Settlement Agreement

I. INTRODUCTION

1. Staff of the Mutual Fund Dealers Association of Canada (“Staff”) and the Respondent, Chi Hong Arthur Yip (the “Respondent”), 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 MFDA:
   1. between April 2012 and September 2015, the Respondent signed the signature of 10 clients on 13 account forms, contrary to MFDA Rule 2.1.1; and
   2. between April 2012 and September 2015, the Respondent obtained, possessed and, in some instances, used to process transactions, 4 pre-signed 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 pay a fine in the amount of $12,500 pursuant to s. 24.1.1(b) of MFDA By-law No.1 (the “Fine”);
   2. the Respondent shall pay costs in the amount of $2,500 pursuant to s. 24.2 of MFDA By-law No.1 (“Costs”);
   3. the Respondent shall pay the Fine and Costs in certified funds as follows:
      1. $2,500 (Costs) payable upon entering into the Settlement Agreement;
      2. $2083.33 on the last business day of the first month following the date of the settlement hearing;
      3. $2083.33 on the last business day of the second month following the date of the settlement hearing;
      4. $2083.33 on the last business day of the third month following the date of the settlement hearing;
      5. $2083.33 on the last business day of the fourth month following the date of the settlement hearing;
      6. $2083.33 on the last business day of the fifth month following the date of the settlement hearing; and
      7. $2083.33 on the last business day of the sixth month following the date of the settlement hearing;
   4. if the Respondent fails to make any of the payments described above in paragraph 5, any outstanding balance of the Fine and Costs shall become immediately due and payable to the MFDA and the Respondent shall be immediately suspended from conducting securities related business while in the employ of or associated with a Member of the MFDA until such time as the total amount outstanding of Fine and Costs owed by the Respondent is paid to the MFDA, pursuant to s. 24.3.13(c) of MFDA By-law No.1;
   5. the Respondent shall in the future comply with MFDA Rule 2.1.1; and
   6. 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 1994, the Respondent has been registered as a mutual fund salesperson (now known as a Dealing Representative).
8. Since 2011, the Respondent has been registered in Ontario with Investia Financial Services Inc. (“Investia”), a Member of the MFDA.
9. At all material times, the Respondent conducted business in the Markham, Ontario area.

AP Signed Client Signatures

10. Between April 2012 and September 2015, the Respondent signed the signature of 10 clients on 13 pre-signed account forms (the “Account Forms”).
11. The Respondent had the clients sign the Account Forms when the forms were either blank or partially incomplete.
12. The Respondent then completed the missing information on the Account Forms, signed the clients’ names in pen over photocopies of the existing client signatures, and submitted to Investia the Account Forms for processing.
13. The Account Forms included withdrawal forms, Letters of Direction, and transfer authorization forms.

Pre-Signed Account Forms

14. At all material times, Investia’s policies and procedures prohibited its Approved Persons, including the Respondent, from using pre-signed account forms.
15. Between April 2012 and September 2015, the Respondent obtained, possessed and, in some instances, used to process transactions, 4 pre-signed account forms.
16. The pre-signed account forms consisted of transfer authorization forms and withdrawal forms.

Investia’s Investigation

17. On January 27, 2016, Investia became aware of the conduct that is the subject of this Settlement Agreement during the course of a branch audit.
18. As part of its investigation, Investia sent letters to all clients serviced by the Respondent in order to determine whether the Respondent engaged in discretionary trading. No clients reported any concerns. Investia also placed the Respondent under close supervision.
19. On July 7, 2016, Investia issued a warning letter to the Respondent in respect of the pre-signed account forms.

Additional Factors

20. 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.
21. There is no evidence of client loss or lack of authorization.
22. The Respondent has not previously been the subject of MFDA disciplinary proceedings.
23. 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

24. 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.
25. 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.
26. 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.
27. 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.
28. 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.
29. 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.
30. 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.