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Reasons For Decision

Re:

Reasons For Decision

Reasons for Decision
File No. 200934



IN THE MATTER OF A SETTELEMENT HEARING
PURSUANT TO SECTION 24.4 OF BY-LAW NO. 1 OF
THE MUTUAL FUND DEALERS ASSOCIATION OF CANADA


Re: Alan Roy Kruss


Heard: March 24, 2010 in Toronto, Ontario
Reasons for Decision: April 5, 2010

REASONS FOR DECISION

Hearing Panel of the Central Regional Council:

The Hon. Edward Saunders, Q.C.
Chair

Guenther Kleberg
Industry Representative

Richard Williams
Industry Representative

Appearances:

Lyla
Simon

)
For the Mutual Fund Dealers Association of

)
Canada

Bruce O’Toole
)
For the Respondent (who also attended in
)
person)

Page 1 of 3

1.
Following a notice of hearing the MFDA and the Respondent entered into a
settlement agreement dated December 15, 2009, with respect to the allegation in the
notice of hearing.

2.
In the settlement agreement the Respondent admitted that between 2004 and 2006
while an Approved person at two consecutive Members, he engaged in securities related
business that was not carried on for the account of the Member and through the facilities
of the Member by selling, referring, or facilitating the sale of $50,000 of an investment
product to client KS on two separate occasions, when that investment product had not
been approved for sale by the Member, contrary to MFDA Rule 1.1.1.

3.
The purpose of this hearing is to accept or reject the settlement agreement
pursuant to Section 24.4.3 of By-law No. 1 of the MFDA. In performing this task we
must be mindful of the public interest. On the other hand it is clearly established that we
should accept a settlement recommended by staff of the MFDA unless it falls outside the
reasonable range of what is appropriate in the circumstances.

4.
The background facts are detailed in the settlement agreement and need not be
repeated. On consent of the parties, we obtained further information which was of
assistance in making our decision. We are assured by both counsel that the Respondent
had not been subject to any previous MFDA disciplinary proceedings. We were told that
the MFDA staff was satisfied that the transactions which the Respondent admitted to
were isolated and not part of a wider activity.

5.
In paragraph 13 of the staff submissions we were referred to factors in the Penalty
Guidelines of the MFDA which should be considered. Among these was “Suitability of
outside business activity”. There was no evidence before us as to the wealth and
sophistication of the client in the transactions nor to the suitability of the investment. We
wish to make clear that we make no findings on the factor of suitability of the investment
sold to the client.

Page 2 of 3

6.
We have reviewed the facts and the penalty agreed to. We have been told that the
amount of money of the fine and costs are held by the MFDA in escrow. We consider the
settlement to fall within the range of what is reasonable and appropriate. Accordingly the
settlement is accepted.

DATED this 5th day of April, 2010.

“Edward Saunders”
The Hon. Edward Saunders, Q.C.,

Chair

“Guenther Kleberg”
Guenther Kleberg

Industry Representative

“Richard Williams”
Richard Williams

Industry Representative

Doc 206597
Page 3 of 3