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:
Settlement Agreement
Settlement Agreement
File No. 201202
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: Alex Wai Yuk Lam
SETTLEMENT AGREEMENT
I.
INTRODUCTION
1.
By Notice of Settlement Hearing, the Mutual Fund Dealers Association of Canada
(“MFDA”) will announce that it proposes to hold a hearing to consider whether, pursuant to s.
24.4 of MFDA By-law No. 1, a hearing panel of the Central Regional Council of the MFDA
(“Hearing Panel”) should accept the settlement agreement entered into between Staff of the
MFDA (“Staff”) and the Respondent, Alex Wai Yuk Lam (“Settlement Agreement”).
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.
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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
XI) 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.
The Respondent was registered as a mutual fund salesperson in Ontario with WFG
Securities of Canada Inc.1 (“WFG Securities”), from October 2002 to January 19, 2010, when he
was terminated for cause when the subject matter of this proceeding came to light.
7.
The Respondent was registered to sell insurance from May 7, 2009 to December 9, 2009
with World Financial Group Insurance Agency of Canada Inc. (“WFG Insurance”).
8.
The Respondent is not currently registered in the securities industry in any capacity.
1 WFG Securities has been a Member of the MFDA since April 2002.
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Respondent’s Misconduct
9.
On December 8, 2009, the Respondent attended a meeting with supervisory staff at WFG
Securities that he had arranged in order to discuss the suitability of potential loans for four of his
clients. During this meeting, additional documents from the four clients’ files were reviewed
and supervisory staff discovered three blank, pre-signed trade forms, meaning three photocopies
of a blank trade form that had been signed by the client.
10.
WFG Securities supervisory staff informed the Respondent that as a result of the pre-
signed forms that had been discovered, WFG Securities would undertake a supervisory
investigation, including WFG Securities compliance staff reviewing all of the Respondent’s
client files to ensure that there were no other blank pre-signed forms in his client files.
11.
WFG Securities supervisory staff asked the Respondent at this meeting whether he
maintained other pre-signed forms in his client files. The Respondent understood the question to
be directed at whether he had conducted any unauthorized trading and so responded that he did
not.
12.
On December 8, 10, and 11, 2009, WFG Securities conducted a review of the entirety of
the Respondent’s client files (“Review”) and identified further blank or partially completed pre-
signed forms in relation to 23 clients and individuals.2
13.
The particulars of the blank or partially completed pre-signed forms were as follows:
(i)
18 instances (9 clients and 4 individuals) of pre-signed trade forms, including:
(a) 16 instances (7 clients and 4 individuals) with only the person’s name and
signature present, and in some instances, partial trade instructions; and
(b) 2 instances (2 clients) of photocopying and altering the form or ‘whiting out’
details on an old form and re-using the form;
(ii) 10 instances (6 clients and 4 individuals) of pre-signed account opening
documents3, including:
2 These individuals were the Respondent’s insurance clients, as distinct from clients of WFG Securities. The
Respondent’s ordinary course business dealings with insurance clients are not subject to regulatory oversight by the
MFDA and do not form part of the Contraventions admitted to herein.
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(a) 7 instances (3 clients and 4 individuals) with little or no information
populated aside from the person’s name and signature; and
(b) 3 instances (3 clients) where the client’s signature was photocopied or cut
out from a previous form and taped on or information was ‘whited out’ and
altered;
(iii) 4 instances (2 clients and 1 individual) of pre-signed Client Change forms, with no
information populated aside from the person’s name and signature including:
(a) 3 instances (1 client and 1 individual) with little or no information populated
aside from the person’s name and signature; and
(b) one instance (1 client) where the client’s signature was cut out from a
previous form and taped on.
(iv) 13 instances (4 clients and 5 individuals) of pre-signed investment loan
applications:
(a) 3 instances (1 client and 2 individuals) with little or no information
populated aside from the person’s name and signature; and
(b) 10 instances (3 clients and 3 individuals) where information (such as the
loan amount, the person’s financial details, the securities to be purchased with
the loan proceeds, the repayment options, and the date the client signed) was
either missing or was altered without the person initialing.
14.
On December 10, 2009, WFG Securities suspended the Respondent’s registration with
WFG Securities, as well as with WFG Insurance.
15.
On December 16, 2009, WFG Securities met with the Respondent to discuss the findings
arising from the Review. At this meeting, the Respondent admitted to obtaining and maintaining
all of the pre-signed forms.
16.
WFG Securities’ policies and procedures manual contained a section prohibiting the use
of pre-signed forms by Approved Persons.
Respondent’s Circumstances
17.
The Respondent is 35 years old, and has worked in the financial services industry for
most of his career.
3 Account opening documents refer to a New Client Account Form or a Know Your Client form.
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18.
As a result of the events herein, the Respondent lost his book of business at WFG
Securities. He wishes to return to the mutual fund industry.
19.
There is no evidence of misappropriation, unauthorized trading, or client harm in this
matter.
20.
There is no evidence that the Respondent received any financial benefit from engaging in
the misconduct beyond that to which he would have been ordinarily entitled had the transactions
in the clients’ accounts been carried out in the proper manner (i.e. by a trade form signed by the
client or through the use of a limited trading authorization).
21.
The Respondent states that the following factors contributed to his misconduct:
his belief that he was providing convenient service to his clients by not ‘bothering’
them to sign the client account forms; and
the fact that he was not up to date with, and did not appreciate the importance of, an
Approved Person’s obligations to be compliant with the regulatory regime.
22.
Staff is satisfied that the Respondent accepts his conduct was improper, and has
undertaken a proactive course of action in order to comply with his regulatory obligations going
forward. In particular, the Respondent has registered for, and is working towards successful
completion of, the IFSE (IFIC) Mutual Fund Dealer Compliance course.
23.
The Respondent has no prior disciplinary history with the MFDA. He has cooperated
fully with Staff during the course of the investigation, and by agreeing to this settlement, has
reduced the resources required to be allocated to the investigation and avoided the necessity of a
full hearing on the merits.
V.
CONTRAVENTIONS
24.
The Respondent admits that between 2002 and 2010, he obtained and maintained 28
blank and incomplete pre-signed forms for 16 clients, contrary to MFDA Rule 2.1.1(a).
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VI.
TERMS OF SETTLEMENT
25.
The Respondent agrees to the following terms of settlement:
(i)
the Respondent shall be prohibited from conducting securities related business in
any capacity while in the employ of or associated with any MFDA Member for a
period of 15 months commencing from the date of the Hearing Panel’s Order
herein, pursuant to s. 24.1.1(e) of MFDA By-law No. 1;
(ii) the Respondent shall successfully complete the IFSE (IFIC) Mutual Fund Dealer
Compliance course (“Course”), pursuant to s. 24.1.1(f) of MFDA By-law No. 1;
(iii) in the event that the Respondent does not successfully complete the Course by the
end of 15 months after the date of the Hearing Panel’s Order herein, the prohibition
shall continue until such time as the Respondent successfully completes the Course,
pursuant to s. 24.1.1(f) of MFDA By-law No. 1;
(iv) the Respondent shall pay costs in the amount of $2,500, pursuant to s. 24.2 of
MFDA By-law No. 1;
(v) the Respondent shall attend in person at the Settlement Hearing; and
(vi) the Respondent shall in future comply with MFDA Rule 2.1.1(a).
VII.
STAFF COMMITMENT
26.
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 XI below. Nothing in this Settlement Agreement precludes Staff from
investigating or initiating proceedings in respect of any facts and contraventions that are not set
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. Furthermore,
nothing in this Settlement Agreement shall relieve the Respondent from fulfilling any continuing
regulatory obligations.
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VIII. PROCEDURE FOR APPROVAL OF SETTLEMENT
27.
Acceptance of this Settlement Agreement shall be sought at a hearing of the Central
Regional Council of the MFDA Tuesday, September 11, 2012.
28.
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.
29.
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.
30.
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
31.
If this Settlement Agreement is accepted by the Hearing Panel and, at any subsequent
time, the Respondent fails to honor any of the terms of settlement set out herein, apart from the
term set out in paragraph 25(vi) herein, Staff reserves the right to bring proceedings under s. 24.3
of By-law No. 1 against the 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.
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X.
NON-ACCEPTANCE OF SETTLEMENT AGREEMENT
32.
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.
33.
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
34.
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.
35.
Any obligations of confidentiality shall terminate upon acceptance of this Settlement
Agreement by the Hearing Panel.
XII.
EXECUTION OF SETTLEMENT AGREEMENT
36.
This Settlement Agreement may be signed in one or more counterparts, which together,
shall constitute a binding agreement.
37.
A facsimile copy of any signature shall be effective as an original signature.
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Dated: September 4, 2012.
“Jennifer Tang”
“Alex Wai Yuk Lam”
Witness – Signature
Alex Wai Yuk Lam
Jennifer Tang
Witness – Print name
“Shaun
Devlin”
Staff of the MFDA
Per: Shaun Devlin
Vice-President, Enforcement
Page 9 of 11
Schedule “A”
Order
File No. 201202
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: Alex Wai Yuk Lam
ORDER
WHEREAS on _________, 2012, the Mutual Fund Dealers Association of Canada
(“MFDA”) issued a Notice of Settlement Hearing pursuant to s. 24.4 of MFDA By-law No. 1 in
respect of Alex Wai Yuk Lam (“Respondent”);
AND WHEREAS the Respondent entered into a settlement agreement with Staff of the
MFDA dated _________, 2012, in 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 By-law No.
1 (“Settlement Agreement”);
AND WHEREAS the Hearing Panel is of the opinion that between 2002 and 2010, the
Respondent obtained and maintained 28 pre-signed forms for 16 clients, contrary to MFDA Rule
2.1.1(a);
IT IS HEREBY ORDERED THAT the Settlement Agreement is accepted, as a
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1. the Respondent shall be prohibited from conducting securities related business in any
capacity while in the employ of or associated with any MFDA Member for a period of 15
months commencing from the date of this Order, pursuant to s. 24.1.1(c) of MFDA By-
law No. 1;
2. the Respondent shall successfully complete the IFSE (IFIC) Mutual Fund Dealer
Compliance course (the “Course”), pursuant to section 24.1.1(f) of MFDA By-law No. 1;
3. in the event that the Respondent does not successfully complete the Course by the end of
15 months after the date of this Order, the prohibition shall resume or continue until such
time as the Respondent successfully completes the Course, pursuant to section 24.1.1(f)
of MFDA By-law No. 1;
4. the Respondent shall pay costs in the amount of $2,500;
5. the Respondent shall in future comply with MFDA Rule 2.1.1(a); and
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,
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]
Doc 309559
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