Mutual Fund Dealers Association of Canada
Association canadienne des courtiers de fonds mutuels
121 King Street West, Suite 1000, Toronto, Ontario, M5H 3T9
TEL: 416-361-6332 FAX: 416-943-1218 WEBSITE: www.mfda.ca
Contact: Hugh Corbett
Director of Litigation
July 26, 2005
Email: [email protected]
For Distribution to Relevant Parties Within your Firm
MFDA imposes lifetime ban and $25,000 fine on Jawad Rathore
A Hearing Panel of the Mutual Fund Dealers Association (“MFDA”) Ontario
Regional Council has imposed disciplinary penalties on Jawad Rathore
(“Rathore”), a former Approved Person of the MFDA.
Following a hearing on May 16, 2005, the Hearing Panel found that Rathore:
1. Engaged in gainful occupation outside the business of the
Member without so advising the Member and obtaining the
approval of the Member, contrary to MFDA Rule 1.2.1.(d)(iii).
2. Failed to produce for inspection and provide copies of
documents requested by the MFDA in the course of an
investigation, contrary to s. 22.1 of MFDA By-Law No. 1.
MFDA Rule 1.2.1(d) states:
An Approved Person may have, and continue in, another gainful
occupation, provided that:
(iii) Member approval. The Member for which the Approved Person
carries on business either as an employee or agent is aware and approves
of the Approved Person engaging in such other gainful occupation;
For the purpose of any examination or investigation pursuant to
this By-law, a Member, Approved Person of a Member or other
person under the jurisdiction of the Corporation pursuant to the
By-laws or the Rules may be required by the Corporation:
(b) to produce for inspection and provide copies of the books,
records and accounts of such person relevant to the matters being
The Hearing Panel imposed the following penalties on Rathore:
1. Permanent prohibition of the authority of Rathore to conduct
securities related business while in the employ of, or
associated with, any MFDA Member;
2. A fine of $10,000 for failing to disclose his other gainful
3. A fine of $15,000 for failing to produce for inspection and
provide copies of documents requested by the MFDA; and
4. Costs in the amount of $7,500.00.
From 1999 to November 2002, Rathore was registered as a Mutual Fund
Salesperson with the Ontario Securities Commission. In August 2002,
Independent Planning Group Inc. (“IPG”) became the sponsoring dealer for
Rathore. Rathore carried on business as a mutual fund salesperson under the
business name Rathore & Associates Asset Management Ltd. in Richmond
In July 2002, one month prior to joining IPG, Rathore incorporated Phoenix
Pension Services Inc. (“Phoenix”). Rathore is the sole director of Phoenix.
One of the services offered by Phoenix to its clients is assisting them to
process financial hardship applications to access funds from a Locked in
Retirement Account (“LIRA”). Rathore did not disclose his involvement in
Phoenix (or in any other activity) to IPG.
In October 2002, IPG received a complaint from a mutual fund client who
was also a client of Phoenix. The complaint alleged that Rathore and/or
Phoenix had overcharged him with regards to two financial hardship
applications processed on his behalf. IPG commenced an investigation,
following which Rathore was terminated for cause.
From February 14, 2003 until disciplinary proceedings were commenced by
the MFDA in February 2005, MFDA investigators made repeated requests to
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Rathore for copies of bank statements for any account in which Rathore held
a direct or indirect interest or over which he had signing authority during the
period February 1, 2002 to November 30, 2002. Rathore did not produce the
requested bank statements.
The Hearing Panel noted that Rathore’s failure to disclose his outside
business activity is a serious offence. Without disclosure of the dual
occupation, the MFDA and the Member cannot ensure that securities
legislation and internal procedures are being complied with, that the MFDA
and its Members or the mutual fund industry are not being brought into
disrepute, that clients are aware that the outside activity is not the business or
responsibility of the Member and that any actual or potential conflicts of
interest are dealt with appropriately.
The Hearing Panel also noted that a failure to cooperate with an MFDA
investigation is serious misconduct. The Hearing Panel stated that the
obligation to comply with a request for information pursuant to an MFDA
investigation continues notwithstanding that the Approved Person has ceased
to be an Approved Person.
For greater detail, see the Decision and Reasons posted on the MFDA
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