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

Re: Pieter Hendrik Leendert Lindhout

Heard: May 25, 2022 by electronic hearing in Toronto, Ontario
Reasons For Decision: July 21, 2022

Reasons For Decision

Hearing Panel of the Central Regional Council:

  • Paul M. Moore, Chair
  • Selwyn Kossuth, Industry Representative

Appearances:

Michael A. M. Mantle, Enforcement Counsel for the Mutual Fund Dealers Association of Canada
Pieter Hendrik Leendert Lindhout, Respondent

I. SETTLEMENT AGREEMENT

  1. We accepted the settlement agreement dated March 14, 2022 (“Settlement Agreement”) between the staff of the MFDA (“Staff”) and Pieter Hendrik Leendert Lindhout (“Respondent”) at an electronic settlement hearing held in accordance with MFDA rules for an electronic hearing.
  2. A copy of the Settlement Agreement is attached to these Reasons as Schedule “1”. The agreed facts are set out in Part III of the Settlement Agreement.

II. CONTRAVENTIONS

  1. The Respondent admits that:
    1. between April 2015 and November 2018, the Respondent photocopied signature pages from account forms that had been signed by clients and re-used the signature pages to complete 23 additional forms in respect of 14 clients, contrary to MFDA Rule 2.1.1;
    2. between October 2015 and November 2018, the Respondent altered and used to process transactions 17 account forms in respect of 6 clients by altering information on the account forms without having the client initial the alterations, contrary to MFDA Rule 2.1.1; and
    3. between April 2015 and November 2018, the Respondent obtained and possessed 6 pre-signed account forms in respect of 2 clients, contrary to MFDA Rule 2.1.1.

III. PROPOSED SANCTION

  1. The Settlement Agreement provides that:
    1. the Respondent shall pay a fine of $30,000;
    2. the Respondent shall pay costs of $5,000;
    3. the Respondent shall successfully complete the Ethics and Professional Conduct Course offered by the IFSE Institute, or an industry course acceptable to Staff of the MFDA, within 12 months of the acceptance of the Settlement Agreement; and
    4. the Respondent shall in the future comply with MFDA Rule 2.1.1.

IV. CONSIDERATIONS

  1. We determined that we had to be satisfied regarding three considerations before we could accept the Settlement Agreement. First, the agreed penalty had to be within an acceptable range taking into account similar cases. Secondly, the agreed penalty had to be fair and reasonable (i.e. proportional to the seriousness of the contraventions taking into consideration relevant circumstances) and should appear to be so to members of the public and industry. Thirdly, the agreed penalty should serve as a deterrent to the Respondent and to industry. To be satisfied on these three considerations required an understanding of the particular facts of the case, the circumstances of the Respondent, and the impact on the Respondent of the agreed penalty.

V. MISCONDUCT

  1. The Respondent’s conduct was in violation of the standard of conduct codified by MFDA in Rule 2.1.1. This rule requires that Members and Approved Persons 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. A multitude of MFDA disciplinary cases have found conduct similar to that of the Respondent in our case to be a contravention of MFDA Rule 2.1.1.

VI. OTHER CONSIDERATIONS

  1. The Respondent has paid a total of $5,200 to the Member in respect of the period of close supervision imposed by the Member.
  2. There was no evidence that the Respondent received any financial benefit from the conduct set out above beyond the commissions or fees he would ordinarily be entitled to receive had the transactions been carried out in the proper manner.
  3. There was no evidence of client complaints or client loss.
  4. The Respondent has not previously been the subject of MFDA disciplinary proceedings.
  5. The agreed penalties are within the recommendations of the MFDA Sanction Guidelines and the reasonable range of appropriateness with regard to MFDA decisions submitted to us by Staff, made by MFDA Hearing Panels in similar circumstances. They are fair and reasonable and will serve as a specific and general deterrent.

VII. COSTS

  1. The costs award is reasonable.

VIII. CONCLUSION

  1. We concluded that the Settlement Agreement was in the public interest and, consequently, we accepted it.
  • Paul M. Moore
    Paul M. Moore
    Chair
  • Selwyn Kossuth
    Selwyn Kossuth
    Industry Representative

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