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 March 24, 2014 to February 5, 2019, the Respondent was registered in Ontario as a dealing representative with Quadrus Investment Services Ltd., a Member of the MFDA (the “Member”).
2. On February 5, 2019, the Member terminated the Respondent as a result of the conduct described below, and she is not currently registered in the securities industry in any capacity.
3. At all material times, the Respondent was licensed as a Life Insurance and A&S Insurance Agent selling insurance products offered by the Member’s insurance affiliate company.
4. At all material times, the Respondent conducted business in the St. Andrew, Ontario area.

Allegation #1 – Misappropriation of Monies

5. At all material times, client JN was the spouse of the Respondent and a client of the Member whose account was serviced by the Respondent.
6. On April 30, 2014, client JN opened a retirement savings plan (“RSP”) investment account at the Member.
7. Between April 2014 and September 8, 2014, client JN transferred approximately $58,222 from other financial institutions to his RSP account with the Member.
8. From September 11, 2014 to December 7, 2015, the Respondent misappropriated monies from client JN by submitting for processing 20 unauthorized redemptions (the “Redemptions”) from JN’s RSP account totaling approximately $59,147 (gross), as described in the table below:

9. In order to process the 20 Redemptions, the Respondent signed client JN’s signature on redemption forms without client JN’s knowledge and submitted them to the Member for processing.
10. For each of the Redemptions, the Respondent also submitted to the Member a void cheque from a joint account the Respondent held with client JN (the “Joint Account”) in order to direct the proceeds of the Redemptions to the Joint Account. The Respondent altered the cheques so that her name was not visible, which concealed from the Member that she was one of the account holders of the Joint Account.
11. The proceeds of each of the Redemptions from client JN’s RSP account were deposited into the Joint Account by electronic transfer without client JN’s knowledge or authorization.
12. The Respondent used some or all of the proceeds of the Redemptions from client JN’s RSP account for her personal benefit.
13. The Respondent took steps to conceal her activities from client JN, including advising him that monies deposited into the Joint Account were her earnings when in fact they were the proceeds from the Redemptions. In addition, client JN was notified by the Canada Revenue Agency (“CRA”) of an outstanding tax liability resulting from the Redemptions from his RSP account in addition to the withholding taxes described above. Client JN contacted the Respondent about CRA’s notification, and in response, the Respondent told client JN that a mistake had been made with his account and that she would contact the CRA to correct the error.
14. In or about January 2019, the Member became aware of a complaint alleging that the Respondent had misappropriated funds from the segregated fund account of a client of the Member’s insurance affiliate. The Member subsequently commenced an investigation into the Respondent’s mutual fund activities and contacted client JN about the Redemptions. Client JN informed the Member that he did not have knowledge of, or authorize, the Redemptions.
15. In addition to client JN, the Respondent misappropriated monies from at least 2 insurance clients by processing unauthorized redemptions in the insurance accounts of the clients.
16. On February 5, 2019, the Member terminated the Respondent after its investigation determined the Respondent had misappropriated monies from clients of the Member’s insurance affiliate and client JN.
17. The Member paid compensation to client JN for his loss resulting from the Respondent’s conduct.
18. By virtue of the foregoing, the Respondent misappropriated or otherwise failed to account for monies obtained from a client and at least 2 individuals, contrary to MFDA Rule 2.1.1.

Allegation #2 – Unauthorized Redemptions

19. Between September 2014 and December 2015, the Respondent misappropriated monies from client JN by submitting for processing the Redemptions from client JN’s RSP account totaling approximately $59,147 (gross), as described above at paragraph 8.
20. Each of the Redemptions were submitted to the Member without the knowledge or authorization of client JN.
21. By virtue of the foregoing, the Respondent submitted for processing unauthorized redemptions in the account of a client, contrary to MFDA Rule 2.1.1.

Allegation #3 – Failure to Cooperate

22. In or about January 2019, the Member notified Staff of the MFDA (“Staff”) about the allegations described above. Staff subsequently commenced its investigation into the Respondent’s conduct.
23. By letter dated March 15, 2019, sent by registered and regular mail to the Respondent, Staff requested that the Respondent provide a written response by April 5, 2019 in respect of the allegation that the Respondent misappropriated monies as described above. The Respondent did not respond to Staff’s March 15, 2019 letter.
24. By letter dated October 2, 2019, served personally on the Respondent on October 4, 2019, Staff requested that the Respondent provide a written response by October 18, 2019, in respect of the allegation that she misappropriated monies from client JN. Staff also requested that the Respondent provide a list of her bank accounts and corresponding bank statements, and an explanation of certain transactions that occurred in the Joint Account. In addition, Staff requested that the Respondent contact Staff to schedule an interview. The Respondent did not respond to Staff’s October 2, 2019 letter, or provide the requested information.
25. By letter dated November 4, 2019, served personally on the Respondent on November 14, 2019, Staff advised the Respondent that because the Respondent had not contacted Staff to schedule her interview, Staff scheduled the interview to take place on January 21, 2020, and that the Respondent was required to confirm her attendance at the interview by December 2, 2019. The Respondent did not respond to Staff’s November 4, 2019 letter or attend the interview that was scheduled to take place on January 21, 2020.
26. The Respondent failed to respond to Staff’s communications as described above, and failed to attend an interview with Staff to give information relevant to matters under investigation.
27. As a result of the Respondent’s failure to provide information to Staff and attend an interview, Staff has been unable to determine the full nature and extent of the Respondent’s misconduct, including her use of the monies misappropriated from client JN or the misappropriation of monies from individuals who were clients of the Member’s insurance affiliate, and whether she engaged in this conduct with other clients or individuals.
28. By virtue of the foregoing, the Respondent failed to cooperate with Staff’s investigation of 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: David Barbaree
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.