wrote to Staff that due to health matters, the Respondent was unable to provide a response to Staff’s request until October 15, 2018.
  5. On October 9, 2018, the Member terminated the Respondent.
  6. The Respondent did not answers Staff’s questions or provide the documents requested in Staff’s September 21 email.
  7. On March 4, 2019, Staff sent a letter by registered mail to the Respondent, requesting that the Respondent contact Staff to schedule an interview to provide information relevant to Staff’s investigation into his conduct. The Respondent signed for the letter on March 7, 2019.
  8. The Respondent did not reply to the letter and did not contact Staff to schedule an interview.
  9. On April 3, 2019, Staff sent a letter by process server to the Respondent, advising the Respondent that she was required to contact Staff by no later than April 17, 2019 to advise of her availability for an interview between June 10, 2019 and June 14, 2019. The letter stated that if the Respondent did not reply to Staff by April 17, 2019, the interview would be held on June 12, 2019.
  10. The letter was delivered personally to the Respondent on April 5, 2019.
  11. The Respondent did not reply to the April 3, 2019 letter and did not contact Staff to schedule an interview as requested.
  12. The Respondent did not attend the interview scheduled for June 12, 2019.
  13. As a result of the Respondent’s failure to cooperate, Staff cannot determine the full nature and extent of the Respondent’s conduct described above, including whether the Respondent engaged in personal financial dealings with other clients or had further involvement with the “gifting program”.
  14. By engaging in the conduct described above, the Respondent failed to cooperate with Staff’s investigation into her 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: Alan Melamud
Email: amelamud@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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