Notice of Hearing

NOTICE is further given that CIRO alleges the following violations of the Mutual Fund Dealer Rules:

Allegation:  Between June 2017 and November 2020, the Respondent borrowed monies from a client, which gave rise to a conflict or potential conflict of interest that the Respondent failed to disclose to the Dealer Member or otherwise ensure was addressed by the exercise of responsible business judgment influenced only by the best interests of the client, contrary to the Dealer Member’s policies and procedures and Mutual Fund Dealer Rules 2.1.4, 2.1.1, and 1.1.2 (as it relates to Rule 2.5.1) (formerly MFDA Rules 2.1.4, 2.1.1, 1.1.2, and 2.5.1).^[1]

PARTICULARS

NOTICE is further given that the following is a summary of the facts alleged and intended to be relied upon by CIRO at the hearing:

Registration History

1. Between May 2002 and June 2003, and between January 30, 2007 and May 27, 2021, the Respondent was registered in Ontario as a dealing representative with PFSL Investments Canada Ltd. (the “Dealer Member”), a Dealer Member of CIRO (formerly a Member of the MFDA).
2. Effective May 27, 2021, the Dealer Member terminated the Respondent as a result of the conduct described herein, and she is not currently registered in the securities industry in any capacity.
3. At all material times, the Respondent conducted business in the Toronto, Ontario area.

Allegation – Borrowing from a Client

4. At all material times, the policies and procedures of the Dealer Member prohibited its Approved Persons from borrowing monies from clients.
5. In 2012, client A became a client of the Dealer Member. At all material times, client A’s accounts at the Dealer Member were serviced by the Respondent.
6. In 2016, client A was 60 years old and retired from his position as a warehouse employee.
7. On the basis of his age and the fact he was retired, client A was a vulnerable investor.
8. At or around the time of client A’s retirement, based on the Respondent’s recommendation, client A opened a new Registered Retirement Savings Plan (“RRSP”) account at the Dealer Member and invested his retirement savings totaling approximately $311,000 into the newly opened RRSP account.
9. In July 2016, client A’s spouse passed away.
10. Between June 2017 and November 2020, the Respondent borrowed a total of approximately $138,509 from client A consisting of 49 individual payments.
11. In response to requests from the Respondent, client A redeemed mutual funds that he held in his RRSP account at the Dealer Member in order to lend proceeds of the redemptions to the Respondent.
12. The Respondent processed the redemptions on behalf of client A. Client A incurred deferred sales charge fees and withholding taxes on these redemptions.
13. Client A also borrowed $1,000 as a cash advance from his credit card in order to loan monies to the Respondent.
14. The Respondent deposited some or all of the amounts that she obtained from client A into her personal bank accounts, and used the monies to pay her personal expenses.
15. Commencing in or about December 2020, client A repeatedly requested that the Respondent repay the monies that she had borrowed from him. Client A informed the Respondent that he needed the money that he had loaned to her in order to pay his taxes, his mortgage and his bills, and because an account that he held was overdrawn.
16. None of the loans that the Respondent obtained from client A were documented in writing.
17. The Respondent did not disclose to the Dealer Member that she had borrowed monies from client A.
18. The Respondent has not repaid any of the monies that she borrowed from client A.
19. On July 15, 2021 client A filed a statement of claim against the Respondent for repayment of the monies owed to him.
20. Borrowing monies from client A, as described above, gave rise to a conflict or potential conflict of interest which the Respondent failed to disclose to the Dealer Member or otherwise ensure was addressed by the exercise of responsible business judgment influenced only by the best interests of the client.
21. In 2017, 2018, 2019, and 2020, the Respondent completed annual attestations to the Dealer Member in which she indicated, among other things, that she understood that she was prohibited from borrowing from a client.
22. By virtue of the foregoing, the Respondent engaged in conduct that was contrary to the Dealer Member’s policies and procedures and Mutual Fund Dealer Rules 2.1.4, 2.1.1, and 1.1.2 (as it relates to Rule 2.5.1) (formerly MFDA Rules 2.1.4, 2.1.1, 1.1.2, and 2.5.1).

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 pursuant to Mutual Fund Dealer Rule 1A that any person subject to the jurisdiction of the Mutual Fund Dealers Association of Canada prior to January 1, 2023 remains subject to the jurisdiction of CIRO in respect of any action or matter that occurred while that person was subject to the jurisdiction of the Mutual Fund Dealers Association of Canada at the time of such action or matter.

NOTICE is further given that the Mutual Fund Dealer Rules provide that if, in the opinion of the Hearing Panel, the Respondent:

• has failed to carry out any agreement with CIRO;
• has failed to comply with or carry out the provisions of any federal or provincial statute relating to the business of the Dealer Member or of any regulation or policy made pursuant thereto;
• has failed to comply with the provisions of the Mutual Fund Dealer Rules of CIRO;
• has engaged in any business conduct or practice which such Hearing Panel 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;
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, Mutual Fund Dealer Division within twenty (20) days from the date of service of this Notice of Hearing.

A Reply shall be served upon Enforcement Counsel at:

Canadian Investment Regulatory Organization
121 King Street West, Suite 1000
Toronto, ON M5H 3T9
Attention: Paul Blasiak
Email: [email protected]

A Reply shall be filed by:

1. providing 4 copies of the Reply to the Office of the Corporate Secretary, Mutual Fund Dealer Division by personal delivery, mail or courier to:

   Canadian Investment Regulatory Organization
   121 King Street West, Suite 1000
   Toronto, ON M5H 3T9
   Attention: Office of the Corporate Secretary, Mutual Fund Dealer Division; or

2. transmitting 1 electronic copy of the Reply to the Office of the Corporate Secretary, Mutual Fund Dealer Division 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 CIRO in the Notice of Hearing; or
2. admit the facts alleged and conclusions drawn by CIRO 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 CIRO 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 CIRO in the Notice of Hearing as having been proven and may impose any of the penalties described in the Mutual Fund Dealer Rules.

End.