Settlement Agreement

I. INTRODUCTION 

1. Staff of the Mutual Fund Dealers Association of Canada (“Staff”) and the Respondent, Claude Armand Vaillancourt, consent and agree to settlement of this matter by way of this agreement (the “Settlement Agreement”).

2. Staff conducted an investigation of the Respondent’s activities which disclosed 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.

II. JOINT SETTLEMENT RECOMMENDATION

3. Staff and the Respondent jointly recommend that the Hearing Panel accept the Settlement Agreement. 

4. The Respondent admits to the following violations of the By-laws, Rules or Policies of the Mutual Fund Dealers Association (“MFDA”): 
   1. between January 2009 and February 2015, the Respondent obtained, possessed, and used to process trades, 76 pre-signed account forms in respect of 14 clients; and
   2. between January 2009 and February 2015, the Respondent, acting in the capacity as alternate branch manager, reviewed and approved the use of 36 pre-signed account forms, contrary to MFDA Rules 2.5.5(f)[1] and 2.1.1. 

5. Staff and the Respondent agree and consent to the following terms of settlement: 
   1. the Respondent shall pay a fine in the amount of $11,500 pursuant to s. 24.1.1(b) of MFDA By-law No.1 (the “Fine”);
   2. the Fine shall be payable in 12 installments in the amount of $958.33 each, which are due on or before the final business day of the 12 months that follow the date of the acceptance of the settlement agreement by the Hearing Panel;
   3. the Respondent shall pay costs in the amount of $2,500 pursuant to s. 24.2 of MFDA By-law No.1;
   4. the Respondent shall be prohibited from conducting securities related business in the capacity of branch manager or any other supervisory capacity for a period of 12 months for a Member of the MFDA pursuant to s. 24.1.1(e) of MFDA By-law No.1;
   5. the Respondent shall successfully complete the branch manager course offered by the Canadian Securities Institute before seeking re-designation as a branch manager, pursuant to s. 24.1.1(f) of MFDA By-law No.1;
   6. the Respondent shall in the future comply with MFDA Rules 2.5.5(f) and 2.1.1; and
   7. the Respondent will attend in person, on the date set for the Settlement Hearing. 

6. Staff and the Respondent agree to the settlement on the basis of the facts set out in Part III herein and consent to the making of an Order in the form attached as Schedule “A”. 

III. AGREED FACTS 

Registration History 

7. Since November 1995, the Respondent has been registered in Ontario as a mutual fund salesperson (now known as a Dealing Representative) with PFSL Investments Canada Inc. (“PFSL”), a member of the MFDA. 

8. Between September 2006 and May 22, 2015, PFSL designated the Respondent as an Alternate Branch Manager. 

9. At all material times, the Respondent conducted business in the Stoney Creek, Ontario area. 

Pre-Signed Account Forms 

10. Between January 2009 and February 2015, the Respondent obtained, possessed, and used to process trades, 76 pre-signed account forms in respect of 14 clients. 

11. The pre-signed account forms consisted of redemption forms and Registered Education Savings Plan withdrawal forms. 

Approval of Pre-Signed Account Forms 

12. Between January 2009 and February 2015, the Respondent, acting in the capacity of alternate branch manager, reviewed and approved the use of 36 pre-signed account forms described above in paragraphs 10 and 11. 

PFSL’s Investigation 

13. PFSL’s compliance staff detected the conduct that is the subject of this Settlement Agreement as a result of a routine branch audit and subsequent follow-up investigation. 

14. As part of its investigation, PFSL sent letters to all affected clients serviced by the Respondent and to 17 additional clients serviced by the Respondent in order to determine whether the Respondent had engaged in any unauthorized trading. No clients reported any concerns. 

15. On June 3, 2015, PFSL placed the Respondent under close supervision for a period of at least 12 months. 

Additional Factors 

16. There is no evidence that the Respondent received any financial benefit from engaging in the misconduct described above beyond any commissions and fees that he would ordinarily be entitled to receive had the transactions been carried out in the proper manner. 

17. There is no evidence of any client harm or that the transactions were unauthorized. 

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

19. By entering into this Settlement Agreement, the Respondent has saved the MFDA the time, resources, and expenses associated with conducting a full hearing of the allegations. 

IV. ADDITIONAL TERMS OF SETTLEMENT 

20. This settlement is agreed upon in accordance with section 24.4 of MFDA By-law No. 1 and Rules 14 and 15 of the MFDA Rules of Procedure. 

21. The Settlement Agreement is subject to acceptance by the Hearing Panel which shall be sought at a hearing (the “Settlement Hearing”). At, or following the conclusion of, the Settlement Hearing, the Hearing Panel may either accept or reject the Settlement Agreement. 

22. The Settlement Agreement shall become effective and binding upon the Respondent and Staff as of the date of its acceptance by the Hearing Panel. Unless otherwise stated, any monetary penalties and costs imposed upon the Respondent are payable immediately, and any suspensions, revocations, prohibitions, conditions or other terms of the Settlement Agreement shall commence, upon the effective date of the Settlement Agreement. 

23. Staff and the Respondent agree that if this Settlement Agreement is accepted by the Hearing Panel:
    1. the Settlement Agreement will constitute the entirety of the evidence to be submitted respecting the Respondent in this matter;
    2. the Respondent waives any 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;
    3. Staff will not initiate any proceeding under the By-laws of the MFDA against the Respondent in respect of the facts and the contraventions described in this Settlement Agreement. 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 this Settlement Agreement.  Furthermore, nothing in this Settlement Agreement shall relieve the Respondent from fulfilling any continuing regulatory obligations;
    4. 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; and
    5. 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 the Respondent. 

24. If, for any reason, this Settlement Agreement is not accepted 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 the Settlement Agreement or the settlement negotiations. 

25. Staff and the Respondent agree that the terms of the 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.
26. The Settlement Agreement may be signed in one or more counterparts which together shall constitute a binding agreement.  A facsimile copy of any signature shall be effective as an original signature.

[1] Rule 2.5.5(f) has been re-numbered and re-worded during the period of the Respondent’s conduct described in this Settlement Agreement. Prior to September 2013, the Respondent’s conduct was contrary to MFDA Rule 2.5.5(d), and prior to December 2010, the Respondent’s conduct was contrary to MFDA Rule 2.5.3(b).