Settlement Agreement

I. INTRODUCTION

1. Staff of the Mutual Fund Dealers Association of Canada (“Staff”) and the Respondent, Sudhir Khanna (“Respondent”), consent and agree to settlement of this matter by way of this agreement (“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 MFDA:
   1. on March 22, 2016, the Respondent signed a client’s signature on 2 account forms, contrary to MFDA Rule 2.1.1; and
   2. on April 21, 2016, the Respondent misled the Member in its investigation into his conduct when he falsely denied that he signed a client’s signature on 2 account forms, contrary to MFDA Rule 2.1.1.

5. Staff and the Respondent agree and consent to the following terms of settlement:
   1. the Respondent shall be prohibited from conducting securities related business in any capacity while in the employ of or associated with a Member of the MFDA for a period of 6 months, pursuant to s. 24.1.1(e) of MFDA By-law No. 1;
   2. the Respondent shall pay costs in the amount of $2,500 pursuant to s. 24.2 of MFDA By-law No. 1;
   3. the Respondent shall be prohibited from acting as a branch manager for a period of 12 months, pursuant to s. 24.1.1(e) of MFDA By-law No. 1;
   4. the Respondent shall in the future comply with MFDA Rule 2.1.1; and
   5. the Respondent will attend by teleconference 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. Between 2011 and 2017, the Respondent was registered as a mutual fund salesperson (now known as a Dealing Representative).

8. Between June 2012 and April 27, 2017, the Respondent was registered in Ontario with Scotia Securities Inc. (“SSI”), a Member of the MFDA. At all material times, SSI designated the Respondent as a branch manager.

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

10. On April 27, 2017, as a result of the conduct that is the subject of this Settlement Agreement, SSI terminated the Respondent. He is not currently registered in the securities industry in any capacity.

AP Signed Client Signatures

11. At all material times, SSI’s policies and procedures prohibited its Approved Persons, including the Respondent, from signing a client’s signature on account forms.

12. At all material times, client JK was a client of SSI whose account was serviced by the Respondent.

13. On March 22, 2016, client JK telephoned the Respondent and instructed him to process a redemption from her client account in the amount of $2,000 (the “Redemption”).

14. SSI’s policies and procedures permit its Approved Persons to accept instructions from clients to process transactions over the telephone.

15. The Respondent entered the Redemption on SSI’s system, but in doing so inadvertently failed to indicate on the system that he had received instructions for the transaction over the telephone. As a result, SSI’s system generated account forms for an in-person visit, which included a place for the client to place her signature.

16. The Respondent printed off the Account Forms and signed client JK’s name on the Account Forms.

SSI’s Investigation and Misleading the Member

17. Client JK is related to SSI employee CS, who also worked at the Respondent’s branch.

18. On or about March 22, 2016, SSI employee CS reviewed the Account Forms during the course of her administrative duties and notified CSI that client JK had not attended at the branch on March 22, 2016.

19. As part of its investigation, SSI contacted client JK who confirmed that although she authorized the Redemption, she did not attend the branch on March 22, 2016 or sign any account forms in respect of the Redemption.

20. On April 21, 2016, during the course of SSI’s investigation into Redemption, the Respondent falsely stated that he had not signed client JK’s name on the Account Forms.

21. On April 27, 2016, SSI terminated the Respondent as a result of the conduct that is the subject of this Settlement Agreement.

Additional Factors

22. There is no evidence that the Respondent received any benefit from the conduct set out above beyond the commissions or fees he would ordinarily be entitled to receive had the transactions been carried out in the proper manner.

23. There is no evidence of client loss or lack of authorization for the Redemption.

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

25. 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.

IV. ADDITIONAL TERMS OF SETTLEMENT

26. 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.

27. 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. MFDA Settlement Hearings are typically held in the absence of the public pursuant to section 20.5 of MFDA By-law No. 1 and Rule 15.2(2) of the MFDA Rules of Procedure. If the Hearing Panel accepts the Settlement Agreement, then the proceeding will become open to the public and a copy of the decision of the Hearing Panel and the Settlement Agreement will be made available at mfda.ca.

28. 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.

29. 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 contraventions described in this Settlement Agreement. Nothing in this Settlement Agreement precludes Staff from investigating or initiating proceedings in respect of any 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.

30. 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.

31. 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.

32. 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.