Hearing Panel of the Pacific Regional Council:
- Michael Carroll, QC, Chair
- Darlene Barker, Industry Representative
Justin Dunphy, Enforcement Counsel for the Mutual Fund Dealers Association of Canada
Maureen Doherty, Counsel for the Respondent, by teleconference
Sean Patrick Edward Parker, Respondent, in person
- The Hearing Panel accepted the settlement agreement dated July 8, 2019 (“Settlement Agreement”) between the staff of the Mutual Fund Dealers Association of Canada (“MFDA”) and Sean Patrick Edward Parker (“Respondent”). A copy of the Settlement Agreement is attached as Schedule “1” to these Reasons for Decision. The agreed facts are as set out in Schedule III of the Settlement Agreement.
- The Respondent admitted that:
- Between November 2012 and August 2017, he altered and used to process transactions, 12 account forms in respect of 10 clients by altering information on the account forms without having the clients initial the alterations ,contrary to MFDA Rule 2.1.1; and
- Between February 2012 and January 2017, he obtained, possessed, and used to process transactions, 7 pre-signed account forms in respect of 6 clients, contrary to MFDA Rule 2.1.1.
- The Respondent has agreed to pay a fine of $9,000 and costs of $2,500.
- Pursuant to s.24.4.3 of the MFDA By-law No. 1, the hearing panel must either accept the Settlement Agreement or reject it.
- In making the determination to accept or reject the Settlement Agreement the panel must be satisfied that:
- the agreed penalty must be within an acceptable range taking into account similar cases;
- the agreed penalty must be fair and reasonable taking into account the seriousness of the contravention and should appear to be so to members of the public and industry, and
- the penalty should serve as a deterrent to the Respondent and to the industry.
- In the present case the nature of the misconduct is serious as he altered 12 account forms and used 7 pre-signed account forms. MFDA Rule 2.1.1 requires that each Member and Approved Person deal fairly, honestly, and in good faith with clients, observe high standards of ethics and conduct in the transaction of business, and refrain from engaging in any business conduct or practice which is unbecoming or detrimental to the public interest.
- The MFDA has made clear to Approved Persons since October 31, 2007 in both MFDA Staff notices and bulletins that possessing and using pre-signed and altered account forms is contrary to the obligations of Rule 2.1.1. The MFDA Hearing Panel in Price (Re) identified the dangers posed by pre-signed account forms which can be summarized as follows:
- They present a legitimate risk that they may be used by an Approved Person to engage in discretionary trading;
- At worst they create a mechanism for an Approved Person to engage in acts of fraud, theft or other forms of harmful conduct towards a client, and
- They subvert the ability of a Member to properly supervise trading activity.
- Price (Re) supra at paras. 122-124
- The reasoning in Price is also applicable to the use of altered account forms, with the additional concern that there also exists the possibility that the changes are made to the forms without the client’s knowledge or consent.
Post Bulletin Misconduct
- In this matter 3 account forms were obtained after the MFDA issued bulletin #0661-E on October 2, 2015. This is an aggravating factor which has been discussed by other Hearing Panels.
- Owen (Re) MFDA File No. 201784, Hearing Panel of the Prairie Regional Council dated December 7,2017 at para 35
- Lo (Re) MFDA File No. 201776, Hearing Panel of the Central Regional Council dated February 7,2018 at paras 16 and 18
- In the present case the mitigating factors are that there was no evidence of any unauthorized trades or client losses. Furthermore there was no evidence that the Respondent received a financial or other benefit through his conduct and there were no client complaints.
- Counsel for the MFDA referred us to other cases similar to this one and the panel finds that the agreed penalties in the present case fall within the range imposed in those cases.
- Simard (Re) MFDA File no. 2017123 Hearing Panel of the Prairie Regional Council
- Georgijev (Re) MFDA File no. 201721 Hearing Panel of the Central Regional Council
- Gonzalez (Re) MFDA File no. 201883 Hearing Panel of the Central Regional Council
- Based on the forgoing the Panel finds that the Settlement Agreement including the costs award is in the public interest and we accept it.
Michael Carroll, QCMichael Carroll, QCChair
Darlene BarkerDarlene BarkerIndustry Representative