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: Aubrey Reid Wallace
- Staff of the Mutual Fund Dealers Association of Canada (“Staff”) and Aubrey Reid Wallace (the “Respondent”), consent and agree to settlement of this matter by way of this agreement (the “Settlement Agreement”).
- 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
- Staff and the Respondent jointly recommend that the Hearing Panel accept the Settlement Agreement.
- The Respondent admits to the following violations of the By-laws, Rules or Policies of the MFDA:
- on June 13, 2014, the Respondent processed three trades in the account of one client without the client’s authorization, contrary to MFDA Rules 2.3.1 and 2.1.1.
- Staff and the Respondent agree and consent to the following terms of settlement:
- the Respondent shall pay a fine in the amount of $10,500 pursuant to s. 24.1.1(b) of MFDA By-law No. 1;
- the Respondent shall pay costs in the amount of $2,500 pursuant to s. 24.2 of MFDA By-law No. 1;
- the Respondent shall in the future comply with MFDA Rules 2.3.1 and 2.1.1; and
- the Respondent will attend in person on the date set for the Settlement Hearing.
- 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
- Since May 2008, the Respondent has been registered in Nova Scotia as a mutual fund salesperson (now known as a dealing representative) with Investors Group Financial Services Inc. (“Investors Group”), a Member of the MFDA.
- At all material times, the Respondent conducted business in the Truro, Nova Scotia area.
- In November 2012, the Respondent became the mutual fund salesperson at Investors Group responsible for servicing client MC’s accounts.
- On March 7, 2014, client MC completed a Transfer Authorization Form, which contained instructions to transfer the entire balance in his account at TD Canada Trust (“TD”) to his account at Investors Group. Client MC requested that the Respondent contact him once the transfer was processed so that he could advise the Respondent with respect to how to invest the proceeds from the transfer.
- On or about May 23, 2014, the entire balance of $5,889.90 in client MC’s TD account (after deducting transfer fees) was transferred to Investors Group (the “Transfer”).
- On or about June 13, 2014, the Respondent, without notifying client MC about the Transfer, and without obtaining client MC’s authorization, used the proceeds from the Transfer to process three mutual fund purchases in client MC’s account at Investors Group.
- The Respondent used his discretion to select which mutual funds to purchase and the date on which the purchases were made.
- On June 17, 2014, client MC contacted the Respondent to inquire about the status of the Transfer.
- On June 17, 2014, the Respondent advised client MC that:
- the Transfer had already been processed;
- the Respondent had used the proceeds from the Transfer to purchase “three different funds” in client MC’s account; and
- the Respondent had “forgot that [the Respondent and client MC] were to meet before the money was invested.”
- Upon learning that the Respondent invested the Transfer proceeds without his authorization, client MC requested that the Respondent process switches in order to transfer his investments from the mutual funds purchased on his behalf to a money market mutual fund. On June 20, 2014, the Respondent processed the switches requested by client MC.
- Between June 13, 2014, which is the date on which the Respondent made the unauthorized mutual fund purchases in client MC’s account, and June 20, 2014, which is the date on which the Respondent processed the switches requested by client MC described above, client MC’s investments declined by a total amount of $6.26.
Action Taken by the Member
- Investors Group became aware of the conduct that is the subject of this Settlement Agreement after it received a complaint from client MC about the unauthorized trades in his account.
- On January 29, 2015, Investors Group sent a cautionary letter to the Respondent regarding the conduct described above.
- In May 2015, Investors Group reviewed 25 of the Respondent’s client files to determine if the Respondent had processed unauthorized trades in the clients’ accounts. No instances of unauthorized trading were identified.
- There is no evidence that the Respondent received any financial benefit from engaging in the misconduct described in this Settlement Agreement, beyond the commissions and fees that he would ordinarily be entitled to receive had the transactions been carried out in the proper manner.
- 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 of the allegations.
IV. ADDITIONAL TERMS OF SETTLEMENT
- 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.
- 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.
- 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.
- Staff and the Respondent agree that if this Settlement Agreement is accepted by the Hearing Panel:
- the Settlement Agreement will constitute the entirety of the evidence to be submitted respecting the Respondent in this matter;
- 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;
- Staff will not initiate any proceeding under the By-laws of the MFDA against the Respondent in respect of the facts and 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;
- 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
- 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.
- 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.
- 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.
- 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.
TJLWitness - Signature
TJLWitness - Print Name
“Aubrey Reid Wallace”
Aubrey Reid Wallace
“Shaun Devlin ”
Staff of the MFDA
Per: Shaun Devlin
Member Regulation – Enforcement
File No. 201683
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: Aubrey Reid Wallace
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 Aubrey Reid Wallace (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 ss. 20 and 24.1 of By-law No. 1;
AND WHEREAS the Hearing Panel is of the opinion that on June 13, 2014, the Respondent processed three trades in the account of one client without the client’s authorization, contrary to MFDA Rules 2.3.1 and 2.1.1.
IT IS HEREBY ORDERED THAT the Settlement Agreement is accepted, as a consequence of which:
- The Respondent shall pay a fine in the amount of $10,500 pursuant to s. 24.1.1(b) of MFDA By-law No. 1;
- The Respondent shall pay costs in the amount of $2,500 pursuant to s. 24.2 of MFDA By-law No. 1;
- The Respondent shall in the future comply with MFDA Rules 2.3.1 and 2.1.1; and
DATED this [day] day of [month], 20[ ].
[Name of Public Representative], Chair
[Name of Industry Representative]
[Name of Industry Representative]