Settlement Agreement

Settlement
Agreement
File No. 201110

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: Scott Devries



SETTLEMENT AGREEMENT

I.
INTRODUCTION

1.
By Notice of Settlement Hearing, the Mutual Fund Dealers Association of Canada (the
“MFDA”) will announce that it proposes to hold a hearing to consider whether, pursuant to
section 24.4 of By-law No. 1, a hearing panel of the Central Regional Council (the “Hearing
Panel”) of the MFDA should accept the settlement agreement (the “Settlement Agreement”)
entered into between Staff of the MFDA (“Staff”) and Scott Devries (the “Respondent”).

II.
JOINT SETTLEMENT RECOMMENDATION

2.
Staff conducted an investigation of the Respondent’s activities. The investigation
disclosed that the Respondent had engaged in activity for which the Respondent could be
penalized on the exercise of the discretion of the Hearing Panel pursuant to s. 24.1 of By-law No.
1.

Page 1 of 18

3.
Staff and the Respondent recommend settlement of the matters disclosed by the
investigation in accordance with the terms and conditions set out below. The Respondent agrees
to the settlement on the basis of the facts set out in Part IV herein and consents to the making of
an Order in the form attached as Schedule “A”.

4.
Staff and the Respondent agree that the terms of this Settlement Agreement, including the
attached Schedule “A”, will be released to the public only if and when the Settlement Agreement
is accepted by the Hearing Panel.

III.
ACKNOWLEDGEMENT

5.
Staff and the Respondent agree with the facts set out in Part IV herein for the purposes of
this Settlement Agreement only and further agree that this agreement of facts is without
prejudice to the Respondent or Staff in any other proceeding of any kind including, but without
limiting the generality of the foregoing, any proceedings brought by the MFDA (subject to Part
IX) or any civil or other proceedings which may be brought by any other person or agency,
whether or not this Settlement Agreement is accepted by the Hearing Panel.

IV.
AGREED FACTS

Registration History

6.
From June 2002 to December 2009, the Respondent was registered in Ontario, British
Columbia, Alberta and Quebec as a mutual fund salesperson with FundEX Investments Inc.
(“FundEX”).

7.
The Respondent was terminated by FundEX on December 10, 2009 as a result of the
events described below. He is not currently registered in the securities industry in any capacity.

8.
FundEX became a member of the MFDA on April 12, 2002.

Page 2 of 18

The Respondent’s Business Activities

9.
Devries Financial is an Ontario corporation. The Respondent is the president, sole
shareholder and controlling mind of Devries Financial Group Inc. (“Devries Financial”). At all
material times, the Respondent conducted business as a mutual fund salesperson using the trade
name Devries Financial, which was approved by FundEX pursuant to MFDA Rule 1.1.7.1

10.
Frontex Reporting Systems Inc. (“Frontex”) is an Ontario corporation. Frontex develops
and sells software applications which produce web-based client account statements and reports.
Frontex sells its products to mutual fund dealers and mutual fund salespersons. The Respondent
is the president, largest shareholder and controlling mind of Frontex. The Respondent sought
and obtained approval from FundEX to carry on FrontEx as an outside business activity in
accordance with MFDA Rule 1.2.1(d). 2

Allegation #1: Conflict of Interest: Borrowing Monies from Clients

11.
At all material times, FundEX’s policies and procedures contained a general requirement
that its Approved Persons refrain from engaging in any activities which might create a conflict or
potential conflict of interest with clients. Where a conflict or potential conflict of interest did
arise, FundEX’s policies and procedures required that the Approved Person, among other things:

(a) disclose the conflict of interest to FundEX; and
(b) disclose the conflict of interest, in writing, to the client.

12.
FundEX’s policies and procedures expressly prohibited its Approved Persons from
borrowing monies from clients on the basis that such activity constituted a conflict of interest.

13.
Between about August 2002 and October 2009, the Respondent borrowed $426,350 from

1 FundEX approved the use of the trade name Devries Financial before it became aware that the Respondent
borrowed monies from clients through Devries Financial.
2 As set out in greater detail below, FundEX approved Frontex as an outside business activity without knowing that
the Respondent had borrowed monies from clients through Frontex, and had sold shares and convertible debentures
of Frontex to clients and other individuals.
Page 3 of 18

eight clients.3 The Respondent borrowed the monies either personally or through Devries
Financial or Frontex, in the amounts and on the dates summarized below:

Client
Date of Loan
Loan Amount Borrowing
Entity Loan
Repaid
MB
July 27, 2006
$58,000
Devries Financial
Yes
September 26, 2006
$22,000
Devries Financial
Yes
November 21, 2006
$15,000
Respondent
Yes
Total $95,000

RN
August 23, 2006
$5,000
Unknown
Yes
September 21, 2006
$5,000
Unknown
Yes
June 12, 2007
$8,500
Unknown
Yes
July 7, 2007
$15,000
Unknown
Yes
August 25, 2008
$3,000
Unknown
Yes
Total $39,500


JJ
August 14, 2006
$15,000
Devries Financial
Yes
Unknown $59,850
Respondent
Yes

Total $74,850

ND4
February 17, 2002
$7,500
Devries Financial
Yes
August 13, 2002
$8,500
Devries Financial
Yes
October 10, 2003
$6,000
Devries Financial
Yes
July 5, 2004
$7,500
Devries Financial
Yes
December 5, 2008
$12,500
Devries Financial
Yes

Total $42,000

JK
June 3, 2009
$60,000
Frontex
Yes

Total $60,000

JMV
April 1, 2009
$50,000
Frontex
Yes

Total $50,000

BS
March 11, 2009
$25,000
Frontex
Yes

Total $25,000

DR
April 1, 2009
$40,000
Frontex
Yes

Total $40,000

Total Client Loans
$426,350

14.
The Respondent used the monies that he borrowed from the clients to pay the operating

3 The Notice of Hearing alleges that the Respondent borrowed $433,350 from clients. This amount should be
$426,350.
4 ND is the sister of the Respondent.
Page 4 of 18

expenses of Devries Financial and Frontex. The Respondent also used the borrowed monies to
pay expenses including the Respondent’s salary, his automobile lease, and the monthly cost of
the condominium in which he resided.

15.
The terms of the loans varied between clients. Generally, the loans purported to pay
interest of approximately 12-14 percent per annum, and the loan principal and interest were
payable within a period of less than two years.

16.
The Respondent repaid the monies borrowed from all of the clients listed above.

17.
At the time the Respondent initially borrowed monies from client MB, the loans were not
subject to specific interest or repayment terms, except that the Respondent claims that he agreed
to repay the loans as soon as possible and to pay interest at a rate to be agreed upon at a later
date.

18.
The MFDA and FundEX initially became aware that the Respondent had borrowed
monies from clients as a result of an anonymous complaint received in September 2009.

19.
Prior to September 2009, the Respondent had not previously disclosed to FundEX, and
FundEX was not otherwise aware, that the Respondent was borrowing or had borrowed monies
from clients.

20.
Shortly after the Respondent became aware that FundEX had received a complaint
regarding his dealings with client MB, the Respondent prepared and signed a promissory note
dated October 9, 2009 in the amount of $18,150 payable to client MB by the Respondent
personally (“PN #1”). According to PN #1, the Respondent was required to repay the $15,000
borrowed from client MB by November 21, 2006, together with interest in the amount of $3,150.

21.
The Respondent prepared and signed a second promissory note dated October 9, 2009 in
the amount of $93,300 payable to client MB by Devries Financial (“PN #2”). PN #2 required the
Respondent to repay the $80,000 borrowed from client MB on July 27, 2006 and September 26,
Page 5 of 18

2006, together with interest in the amount of $13,300.5

22.
PN #1 and PN #2 were due to be paid in full by December 8, 2009.

23.
The Respondent did not pay PN #1 or PN #2 by December 8, 2009.

24.
The Respondent subsequently prepared and signed a new promissory note dated
November 10, 2010 in the amount of $19,420 payable to client MB by the Respondent
personally (“PN #3”), which purported to replace PN #1. The Respondent paid PN #3 in full on
November 22, 2010.

25.
With respect to the monies owed pursuant to PN #2, the Respondent prepared and signed
a new promissory note dated November 10, 2010 in the amount of $98,831 payable to client MB
by Devries Financial (“PN #4”). PN #4 required the Respondent to pay the balance owed to
client MB in four equal monthly installments commencing January 7, 2011 and continuing until
April 7, 2011.

26.
The Respondent did not pay PN #4 in accordance with its terms.

27.
On May 11, 2012, Staff received confirmation that the monies owed to client MB had
been repaid in full by the Respondent.

Allegation #2: Securities Related Business – Sale of Frontex Shares and Debentures

28.
At all material times, FundEX’s policies and procedures required that all securities
related business must be conducted through FundEX in accordance with the requirements of
MFDA Rule 1.1.1.

29.
Between about September 2004 and December 2009, the Respondent sold shares of
Frontex, and debentures which were convertible into shares of Frontex, to clients and other
individuals, as summarized below:

5 The Respondent previously provided an additional interest payment to the client MB in the amount of $3,500 with
respect to the loans.
Page 6 of 18

Purchaser Mutual
Fund Date of Share
# of Shares
Amount Invested
Client
Purchase
Purchased
JB
No
September 20, 2004
50
$0
RB
No
September 20, 2004
50
$0
CR
No
September 20, 2004
250
$06
JPL
No
September 20, 2004
2,000
$0
MS
No
September 20, 2004
1,250
$07
WS (954171
Yes
April 1, 2005
400
$75,000
Ontario Inc.)
JMV
Yes
July 11, 2006
675
$100,000
September 1, 2006
ST No
325
$50,000
June 1, 2009
75
$08
November 17, 2007
DR Yes
255
$50,000
June 14, 2008
205
$40,000
SR (1479095
No
April 30, 2008
400
$120,000
Ontario Inc.)
July 17, 2008
BS Yes
200
$50,000
January 20, 2009
200
$50,000
RN/PK
Yes/No
June 1, 2009
600
$09
JK
Yes
June 29, 2009
400
$120,000
PH
No
August 13, 2009
200
$60,000

Total 7,535
$715,000

30.
At all material times, the Respondent owned, directly or indirectly, at least 4,740
common shares and 1,250 Class A common shares of Frontex. The Respondent is the largest
common shareholder and the sole Class A common shareholder of Frontex.

31.
The shares of Frontex were sold to clients and other individuals pursuant to the terms of
subscription agreements, convertible debenture agreements, and share purchase agreements
which were prepared by the Respondent.

32.
The shares sold pursuant to subscription agreements were offered in purported reliance
on the condition that the issue and sale of the shares was exempt from the registration and
prospectus requirements of the Ontario Securities Act, R.S.O. 1990 c. S.5 as amended (the
“Securities Act”).

6 CR received shares in exchange for providing legal services to Frontex
7 MS received shares in exchange for providing technology-related and other services to Frontex.
8 ST received shares in exchange for providing legal services to Frontex
9 RN and PK received shares in exchange for providing legal services to Frontex.
Page 7 of 18

33.
The convertible debenture agreements granted the debenture holder the right to convert
the debenture into shares of Frontex, but did not otherwise identify the provisions of the
Securities Act which the Respondent purported to rely upon in order to issue and sell the shares
of Frontex.

34.
The share purchase agreements do not refer to the Securities Act.

35.
The shares and convertible debentures of FrontEx were not investment products approved
by FundEX for sale by its Approved Persons, including the Respondent. The Respondent did not
disclose to FundEX, and FundEX was not otherwise aware, that the Respondent was selling
shares and convertible debentures of Frontex to clients and other individuals, until October 2009.

36.
The sale of the shares and convertible debentures of Frontex, whether conducted by
subscription agreement, convertible debenture agreement, or share purchase agreement, was not
carried on for the account or through the facilities of FundEX.

Allegation #3: Conflict of Interest – Sale of Frontex Shares and Debentures

37.
As stated above, the Respondent is the president, largest shareholder and controlling
mind of Frontex. As a result, the sale of the shares and convertible debentures of Frontex gave
rise to a conflict between the interests of the clients and the interests of the Respondent.

38.
The Respondent did not disclose to FundEX, and FundEX was not otherwise aware, that
the Respondent was selling shares and convertible debentures of Frontex to clients and other
individuals until October 2009.

39.
The Respondent failed to comply with FundEX’s policies and procedures with respect to
conflicts of interest, as described above.

Allegation #4: Failure to Cooperate

40.
On November 23, 2010, the Respondent was interviewed by Staff with respect to the
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events described in Allegations #1 to #3 above. During the interview, the Respondent gave a
number of undertakings to provide certain information and documentation requested by Staff.

41.
On December 2 and 3, 2010, Staff made additional requests for information and
documentation from the Respondent.

42.
For the remainder of this Settlement Agreement, the undertakings given during the
Respondent’s interview with Staff, and the additional information requested from the
Respondent on December 2 and 3, 2010, will be referred to collectively as the “Undertakings”.

43.
Commencing in December 2010, Staff made repeated requests for the Respondent to
answer the Undertakings.

44.
Despite Staff’s repeated requests, the Respondent failed to answer 13 of the 19
Undertakings on a timely basis, as summarized below:

Undertaking
Item Requested
Date Response
Delay
#
Received
2.
Copy of any archived e-mail
4/5/11 4
months
correspondence with Michael Greer
regarding Frontex.
5.
A copy of the “booklet” that was used in the 4/5/11 4
months
focus groups that were conducted.
6.
Copies of any e-mails, evidence of
4/5/11 4
months
discussion of focus group.
7.
Copy of any shareholder agreements and all 5/4/12 17
months
loan agreements/promissory notes for all
Frontex investors, including those
shareholders that invested after your
termination from FundEX (including but
not limited to CC).
8.
Copies of any e-mails, letters, notes or any
5/10/12 17
months
other documentation that may exist between
you and any Frontex shareholders regarding
any loans or investments in Frontex.
10.
Copies of the notes, meeting minutes and
5/10/12 17
months
agendas from all shareholder meetings of
Frontex.
11.
A list of shareholders and their percentage
7/5/11 7
months
of ownership (provide historical information
as well when the shareholders changed).
Page 9 of 18

Undertaking
Item Requested
Date Response
Delay
#
Received
12.
Provide confirmation of future payments
5/11/12 17
months
made to MB.
13.
Account statements from Devries Financial
4/13/12 16
months
from January 2006 to December 2009.
16.
Confirm if MS and BS were ever mutual
5/10/12 17
months
fund clients while you were registered with
FundEX.
17.
For those personal loans that were made
5/8/12 17
months
with RN, JJ, BS, ND, and DS:

(a) Provide confirmation that payments
were made (copies of cashed cheques,
Account Statements and/or written
statements from the individuals); (b)
Confirm the source of the monies that were
used to pay the loans (how did you pay back
the loans?); and (c) Are there any other
loans outstanding?
18.
MFDA Staff received information about
5/8/12 17
months
additional loans extended to JPL involving
Frontex ($27,000) and a Numbered Ontario
Corp. ($285,000) that were not previously
disclosed. Please comment on this
information and provide all supporting
documentation in your response. Please
also advise if there is a numbered company
or companies that you have used for
business purposes and provide information
regarding the date the account was set up,
the purpose of the account, the account
numbers, account holders, etc.
19.
Comment on how commission rebating was
5/8/12 17
months
being facilitated at the branch and explain
the process that was in place while you were
registered with FundEX.

45.
All of the Undertakings have now been answered.

46.
The Respondent’s failure to answer the Undertakings on a timely basis frustrated the
ability of Staff to investigate the full nature and extent of the Respondent’s misconduct as
described in Allegations #1 to #3 above.


Page 10 of 18

Additional

47.
The Respondent has not previously been the subject of MFDA disciplinary proceedings.

48.
Apart from the anonymous complaint received regarding the monies that the Respondent
had borrowed from client MB (see paragraph 18 above), Staff did not receive further complaints
with respect to the Respondent.

49.
Staff’s investigation did not reveal any evidence of client loss.

V.
CONTRAVENTIONS

50.
The Respondent admits the following contraventions of the By-laws, Rules or Policies of
the MFDA:

(a) between about August 2002 and October 2009, the Respondent engaged in personal
financial dealings with clients by borrowing $426,350 from 8 clients, either personally or
through his businesses Devries Financial or Frontex, thereby giving rise to conflicts or
potential conflicts of interest between the Respondent and the clients that the Respondent
failed to ensure were addressed by the exercise of responsible business judgment
influenced only by the best interests of the clients, contrary to MFDA Rules 2.1.4 and
2.1.1;
(b) between about September 2004 and December 2009, the Respondent engaged in
securities related business that was not carried on for the account of the Member and
through the facilities of the Member by selling shares and convertible debentures of
Frontex to 15 clients and other individuals, contrary to MFDA Rule 1.1.1;
(c) between about September 2004 and December 2009, the Respondent engaged in personal
financial dealings with 9 clients by selling shares and convertible debentures of Frontex
to the clients, thereby giving rise to conflicts or potential conflicts of interest between the
Respondent and the clients that the Respondent failed to ensure were addressed by the
exercise of responsible business judgment influenced only by the best interests of the
clients, contrary to MFDA Rules 2.1.4 and 2.1.1; and
(d) commencing in December 2010, the Respondent failed to provide information and
Page 11 of 18

documentation requested by MFDA Staff during the course of an investigation, when he
failed to answer undertakings on a timely basis that he had given during an interview
with MFDA Staff, contrary to section 22.1 of MFDA By-law No. 1.

VI.
TERMS OF SETTLEMENT

51.
The Respondent agrees to the following terms of settlement:

(a) the Respondent shall for a period of seven (7) years be prohibited from conducting
securities related business while in the employ of or associated with any MFDA Member,
pursuant to s. 24.1.1(e) of MFDA By-law No. 1;
(b) the Respondent shall pay a fine in the amount of $20,000.00 pursuant to s. 24.1.1(b) of
MFDA By-law No. 1, payable as follows:
i. $10,000.00 payable on or before November 15, 2012; and
ii. $10,000.00 payable on or before February 15, 2013.
(c) the Respondent shall pay costs in the amount of $5,000.00 pursuant to s. 24.2 of MFDA
By-law No. 1 payable upon acceptance of the settlement;
(d) if the Respondent fails to comply with subparagraphs (b) or (c), then without further
notice to the Respondent, the Respondent shall summarily be permanently prohibited
from conducting securities related business in any capacity while in the employ of or
associated with any MFDA Member, pursuant to s. 24.1.1(e) of MFDA By-law No. 1;
(e) the Respondent shall in the future comply with all MFDA By-laws, Rules and Policies,
and all applicable securities legislation and regulations made thereunder, including Rules
1.1.1, 2.1.1, 2.1.4, and section 22.1 of MFDA By-law No. 1; and
(f) the Respondent will attend in person, on the date set for the Settlement Hearing.

VII.
STAFF COMMITMENT

52.
If this Settlement Agreement is accepted by the Hearing Panel, Staff will not initiate any
proceeding under the By-laws of the MFDA against the Respondent in respect of the facts set out
in Part IV and the contraventions described in Part V of this Settlement Agreement, subject to
the provisions of Part X below. Nothing in this Settlement Agreement precludes Staff from
investigating or initiating proceedings in respect of any facts and contraventions that are not set
Page 12 of 18

out in Parts IV and V of this Settlement Agreement or in respect of conduct that occurred outside
the specified date ranges of the facts and contraventions set out in Parts IV and V, whether
known or unknown at the time of settlement. Furthermore, nothing in this Settlement Agreement
shall relieve the Respondent from fulfilling any continuing regulatory obligations.

VIII. PROCEDURE FOR APPROVAL OF SETTLEMENT

53.
Acceptance of this Settlement Agreement shall be sought at a hearing of the Central
Regional Council of the MFDA on a date agreed to by counsel for Staff and the Respondent.

54.
Staff and the Respondent may refer to any part, or all, of the Settlement Agreement at the
settlement hearing. Staff and the Respondent also agree that if this Settlement Agreement is
accepted by the Hearing Panel, it will constitute the entirety of the evidence to be submitted
respecting the Respondent in this matter, and the Respondent agrees to waive his rights to a full
hearing, a review hearing before the Board of Directors of the MFDA or any securities
commission with jurisdiction in the matter under its enabling legislation, or a judicial review or
appeal of the matter before any court of competent jurisdiction.

55.
Staff and the Respondent agree that if this Settlement Agreement is accepted by the
Hearing Panel, then the Respondent shall be deemed to have been penalized by the Hearing
Panel pursuant to s. 24.1.2 of By-law No. 1 for the purpose of giving notice to the public thereof
in accordance with s. 24.5 of By-law No. 1.

56.
Staff and the Respondent agree that if this Settlement Agreement is accepted by the
Hearing Panel, neither Staff nor the Respondent will make any public statement inconsistent with
this Settlement Agreement. Nothing in this section is intended to restrict the Respondent from
making full answer and defence to any civil or other proceedings against him.

IX.
FAILURE TO HONOUR SETTLEMENT AGREEMENT

57.
If this Settlement Agreement is accepted by the Hearing Panel and, at any subsequent
time, the Respondent fails to honour any of the Terms of Settlement set out herein, Staff reserves
the right to bring proceedings under section 24.3 of the By-laws of the MFDA against the
Page 13 of 18

Respondent based on, but not limited to, the facts set out in Part IV of the Settlement Agreement,
as well as the breach of the Settlement Agreement. If such additional enforcement action is
taken, the Respondent agrees that the proceeding(s) may be heard and determined by a hearing
panel comprised of all or some of the same members of the hearing panel that accepted the
Settlement Agreement, if available.

X.
NON-ACCEPTANCE OF SETTLEMENT AGREEMENT

58.
If, for any reason whatsoever, this Settlement Agreement is not accepted by the Hearing
Panel or an Order in the form attached as Schedule “A” is not made by the Hearing Panel, each
of Staff and the Respondent will be entitled to any available proceedings, remedies and
challenges, including proceeding to a disciplinary hearing pursuant to sections 20 and 24 of By-
law No. 1, unaffected by this Settlement Agreement or the settlement negotiations.

59.
Whether or not this Settlement Agreement is accepted by the Hearing Panel, the
Respondent agrees that he will not, in any proceeding, refer to or rely upon this Settlement
Agreement or the negotiation or process of approval of this Settlement Agreement as the basis
for any allegation against the MFDA of lack of jurisdiction, bias, appearance of bias, unfairness,
or any other remedy or challenge that may otherwise be available.

XI.
DISCLOSURE OF AGREEMENT

60.
The terms of this Settlement Agreement will be treated as confidential by the parties
hereto until accepted by the Hearing Panel, and forever if, for any reason whatsoever, this
Settlement Agreement is not accepted by the Hearing Panel, except with the written consent of
both the Respondent and Staff or as may be required by law.

61.
Any obligations of confidentiality shall terminate upon acceptance of this Settlement
Agreement by the Hearing Panel.

XII.
EXECUTION OF SETTLEMENT AGREEMENT

62.
This Settlement Agreement may be signed in one or more counterparts which together
Page 14 of 18

shall constitute a binding agreement.

63.
A facsimile copy of any signature shall be effective as an original signature.

Dated: May 11, 2012

“Scott
Devries”

Witness- Signature
Scott Devries

Witness – Print Name

“Shaun
Devlin”

Staff of the MFDA

Per: Shaun Devlin
Vice-President,
Enforcement

Page 15 of 18

Schedule “A”
Order
File No. 201110

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: Scott Devries



ORDER

WHEREAS on [date], the Mutual Fund Dealers Association of Canada (the “MFDA”)
issued a Notice of Settlement Hearing pursuant to section 24.4 of By-law No. 1 in respect of
Scott Devries (the “Respondent”);
AND WHEREAS the Respondent entered into a settlement agreement with Staff of the
MFDA, dated [date] (the “Settlement Agreement”), in which the Respondent agreed to a
proposed settlement of matters for which the Respondent could be disciplined pursuant to
sections 20 and 24.1 of By-law No. 1;
AND WHEREAS the Hearing Panel is of the opinion that the Respondent contravened
the By-laws, Rules or Policies of the MFDA as follows:
(a) between about August 2002 and October 2009, the Respondent engaged in personal
financial dealings with clients by borrowing $426,350 from 8 clients, either personally or
through his businesses Devries Financial or Frontex, thereby giving rise to conflicts or
potential conflicts of interest between the Respondent and the clients that the Respondent

Page 16 of 18

failed to ensure were addressed by the exercise of responsible business judgment
influenced only by the best interests of the clients, contrary to MFDA Rules 2.1.4 and
2.1.1;
(b) between about September 2004 and December 2009, the Respondent engaged in
securities related business that was not carried on for the account of the Member and
through the facilities of the Member by selling shares and convertible debentures of
Frontex to 15 clients and other individuals, contrary to MFDA Rule 1.1.1;
(c) between about September 2004 and December 2009, the Respondent engaged in personal
financial dealings with 9 clients by selling shares and convertible debentures of Frontex
to the clients, thereby giving rise to conflicts or potential conflicts of interest between the
Respondent and the clients that the Respondent failed to ensure were addressed by the
exercise of responsible business judgment influenced only by the best interests of the
clients, contrary to MFDA Rules 2.1.4 and 2.1.1; and
(d) commencing in December 2010, the Respondent failed to provide information and
documentation requested by MFDA Staff during the course of an investigation, when he
failed to answer undertakings on a timely basis that he had given during an interview
with MFDA Staff, contrary to section 22.1 of MFDA By-law No. 1.
IT IS HEREBY ORDERED THAT the Settlement Agreement is accepted, as a
consequence of which:
1. The Respondent shall for a period of seven (7) years be prohibited from conducting
securities related business while in the employ of or associated with any MFDA Member,
pursuant to s. 24.1.1(e) of MFDA By-law No. 1;
2. The Respondent shall pay a fine in the amount of $20,000.00 pursuant to s. 24.1.1(b) of
MFDA By-law No. 1, payable as follows:
a. $10,000.00 payable on or before November 15, 2012; and
b. $10,000.00 payable on or before February 15, 2013.
3. The Respondent shall pay costs in the amount of $5,000.00 pursuant to s. 24.2 of MFDA
By-law No. 1 payable upon acceptance of the settlement.

Page 17 of 18

4. If the Respondent fails to comply with paragraphs (2) or (3), then without further notice
to the Respondent, the Respondent shall summarily be permanently prohibited from
conducting securities related business in any capacity while in the employ of or
associated with any MFDA Member, pursuant to s. 24.1.1(e) of MFDA By-law No. 1.
5. The Respondent shall in the future comply with all MFDA By-laws, Rules and Policies,
and all applicable securities legislation and regulations made thereunder, including Rules
1.1.1, 2.1.1, 2.1.4, and section 22.1 of MFDA By-law No. 1.
6. If at any time a non-party to this proceeding requests production of, or access to, any
materials filed in, or the record of, this proceeding, including all exhibits and transcripts,
then the MFDA Corporate Secretary shall not provide copies of, or access to, the
requested documents to the non-party without first redacting from them any and all
intimate financial or personal information, pursuant to Rules 1.8(2) and (5) of the MFDA
Rules of Procedure.
DATED this [day] day of [month], 20[ ].
Per: __________________________

[Name of Public Representative], Chair
Per: _________________________

[Name of Industry Representative]
Per: _________________________

[Name of Industry Representative]

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