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. Commencing in June 2004, the Respondent was registered in the securities industry.
2. From November 30, 2012 until December 21, 2017, the Respondent was registered in Ontario as a dealing representative with Desjardins Financial Security Investments Inc. (“Desjardins”), a Member of the MFDA.
3. From November 30, 2012 until April 15, 2016, Desjardins designated the Respondent as a branch manager.
4. From December 27, 2017 until July 9, 2020, the Respondent was registered in Ontario as a dealing representative with IPC Investment Corporation (“IPC”), a Member of the MFDA.
5. On July 9, 2020, IPC terminated the Respondent’s registration after discovering the conduct described herein, and she is not currently registered in the securities industry in any capacity.
6. At all material times, the Respondent conducted business in the Mississauga and Toronto, Ontario areas.

The Members’ Policies and Procedures

7. At all material times, the policies and procedures of Desjardins:
   1. required Approved Persons to act at all times in the best interest of the client and avoid placing themselves in a situation that would encourage, or give the impression of encouraging, them to place their own interests before those of the client;
   2. required Approved Persons to ensure that any conflict or potential conflict of interest is addressed by the exercise of responsible business judgement influenced only by the best interests of the client and in compliance with the MFDA’s rules, and to immediately disclose in writing any conflict of interest, or any conflict of interest that can reasonably be expected to arise, to Desjardins;
   3. included accepting a beneficiary designation from a client as an example of a conflict of interest; and
   4. prohibited Approved Persons from accepting or acting on a general Power of Attorney or similar authorization on an account held with the dealer.
8. At all material times, the policies and procedures of IPC:
   1. required Approved Persons to immediately disclose in writing to IPC any conflict of interest, or any conflict of interest that could reasonably be perceived, so that after reviewing the written disclosure IPC’s compliance department could assist Approved Persons in determining what disclosure (if any) would be required to be made to clients;
   2. prohibited Approved Persons from accepting gifts unless nominal in amount and offered as part of a normal business courtesy; and
   3. prohibited Approved Persons from accepting appointments as a Power of Attorney, Executor of Estate or Trustee that permits them to trade on behalf of a client or any other form of authority which grants an Approved Person control over a client’s financial affairs.

Allegations #1, #2 and #3 – Accepting a Power of Attorney, Executor and Trustee Appointments for a Client, and Designation as a Beneficiary in a Client’s Will

Client MW’s Will and Power of Attorney

9. In or around November 2012, the Respondent became the Approved Person at Desjardins responsible for servicing the accounts of client MW.
10. In January 2016, client MW informed the Respondent that she had drafted a will with her lawyer and had appointed the Respondent as:
    1. the executor and trustee of her estate; and
    2. her power of attorney (“POA”) for property and for personal care.
11. When client MW informed the Respondent that she was or would be appointed as client MW’s POA for property and executor and trustee of client MW’s estate, the circumstances gave rise to a conflict or potential conflict of interest that the Respondent was required to disclose to Desjardins so that the conflict or potential conflict of interest could be addressed in compliance with MFDA Rule 2.1.4. The Respondent failed to disclose to Desjardins that she was or would be appointed as client MW’s POA and executor and trustee.
12. On April 15, 2016, client MW executed her will. The will specified that the Respondent was appointed:
    1. the executor and trustee of client MW’s estate; and
    2. a beneficiary who was entitled to receive 32% from a 60% share of the residue of client MW’s estate.
13. Client MW advised the Respondent that she had been designated as a beneficiary of client MW’s estate during the period while the Respondent was an Approved Person of Desjardins.
14. When the Respondent was informed that client MW designated, or would designate, the Respondent as a beneficiary of her estate, the circumstances gave rise to a conflict or potential conflict of interest that the Respondent was required to disclose to Desjardins so that the conflict or potential conflict of interest could be addressed in accordance with MFDA Rule 2.1.4. The Respondent failed to disclose to Desjardins that client MW designated, or would designate, the Respondent as a beneficiary of client MW’s estate.
15. When the Respondent was informed that she was appointed as client MW’s POA, executor and trustee in client MW’s will and designated a beneficiary of client MW’s estate while she was an Approved Person at Desjardins and client MW was a client of Desjardins, she did not renounce her appointments and beneficiary designation.

The Respondent Transfers her Registration to IPC

16. In August 2017, the Respondent began the process of transferring her registration in order to become an Approved Person of IPC. As part of this process, the Respondent disclosed to IPC that she had a conflict of interest with respect to client MW as the Respondent was appointed as client MW’s POA, and was appointed in client MW’s will as the executor and trustee of client MW’s estate.
17. In September 2017, IPC requested that the Respondent remove herself from the appointments described above prior to becoming registered with IPC. In order to comply with IPC’s request, the Respondent contacted client MW’s lawyer to have herself removed from the appointments.
18. On December 27, 2017, the Respondent became an Approved Person of IPC, and client MW became a client of IPC whose accounts were serviced by the Respondent.
19. The Respondent was aware that she continued to be a beneficiary of the estate of client MW, which gave rise to a conflict or potential conflict of interest between the Respondent and client MW that the Respondent failed to disclose to IPC or otherwise address in accordance with MFDA Rule 2.1.4.

The Respondent Again Became an Executor and Trustee of Client MW’s Estate

20. The Respondent and client MW’s family friend discussed that the Respondent would be appointed as co-executor and co-trustee of client MW’s estate with the family friend. Pursuant to a codicil to client MW’s will dated March 23, 2018, client MW appointed the Respondent and the family friend as co-executors and co-trustees of client MW’s estate, but the Respondent did not inform IPC of these appointments.
21. The Respondent continued to service client MW’s accounts at IPC until IPC terminated her on July 9, 2020.
22. The Respondent continues to be appointed as the co-executor and co-trustee of client MW’s estate and designated a beneficiary of client MW’s estate. While she was an Approved Person at IPC, the Respondent failed to renounce her appointments as co-executor and co-trustee of client MW’s estate and her designation as a beneficiary of client MW’s estate.
23. By virtue of the foregoing, the Respondent accepted an appointment to act as power of attorney for property from client MW, contrary to the Member’s policies and procedures and MFDA Rules 2.3.1, 2.1.1, and 1.1.2 (as it relates to MFDA Rule 2.5.1).
24. By virtue of the foregoing, the Respondent accepted an appointment to act as executor and trustee of client MW’s estate in her will, and to act as co-executor and co-trustee of client MW’s estate, contrary to the Member’s policies and procedures and MFDA Rules 2.3.1, 2.1.1, and 1.1.2 (as it relates to MFDA Rule 2.5.1).
25. By virtue of the foregoing, 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 client MW that conflicts or potential conflicts of interest arose between the Respondent and client MW when she became aware that she was or would be:
    1. appointed as power of attorney for property of client MW;
    2. appointed as executor and trustee of client MW’s estate;
    3. appointed as co-executor and co-trustee of client MW’s estate; and
    4. designated as a beneficiary of client MW’s estate,

    contrary to the Member’s policies and procedures and MFDA Rules 2.1.4, 2.1.1, and 1.1.2 (as it relates to MFDA Rule 2.5.1).

Allegation #4 – False or Misleading Responses on Compliance Information Forms

26. While the Respondent was an Approved Person at Desjardins, she completed Annual Compliance Update Checklists dated April 6, 2016 and April 5, 2017 in which she confirmed that she understood the requirement to report any potential or actual conflict of interest to Compliance, and that she had reported any conflicts or potential conflicts of interest to Compliance.
27. The information that the Respondent provided to Desjardins was false or misleading because the Respondent did not report to Desjardins conflicts or potential conflicts of interest that arose between her and client MW when she became aware that:
    1. she was or would be appointed as client MW’s POA, as described above;
    2. she was or would be appointed executor and trustee of client MW’s estate, as described above; and
    3. she was or would be designated as a beneficiary in client MW’s will, as described above.
28. While the Respondent was an Approved Person at IPC, she completed Annual Affirmations dated August 9, 2018 and November 25, 2019 in which she answered “No” to the question: “Have you been appointed as either an Executor, POA and Trustee?” The Respondent’s response was false or misleading because, as described above, the Respondent was appointed as client MW’s POA and as executor and trustee, and she was later appointed as co-executor and co-trustee of client MW’s estate.
29. By virtue of the foregoing, the Respondent provided false or misleading responses to questions on compliance information forms that she submitted to the Member, contrary to MFDA Rule 2.1.1.

Allegation #5 – The Respondent Borrowed $30,000 from a Client

30. At all material times, IPC’s policies and procedures prohibited its Approved Persons from borrowing money from clients.
31. At all material times, the Respondent was the Approved Person at IPC responsible for servicing client ME’s accounts.
32. In December 2019, the Respondent submitted a request to IPC’s head office to obtain an advance on her year-end bonus in order to make a contribution to her Registered Retirement Savings (RRSP) account. IPC denied the request.
33. Thereafter, on December 19, 2019, the Respondent borrowed $30,000 from client ME, which the Respondent used to make a contribution to the Respondent’s RRSP account.
34. The Respondent prepared and signed a promissory note dated December 19, 2019, which provided that the Respondent would repay the $30,000 to client ME on January 6, 2021.
35. On or about January 2, 2020, the Respondent repaid $30,000 to client ME.
36. The acceptance of a $30,000 loan from client ME constituted personal financial dealings with a client that gave rise to a conflict or potential conflict of interest between the Respondent and client ME that the Respondent failed to disclose to IPC and otherwise ensure was addressed by the exercise of responsible business judgment influenced only by the best interests of client ME as required by MFDA Rule 2.1.4.
37. By virtue of the foregoing, the Respondent’s conduct contravened the Member’s policies and procedures and MFDA Rules 2.1.4, 2.1.1, and 1.1.2 (as it relates to MFDA Rule 2.5.1).

Allegation #6 – Pre-signed Account Forms

38. At all material times, IPC’s policies and procedures prohibited Approved Persons from obtaining or using pre-signed account forms.
39. Between January 2018 and May 2018, the Respondent obtained, possessed, and in some instances used to process transactions, 18 pre-signed account forms in respect of 7 Member clients.
40. The account forms included Order Entry Forms, New Account Application Forms, Know Your Client Forms, T2033 Forms, and Automatic Rebalancing Service Forms.
41. By virtue of the foregoing, the Respondent contravened 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
121 King Street West
Suite 1000
Toronto, ON M5H 3T9
Attention: Julie Grajales
Email: jgrajales@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.