Skip to Main Content

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: Dessislava Hristova

Heard: September 23, 2022 by electronic hearing in Toronto, Ontario
Reasons For Decision: October 11, 2022

Reasons For Decision

Hearing Panel of the Central Regional Council:

  • Paul M. Moore, Q.C., Chair
  • Bianca Dupuis, Industry Representative
  • Vas Pachapurkar, Industry Representative

Appearances:

Paul Blasiak, Senior Enforcement Counsel for the Mutual Fund Dealers Association of Canada

Caitlin Sainsbury, Counsel for Respondent

Dessislava Hristova, Respondent

I. SETTLEMENT AGREEMENT

  1. We accepted the settlement agreement dated July 29, 2022 (“Settlement Agreement”) between the staff of the MFDA (“Staff”) and Dessislava Hristova (“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 IV of the Settlement Agreement.

II. CONTRAVENTIONS

  1. The Respondent admits that:
    1. on November 25, 2019, the Respondent failed to use due diligence to learn the essential facts relative to three clients when opening accounts for the clients, and opened the clients’ accounts without obtaining signed New Account Application Forms from the clients, contrary to the Member’s policies and procedures and MFDA Rules 2.2.2(b), 2.2.1, 2.5.1, 1.1.2 and 2,1.1; and
    2. on November 25, 2019, the Respondent processed the purchase of a mutual fund in a client’s account without communicating with the client, thereby engaging in unauthorized trading, contrary to the Member’s policies and procedures and MFDA Rules 2.1.1, 2.5.1 and 1.1.2.

III. PROPOSED SANCTIONS

  1. The Settlement Agreement provides that:
    1. the Respondent shall pay a fine of $10,000;
    2. the Respondent shall pay costs of $5,000; and
    3. the Respondent shall in the future comply with MFDA Rules 2.2(b), 2.2.1, 2.5.1, 1.1.2 and 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 penalties had to be within an acceptable range taking into account similar cases. Secondly, the agreed penalties 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 penalties 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 penalties.

V. MISCONDUCT

  1. The Respondent’s conduct was in violation of the Rules cited above.

VI. OTHER CONSIDERATIONS

  1. The Respondent’s misconduct was isolated as it was limited to accounts and transactions that were processed on a single day (November 25, 2019) for one set of spousal clients. The fact that the Respondent did not engage in a pattern of misconduct or repeated violations of the MFDA’s Rules is a relevant factor in determining penalty.
  2. Unauthorized trading and failure to learn the essential facts relative to clients can lead to client financial loss and undermine confidence in the mutual fund industry. In the present case, after the clients complained to the Member, the Member and its bank affiliate credited the bank accounts of the clients in the total amount of approximately $4,000 to compensate them for market  losses  and  lost  interest  on  GICs  that  they  had  incurred as a result of the mutual fund purchase transactions at issue.
  3. The Respondent has not previously been the subject of MFDA disciplinary proceedings.
  4. By entering into the Settlement Agreement, the Respondent has accepted responsibility for  her  misconduct  and  has  saved  the  MFDA  the  time,  resources,  and  expenses associated with conducting a contested hearing of the allegations.

VII. CONCLUSIONS

  1. The agreed penalties will deter the Respondent from engaging in misconduct in the future. The proposed penalties will also demonstrate to other Approved Persons that a failure  to  appropriately  exercise  due  diligence  to  obtain  and  record  accurate  KYC  information and processing unauthorized trades in a client’s account will result in serious consequences. Accordingly, the proposed penalties in this case will deter the Respondent and others from engaging in similar misconduct in the future, improve overall compliance with regulatory requirements by Approved Persons and foster confidence among investors
    and other stakeholders in the mutual fund industry as a whole.
  2. 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.
  3. The costs award is reasonable.
  • Paul M. Moore, Q.C.
    Paul M. Moore, Q.C.
    Chair
  • Bianca Dupuis
    Bianca Dupuis
    Industry Representative
  • Vas Pachapurkar
    Vas Pachapurkar
    Industry Representative