Notice of Hearing

NOTICE is further given that the MFDA alleges the following violations of the By-laws, Rules or Policies of the MFDA:

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 August 3, 2016 to May 15, 2019, the Respondent was registered in Alberta as a dealing representative with Investors Group Financial Services Inc. (the “Member”), a Member of the MFDA.
2. On May 15, 2019, the Member terminated the Respondent, and he is not currently registered in the securities industry in any capacity.
3. At all material times, the Respondent carried on business in the Calgary, Alberta area.

Allegation #1 – Personal Financial Dealings with a Client

4. At all material times, the Member’s policies and procedures prohibited its Approved Persons from borrowing from clients under any circumstances.
5. At all material times, the Respondent’s father, client IL, held a Registered Retirement Investment Fund (“RRIF”) account and a Tax Free Savings Account (“TFSA”) with the Member. The Respondent was the Approved Person responsible for servicing client IL’s accounts at the Member. Client IL was approximately 82 years of age, and was a vulnerable investor.
6. On or about December 1, 2017, the Respondent submitted account forms to the Member to process a $2,604 redemption from client IL’s RRIF account. Subsequently, the Member issued a cheque for the proceeds that was payable to client IL (“Cheque #1”).
7. On December 15, 2017, the Respondent deposited Cheque #1 into the Respondent’s personal bank account by endorsing the back of the cheque with his own signature.
8. On or about January 22, 2018, the Respondent submitted account forms to the Member to process a second redemption totaling $25,000 from client IL’s TFSA account. Subsequently, the Member issued a cheque for the proceeds that was payable to client IL (“Cheque #2).
9. On February 6, 2018, the Respondent deposited Cheque #2 into the Respondent’s personal bank account by endorsing the back of the cheque with his own signature.
10. The Respondent did not disclose to the Member that he deposited the cheques payable to client IL comprised of redemption proceeds from the investment accounts of client IL into his bank account.
11. In March 2019, client IL complained to the Member that he had not authorized redemptions or received the proceeds of the redemptions described above at paragraphs 6 and 8.
12. During the Member’s investigation into his conduct, the Respondent stated to the Member that the proceeds of the redemptions that he had obtained from client IL’s investment accounts as described above at paragraphs 6 and 8 were gifts and loans respectively from his father.
13. The Member contacted client IL who denied that he had loaned or gifted to the Respondent the monies redeemed from his investment accounts at the Member.
14. As described below, the Respondent failed to cooperate with Staff’s investigation into his conduct. As a result, Staff was unable to determine the full nature and extent of the Respondent’s conduct, including whether the proceeds of redemptions that the Respondent obtained from client IL were obtained with the prior knowledge and authorization of client IL.
15. On April 25, 2019, the Member offered to reimburse client IL $27,604.
16. By virtue of the foregoing, the Respondent engaged in personal financial dealings with a client, which gave rise to a conflict or a 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 best interests of the client, contrary to MFDA Rules 2.1.4 and 2.1.1.

Allegation #2 – Failure to Co-operate with Staff of the MFDA

MFDA Investigation

17. Staff of the MFDA (“Staff”) commenced an investigation into the conduct of the Respondent after receiving information from the Member about the complaint of client IL described above at paragraph 11.
18. During the course of Staff’s investigation, Staff became aware of additional conduct of the Respondent, including his involvement in the planning and promotion of a confectionary trade show that had not been disclosed to or approved by the Member, and arrangements that the Respondent had with his creditors that he had not reported to the Member.

Failure to Cooperate

19. On April 15, 2019, Staff sent a letter by regular and registered mail to the Respondent advising him that Staff had commenced an investigation into allegations that he had redeemed funds from client IL’s account without client IL’s knowledge or authorization. Staff requested that the Respondent provide information regarding the circumstances surrounding the redemptions described above at paragraphs 6 and 8, and about other documentation that gave rise to concerns that other regulatory violations may have occurred. Staff requested that the Respondent respond to this letter by May 7, 2019. The Respondent received and signed for the registered mail on April 17, 2019. The Respondent did not respond to the April 15, 2019 letter from Staff.
20. On May 9, 2019, Staff sent a second letter by regular and registered mail to the Respondent, reiterating its request for the information requested in its April 15, 2019 letter. Staff also requested that the Respondent provide information about his involvement in the trade show. Staff informed the Respondent that should he fail to provide the requested information by May 24, 2019, that that matter may be referred for a review of possible commencement of disciplinary proceedings against him for failing to cooperate. An individual residing at the same address received and signed for the registered letter on May 13, 2019. The Respondent did not respond to the May 9, 2019 letter from Staff.
21. On October 30, 2019, Staff sent a third letter by registered mail to the Respondent requesting that he contact Staff within ten business days to schedule an interview to give information relevant to matters under investigation. The registered letter dated October 30, 2019 was returned to the MFDA office as “Unclaimed”.
22. On November 28, 2019, Staff sent a fourth letter by regular and registered mail to the Respondent, requesting that he contact Staff within ten business days to schedule an interview to answer questions relevant to matters under investigation. An individual residing at the same address received and signed for the registered mail on November 29, 2019. The Respondent did not respond to the letter from Staff.
23. On January 7, 2020, Staff sent a fifth letter via process server to the Respondent requesting that he contact Staff by January 21, 2020 to schedule an interview in February 2020. The January 7, 2020 letter also stated that if the Respondent did not respond by January 21, 2020, an interview would be scheduled on February 6, 2020. On January 7, 2020, the letter was delivered by the process server to the Respondent’s father residing at the same address as the Respondent. The Respondent did not respond to the January 7, 2020 letter from Staff, nor did he attend the interview that was scheduled to take place on February 6, 2020.
24. The Respondent has failed to provide Staff with a written statement, and did not attend an interview to give information relevant to matters under investigation by Staff.
25. Due to the Respondent’s failure to cooperate with Staff’s investigation, Staff has been unable to determine the full nature and extent of the Respondent’s conduct, including:
    1. whether client IL authorized the redemptions from his RRIF and TFSA accounts and deposit of the redemptions proceeds into the Respondent’s personal bank accounts;
    2. whether the Respondent misappropriated monies from client IL;
    3. whether the Respondent deposited other amounts in his personal bank accounts that had been obtained from client IL or other individuals;
    4. whether the Respondent’s involvement with the planning and promotion of the trade show constituted an undisclosed and unapproved outside activity; and
    5. whether the dealings that the Respondent had with his creditors gave rise to an obligation to report to the Member.
26. By virtue of the foregoing, 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.

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
Prairie Regional Office
Suite 850, 800 – 6th Ave SW
Calgary, AB T2P 3G3
Attention: Sakeb Nazim
Email: [email protected]

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 [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.