Hearing Panel of the Pacific Regional Council:
- Lynn Smith, O.C., K.C., Chair
- Susan E. Monk, Industry Representative
- Tammi Walsh, Industry Representative
Peter Gilmore, Enforcement Counsel for the Mutual Fund Dealers Association of Canada
Brian Grootendorst, Counsel for Respondent
Christopher Glenn Roberts, Respondent
- On June 20, 2022, Christopher Glenn Roberts (the “Respondent”) entered into a settlement agreement dated June 20, 2022 (the “Settlement Agreement”) with the Mutual Fund Dealers Association of Canada (the “MFDA”) pursuant to which the Respondent agreed to a proposed settlement of matters for which the Respondent could be disciplined pursuant to ss. 20 and 24.1 of MFDA By-law No. 1.
- In the Settlement Agreement the Respondent admits to the following violations of the By-laws, Rules or Policies of the MFDA:
- Between October 20, 2020 and October 22, 2020, the Respondent signed a client’s signature on four account forms and submitted the forms to the Member for processing contrary to MFDA Rule 2.1.1.
- The Settlement Agreement provides that Staff and the Respondent agree to the following terms of settlement:
- The Respondent shall pay a fine in the amount of $10,000 in certified funds upon acceptance of the Settlement Agreement, pursuant to section 24.1.1(b) of MFDA By-law No. 1;
- The Respondent shall pay costs in the amount of $2,500 in certified funds upon acceptance of the Settlement Agreement, pursuant to section 24.2 of MFDA By-law No. 1;
- The Respondent shall in the future comply with MFDA Rule 2.1.1.; and
- The Respondent shall attend in person or by videoconference on the date set for the Settlement Hearing.
- This matter came before the Hearing Panel as a settlement hearing on September 12, 2022. The Respondent did not attend the settlement hearing in person nor was he represented by counsel. Gilmore, Enforcement Counsel tendered the signed Settlement Agreement.
- At the commencement of the hearing, the Panel granted Enforcement Counsel’s motion to conduct the proceedings in camera while the Panel considered the Settlement Agreement. Proceeding in camera ensures that members of the public do not become privy to the confidential contents of the Settlement Agreement unless and until it is accepted by the Panel. After hearing submissions by counsel for the MFDA, and the Respondent having failed to appear or make submissions, the Panel, having considered the submissions, the Settlement Agreement, and the authorities, decided to accept the Settlement Agreement and issued an order to that affect. These are the written reasons for the Panels’ decision.
II. THE AGREED FACTS
- The Agreed Facts in the Settlement Agreement are as set out below.
- The Respondent was registered in the securities industry in British Columbia commencing in 2014. From February 27, 2019 to November 17, 2020, he was a dealing representative with TD Investment Services Inc. a Member of the MFDA (the “Member”). The Respondent conducted business at the material times in the Chilliwack, B.C., area.
- The Member terminated the Respondent on November 17, 2020, as a result of the conduct that was the subject of this settlement, and the Respondent is not currently registered in the securities industry in any capacity.
- The Respondent, contrary to the Member’s policies and procedures prohibiting the falsification of any account information, record or documentation, signed a client’s signature on four Transaction and Account Maintenance Forms from October 20 to 22, 2020, and submitted those forms to the Member for processing.
- After the falsification was discovered, the Member contacted the client, who confirmed that he did not sign the account forms but that the transactions were authorized. The client re-signed the account forms in question.
- The Member reviewed the Respondent’s trading activity from October 2019 to October 2020, and no additional instances where the Respondent signed client signatures were identified.
- It does not appear that the Respondent received any financial benefit from the conduct beyond the commission and fees to which he would ordinarily have been entitled had the transactions been carried out in the proper manner.
- It does not appear that the client suffered loss, or complained regarding the Respondent’s having applied his signature to the Forms.
- The Respondent has not previously been the subject of MFDA disciplinary proceedings.
- The Respondent says that he was under stress due to his spouse’s serious illness at the relevant time, and exercised poor judgment in signing his client’s name on the account forms.
- The Respondent is 64 years of age, is retired, and says that he has no intention of again working in the financial services industry.
- As a result of the Settlement Agreement, the MFDA is not required to spend the time and resources entailed in a full hearing of the allegations.
III. APPLICABLE RULES AND PROVISIONS
- MFDA Rule 2.1.1 requires registrants in the mutual fund industry to abide by this standard of conduct:
- Each Member and Approved Person of a Member shall: deal fairly, honestly and in good faith with its clients; observe high standards of ethics and conduct in the transaction of business; and not engage in any business conduct or practice which is unbecoming or detrimental to the public interest.
- The purpose of the Rule is to support the protection of investors, and public confidence in the Canadian mutual fund industry.
- Signing a client’s signature has been held to constitute a contravention of the standard of conduct prescribed by MFDA Rule 2.1.1: Stemshorn-Russell (Re),  Hearing Panel of the Pacific Regional Council, MFDA File No. 201792, Panel Decision dated March 7, 2018 at paras. 20-22; Tian (Re),  Hearing Panel of the Central Regional Council, MFDA File No. 2016112, Panel Decision dated March 27, 2017.
- Falsifying a signature is a serious matter, as explained by the Hearing Panel in Barnai (Re),  Hearing Panel of the Central Regional Council, MFDA File No. 200814, Panel Decision (Misconduct) dated April 18, 2011 at paras. 122-124:
Falsifying client signatures or initials is serious misconduct. Signature falsification (like the use of pre-signed forms) adversely affects the integrity and reliability of account documents, leads to the destruction of the audit trail, has a negative impact on Member complaint handling, and has the potential for misuse in the form of unauthorized trading, fraud and misappropriation.
As a Hearing Panel of the Investment Dealers Association (now IIROC) stated in Bell (Re):
Forgery is always serious. It is unequivocally condemned because it is fundamentally dishonest and dangerous. Any act of forgery is a step onto a steep and slippery slope of deception that is always potentially harmful to clients and actually harmful to the Member firm and the securities industry as a whole.
- In this case, as well, the Member’s policies and procedures specifically prohibited the falsification of any account information, record or documentation in any way, including signing or initialling documents on behalf of a client.
IV. POWERS OF THE HEARING PANEL AND GOVERNING PRINCIPLES
- Under s. 24.4.3 of MFDA By-law No. 1, this Panel has two options: it may either accept the settlement agreement or reject it.
- A Hearing Panel should not interfere lightly in a negotiated settlement as long as the penalties agreed upon are within a reasonable range of appropriateness having regard to the conduct of the Respondent: Jacobson (Re),  Hearing Panel of the Prairie Regional Council, MFDA File No. 200712, Panel Decision dated July 13, 2007, at para. 68. This principle supports the making of settlements with appropriate remedies, and the regulatory mandate of the MFDA to protect the public.
- The Jacobsen case also sets out (at para. 70) the relevant considerations for a Hearing Panel in assessing whether a proposed settlement should be accepted:
- whether acceptance of the settlement agreement would be in the public interest and whether the penalty imposed will protect investors;
- whether the settlement agreement is reasonable and proportionate, having regard to the conduct of the Respondent as set out in the settlement agreement;
- whether the settlement agreement addresses the issues of both specific and general deterrence;
- whether the proposed settlement will prevent the type of conduct described in the settlement agreement from occurring again in the future;
- whether the settlement agreement will foster confidence in the integrity of the Canadian capital markets;
- whether the settlement agreement will foster confidence in the integrity of the MFDA; and
- whether the settlement agreement will foster confidence in the regulatory process itself.
- In deciding whether or not a penalty is appropriate, the Hearing Panel is to take into account a number of factors including:
- the seriousness of the allegations;
- past conduct of the Respondent;
- the Respondent’s experience and level of activity in capital markets;
- whether the Respondent recognizes the seriousness of the improper activity;
- the harm suffered by investors as a result of the activity;
- the benefits received by the Respondent as a result of that activity;
- the risk to investors and the capital markets in the jurisdiction if the Respondent were to continue to operate in capital markets in that jurisdiction;
- damage caused to the integrity of the capital markets in the jurisdiction;
- the need for specific and general deterrence;
- the need to alert others to the consequences of inappropriate activities to those who are permitted to participate in the capital markets; and
- previous decisions made in similar circumstances.
- Headley (Re),  Hearing Panel of the Ontario Regional Council, MFDA File No. 200509, Panel Decision dated February 21, 2006, at para. 85.
- Similar factors are set out in the MFDA’s Sanction Guidelines.
V. APPLICATION OF THE PRINCIPLES TO THIS CASE
- The Hearing Panel has concluded that the alleged offence has been admitted by the Respondent, that the penalties agreed upon are within a reasonable range of appropriateness having regard to the conduct of the Respondent, and that the Settlement Agreement should be approved.
- While the Respondent’s breach of the MFDA Rule was a serious one, the client was unharmed and made no complaint. The Respondent has accepted responsibility and provided an explanation (stress flowing from his wife’s illness) and entered into the Settlement Agreement. This was the first occasion upon which the Respondent has faced disciplinary proceedings. He is retired and does not intend to work in the financial services industry in the future.
- Previous cases referred to by Enforcement Counsel are: Homer (Re),  Hearing Panel of the Prairie Regional Council, MFDA File No. 202207, Panel Decision dated July 21, 2022; Armstrong (Re),  Hearing Panel of the Pacific Regional Council, MFDA File No. 202161, Panel Decision dated November 30, 2021; Yu (Re),  Hearing Panel of the Prairie Regional Council, MFDA File No. 202170, Panel Decision dated May 12, 2022; and Terrill (Re),  Hearing Panel of the Prairie Regional Council, MFDA File No. 201909, Panel Decision dated May 9, 2019. In all of these cases the Respondent’s misconduct involved the falsification of signatures or initials on client documents, and the matter was the subject of a settlement agreement. The fines ranged from $12,500 to $7,500, and the costs were consistently set at $2,500.
- We agree with Enforcement Counsel that the proposed penalty of a $10,000 fine plus payment of costs in the amount of $2,500 is within the range of penalties imposed in previous cases, should have a significant deterrent effect, and is in keeping with the MFDA’s mandate to enhance investor protection and strengthen public confidence in the Canadian mutual fund industry by ensuring high standards of conduct by Members and those they employ.
- The Hearing Panel has concluded that the Settlement Agreement should be accepted and it is so ordered. The Settlement Agreement is attached as Schedule “1” to these Reasons.
Lynn Smith, O.C., K.C.Lynn Smith, O.C., K.C.Chair
Susan E. MonkSusan E. MonkIndustry Representative
Tammi WalshTammi WalshIndustry Representative