MFDA Notice of Hearing

View and Download English PDF
HomeCurrent Hearings202050 - Viet Ton-That › NOH202050

202050

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

Viet Ton-That

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 February 16, 2021 at 10:30 a.m. (Eastern), or as soon thereafter as the appearance can be held, concerning a disciplinary proceeding commenced by the MFDA against Viet Ton-That (“Respondent”). Members of the public who would like to listen to the teleconference should contact hearings@mfda.ca to obtain particulars.

DATED: Nov 23, 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 February 14, 2018 and October 19, 2018, the Respondent misappropriated, or failed to account for, monies from two clients, thereby failing to deal fairly, honestly and in good faith with the clients, failing to observe high standards of ethics and conduct in the transaction of business, and engaging in business conduct or practice unbecoming or detrimental to the public interest, contrary to MFDA Rule 2.1.1.

Allegation #2: Between no later than February 2018 and October 22, 2018, the Respondent engaged in personal financial dealings with a client by borrowing monies from a client, thereby giving rise to a conflict or potential conflict of interest which the Respondent failed to disclose to the Member or otherwise 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, 1.1.2, 2.5.1, and 2.1.1.

Allegation #3: Commencing December 20, 2019, the Respondent failed to cooperate with an investigation by MFDA Staff 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 April 8, 2014 to October 22, 2018, the Respondent was registered in Ontario as a dealing representative with Investors Group Financial Services Inc., a Member of the MFDA (the “Member”).
  2. On October 22, 2018, the Member terminated the Respondent. The Respondent is no longer registered in the securities industry in any capacity.
  3. At all material times, the Respondent conducted business from a branch of the Member located in Brampton, Ontario.

Allegation #1 – The Respondent misappropriated monies from clients

  1. In or about May 2014, clients VN and HT, spouses, became clients of the Member. At all material times, the Respondent serviced their mutual fund accounts.
  2. In or about February 2018, the Respondent recommended to clients VN and HT that they contribute to, and purchase mutual fund investments in, their spousal registered retirement savings plan (“RRSP”) and client VN’s tax free savings accounts (“TFSA”).
  3. Further to the Respondent’s instructions, between February 14, 2018 and February 25, 2018, client VN sent a total of approximately $13,412 by six INTERAC electronic transfers to the Respondent’s email address for investment in the clients’ accounts at the Member, as follows:

Date of Electronic Transfer

Amount

Comments

February 14, 2018

$3,000

For spousal RRSP contribution

February 15, 2018

$3,000

N/A

February 16, 2018

$2,000

Last deposit for spousal RRSP.

February 21, 2018

$2,950

TFSA contribution

February 24, 2018

$1,756

TFSA

February 25, 2018

$ 706

TFSA

Total: $13,412

 

  1. As described in the chart above, client VN provided comments at the time of sending the electronic transfers that informed the Respondent that the electronic transfers dated February 14, 15, and 16, 2018 totaling $8,000 were intended to be spousal RRSP contributions, and the February 21, 24 and 25, 2018 electronic transfers totaling $5,412 were for investment in client VN’s TFSA.
  2. The Respondent deposited the entirety of the monies sent to him by clients VN and HT into his personal bank account.
  3. None of the monies that client VN and HT provided to the Respondent as described in paragraphs 6 and 7 above were used to purchase any investments in the clients’ investment accounts at the Member.
  4. Commencing February 27, 2018, client VN repeatedly inquired about the status of the $13,412 that he and client HT provided for investment in their investment accounts at the Member. Clients VN and HT contacted the Respondent as they had not received tax receipts, and had not seen records in their account statements indicating that the monies that they sent to the Respondent in February 2018 had been invested in their investment accounts at the Member.
  5. In response to client VN’s inquiries, the Respondent falsely informed client VN that the $13,412 had been invested, and that the reason that they had not received tax receipts or that the investments did not appear on the clients’ account statements were the result of the Member’s slow or malfunctioning “online systems”.
  6. On October 19, 2018, client VN complained to the Member that, among other things, the Respondent had misappropriated $13,412 intended for his mutual fund accounts, and had further borrowed $500 from him.
  7. On or about October 19, 2018, the Respondent sent $18,000 to client VN, following which client VN withdrew his complaint.
  8. By engaging in the conduct described above, the Respondent misappropriated, or failed to account for, approximately $13,412 from clients VN and HT, thereby failing to deal fairly, honestly and in good faith with the clients, failing to observe high standards of ethics and conduct in the transaction of business, and engaging in business conduct or practice unbecoming or detrimental to the public interest, contrary to MFDA Rule 2.1.1.

Allegation #2 – The Respondent borrowed monies from a client

  1. The Member’s policies and procedures prohibited Approved Persons from borrowing from clients.
  2. In or about February 2018, the Respondent solicited and obtained a $500 personal loan from client VN (the “$500 loan”).
  3. On or about October 11, 2018, further to requests made by client VN to the Respondent, the Respondent sent $550 to client VN as reimbursement of the $500 loan principal plus $50 in interest.
  4. The solicitation of a loan from client VN constituted personal financial dealings that gave rise to a conflict or potential conflict of interest.
  5. At no time did the Respondent disclose to the Member that he had borrowed monies from client VN, nor did he obtain approval to do so.
  6. By soliciting and obtaining the $500 loan from client VN, the Respondent engaged in personal financial dealings with a client, which gave rise to a conflict or potential conflict of interest which the Respondent failed to disclose to the Member or otherwise address by the exercise of responsible business judgment influenced only by the best interests of the client, contrary to Member’s policies and procedures and MFDA Rules 2.1.4, 1.1.2, 2.5.1, and 2.1.1.

Allegation #3 – The Respondent failed to cooperate with an investigation by the MFDA

  1. On December 4, 2019, the Respondent attended an interview with MFDA Staff pursuant to section 22.1 of MFDA By-law No. 1 with respect to, among other matters, his dealings with clients VN and HT (the “Interview”).
  2. During the Interview, the Respondent undertook to provide MFDA Staff with documents requested by MFDA Staff, including, the following (the “Undertaking Documents”):
    1. copies of all communications with client VN regarding personal loans, including the initial communication where the Respondent solicited the client for the Loan; and
    2. copies of all banking records for any bank accounts held or controlled by the Respondent, including any line of credit accounts or chequing or savings accounts, for the period of February 14 to November 3, 2018.
  3. On December 5, 2019, MFDA Staff sent a letter to the Respondent requesting that he provide the Undertaking Documents no later than December 20, 2019.
  4. The Respondent did not provide the Undertaking Documents by December 20, 2019, or at any time thereafter.
  5. On January 7 and 9, 2020, MFDA Staff sent emails to the Respondent, again requesting that he provide the Undertaking Documents. On January 9, 2020, MFDA Staff also left a voice message for the Respondent requesting the Undertaking Documents. The Respondent did not respond to those emails or MFDA Staff’s voice message.
  6. On January 14, 2020, MFDA Staff sent a letter to the Respondent reminding him of his obligations as a former Approved Person of the MFDA to cooperate with Staff during the course of an investigation, and again requested that he provide the Undertaking Documents. The Respondent was informed that his failure to cooperate with MFDA Staff’s requests could result in disciplinary proceedings being commenced against him.
  7. On January 22, 2020, the Respondent sent an email to MFDA Staff stating, among other things: “…I will be back on Jan 29 and will contact you shortly”. The Respondent never contacted MFDA Staff further to his January 22, 2020 email.
  8. On January 30, 2020, Staff sent an email to the Respondent asking, among other things, that he contact Staff to discuss providing the Undertaking Documents.
  9. To date, the Respondent has not provided the Undertaking Documents to MFDA Staff. As a result, MFDA Staff has been unable to determine the full nature and extent of the Respondent’s dealings with clients VN and HT, including whether he obtained any further monies from clients VN and HT or any other clients of the Member.
  10. By engaging in the conduct described above, commencing December 20, 2019 the Respondent failed to cooperate with an MFDA Staff 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: 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.

781765