MFDA Notice of Hearing

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202101

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

Matthew Elliott de Haan

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 March 23, 2021 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 Matthew Elliott de Haan (“Respondent”). Members of the public who would like to listen to the teleconference should contact hearings@mfda.ca to obtain particulars. The Hearing on the Merits will take place in Vancouver, British Columbia.

DATED: Jan 18, 2021

"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 on or about October 29, 2018 and December 3, 2018, the Respondent solicited a client and other individuals to invest in an investment that was not approved for sale by the Member, thereby engaging in securities related business that was not carried on for the account of the Member or through the facilities of the Member, contrary to the Member’s policies and procedures and MFDA Rules 1.1.1, 1.1.2, 2.1.1, and 2.5.1.

Allegation #2: Between on or about October 29, 2018 and December 3, 2018, the Respondent engaged in an unapproved outside activity when he, acting on behalf of a third party company, solicited a client and other individuals to invest in an investment that was not approved for sale by the Member, contrary to the Member’s policies and procedures and MFDA Rules 1.1.2, 1.3.2, 2.1.1, and 2.5.1.

Allegation #3: On or about December 7, 2018, the Respondent provided a false or misleading statement to the Member during the course of an investigation by the Member, contrary to MFDA Rule 2.1.1.

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. Since July 8, 2016, the Respondent was registered as a dealing representative in British Columbia with Sun Life Financial Investment Services (Canada) Inc. (the “Member”), a Member of the MFDA.
  2. On November 27, 2018, the Respondent resigned from the Member effective December 12, 2018, 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 City of Abbotsford, British Columbia area.

Allegation #1 - Securities Related Business Outside the Member

  1. At all material times, the Member’s policies and procedures required its Approved Persons to conduct all securities related business through the Member. Approved Persons were permitted to only offer products approved by the Member.
  2. Impact International Secured Investments Corporation (“Impact”) is a corporation incorporated in British Columbia.
  3. In or about October 2018, the Respondent accepted a sales role with Impact to solicit investors to provide capital to be used by Impact to: (i) sponsor the formation of bonds offered by Impact; (ii) purchase bonds; or (iii) serve as working capital for underlying projects for which Impact was arranging financing.
  4. On or about October 29, 2018, the Respondent and Impact entered into an agreement (the “Agreement”), which provided, among other things, that the Respondent would receive compensation comprised of a 10% commission on closed transactions.
  5. The Respondent obtained promotional materials from Impact to use when soliciting investors to provide capital for a bond that was being arranged by Impact to finance a windfarm project in the United States called “WinGen 7” (the “Investment”). Among other things, the materials provided that:
    1. the WinGen 7 project was an Ultra Green Bond offering for financing the windfarm;
    2. the amount of investment sought was USD $500,000; and
    3. the total forecasted return on $500,000 of investment was a percentage return of 7468% consisting of a share of investment from the purchase of the bond, assets put up to collateralize the bond, and revenue accruing from the operations of the underlying project.
  6. From on or about November 1, 2018 to December 3, 2018, the Respondent solicited at least seven individuals, including one client (collectively, the “Investors”) to invest in the Investment. In particular, the Respondent engaged in one or more of the following activities with the Investors:
    1. introducing the Investors to the opportunity to invest monies in the Investment;
    2. providing the Investors with promotional materials, including the materials described at paragraph 8 above, and advertising that described the Investment;
    3. discussing the terms and features, including purported rates of return, of the Investment with the Investors;
    4. providing the Investors with an assessment of the risks and merits of the Investment; and
    5. recommending the Investment to Investors.
  7. The Respondent did not inform the Member that he entered into the Agreement with Impact, or that he was soliciting the Investors to invest as described above.
  8. The Member did not review or approve the Investment for sale by its Approved Persons.
  9. The Respondent’s activities with respect to the Investment described above were not carried on for the account or through the facilities of the Member.
  10. By virtue of the foregoing, the Respondent solicited a client and other individuals to invest in an investment that was not approved for sale by the Member, thereby engaging in securities related business that was not carried on for the account of the Member or through the facilities of the Member, contrary to the Member’s policies and procedures and MFDA Rules 1.1.1, 1.1.2, 2.1.1, and 2.5.1.

Allegation #2 - Unapproved Outside Activity

  1. At all material times, the Member’s policies and procedures required that its Approved Persons disclose to and obtain written consent from the Member prior to engaging in any business or occupation other than acting as an Approved Person for the Member.
  2. As described above, the Respondent entered into the Agreement with Impact which provided that the Respondent would receive payment of a 10% commission on closed transactions, and, acting on behalf of Impact, solicited investors to invest in the Investment
  3. The Respondent did not disclose to or obtain approval from the Member to enter into the Agreement or to solicit at least one client and other individuals to invest in the Investment as described above.
  4. By virtue of the foregoing, the Respondent engaged in an outside activity which was not disclosed to or approved by the Member, contrary to the Member’s policies and procedures and MFDA Rules 1.1.2, 1.3.2, 2.1.1, and 2.5.1.

Allegation #3 - Misleading the Member

  1. On December 7, 2018, the Member interviewed the Respondent during the course of its investigation into the Respondent’s conduct as described above. During the interview, the Respondent advised the Member that he had solicited investors for Impact, but had not solicited clients to invest in the Investment.
  2. The Respondent’s statement to the Member was false because one of the individuals whom the Respondent had solicited to invest in the Investment was a client of the Member.
  3. By providing a false or misleading statement to the Member, the Respondent engaged in conduct contrary to MFDA Rule 2.1.1.

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
Pacific Regional Office
Suite 1220 650 West Georgia
Vancouver, BC V6B 4N9
Attention: Zaid Sayeed
Email: zsayeed@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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