Hearing Panel of the Central Regional Council:
- Paul M. Moore, K.C., Chair
- Jeff Page, Industry Representative
- Craig Woolford, Industry Representative
Michael A. M. Mantle, Enforcement Counsel for the Mutual Fund Dealers Association of Canada
Aaron Gold, Counsel for the Respondent
Zachary Pringle, Counsel for the Member
Margaret Sau-Ching Cheng, Respondent
I. SETTLEMENT AGREEMENT
- We accepted the settlement agreement dated September 20, 2022 (“Settlement Agreement”) between the staff of the MFDA (“Staff”) and Margaret Sau-Ching Cheng (“Respondent”) at an electronic settlement hearing held in accordance with MFDA rules for an electronic hearing.
- A copy of the Settlement Agreement is attached to these Reasons as Schedule “1”.
II. AGREED FACTS
- The agreed facts are set out in Part IV of the Settlement Agreement.
- The Respondent admits that:
- between March 2013 and October 2020, she altered, and used to process transactions, 4 account forms in respect of 4 clients contrary to MFDA Rule 2.1.1; and
- between August 2019 and September 2020, she obtained, possessed, and used to process transactions, 5 pre-signed account forms in respect of 5 clients, contrary to MFDA Rule 2.1.1.
IV. AGREED SANCTIONS
- The Settlement Agreement provides that the Respondent shall:
- pay a fine of $12,500;
- pay costs of $2,500;
- be prohibited from acting as a branch manager or in any supervisory capacity for a Member of the MFDA for 6 months;
- successfully complete the Investment Dealer Supervisors Course offered by the Canadian Securities Institute prior to acting as a branch manager or supervisor for a Member of the MFDA in the future; and
- comply in the future with MFDA Rule 2.1.1.
- 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.
- 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.
VII. OTHER CONSIDERATIONS
- There was no evidence that the Respondent received any benefit from the conduct set out above beyond the commissions or fees she would ordinarily be entitled to receive had the transactions been carried out in the proper manner.
- There was no evidence of client complaints, client loss or lack of client authorization.
- The Respondent has not previously been the subject of MFDA disciplinary proceedings.
- By entering into this Settlement Agreement, the Respondent has saved the MFDA the time, resources, and expenses associated with conducting a full hearing on the allegations.
- The costs award is reasonable.
- 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.
- Accordingly, we concluded that the Settlement Agreement was in the public interest and, consequently, we accepted it.
Paul M. Moore, K.C.Paul M. Moore, K.C.Chair
Jeff PageJeff PageIndustry Representative
Craig WoolfordCraig WoolfordIndustry Representative