Settlement Agreement

I. INTRODUCTION

1. Staff of the Mutual Fund Dealers Association of Canada (“Staff”) and the Respondent, Laurie Rose Lewis (“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. between November 2012 and April 2014, the Respondent altered and used to process transactions, 3 account forms in respect of 3 clients, by altering information on the account forms without having the clients initial the alterations, contrary to MFDA Rule 2.1.1;
   2. between August 2012 and January 2016, the Respondent altered information on 17 account forms that had been previously signed by 10 clients and used in previous transactions in order to process new transactions in the clients’ accounts, contrary to MFDA Rule 2.1.1; and
   3. between February 2013 and February 2016, the Respondent obtained, possessed, and in some instances, used to process transactions, 51 pre-signed account forms in respect of 24 clients, 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 $20,000 pursuant to s. 24.1.1.(b) 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 payment by the Respondent of the Fine and Costs shall be made to and received by MFDA Staff in certified funds as follows:
      1. $5,000 (Fine) upon acceptance of the Settlement Agreement by the Hearing Panel;
      2. $2,500 (Costs) upon acceptance of the Settlement Agreement by the Hearing Panel;
      3. $7,500 on or before the last business day of the 3rd month following the date of the acceptance of the Settlement Agreement by the Hearing Panel;
      4. $7,500 on or before the last business day of the 6th month following the date of the acceptance of the Settlement Agreement by the Hearing Panel;
   4. if the Respondent fails to make any of the installment payments described above in sub-paragraph 5(c):
      1. any outstanding balance of the Fine and Costs owed by the Respondent shall become immediately due and payable to the MFDA; and
      2. the Respondent shall be prohibited 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 the 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 January 25, 2010, the Respondent has been registered in Alberta as a mutual fund salesperson (now known as a dealing representative) with Sun Life Financial Investment Services (Canada) Inc. (“Sun Life”), a Member of the MFDA.

8. At all material times, the Respondent conducted business in the Rocky Mountain House, Alberta area.

Altered Account Forms and Altering and Re-Using Account Forms

9. Between November 2012 and April 2014, the Respondent altered and used to process transactions, 3 account forms in respect of 3 clients by altering information on the account forms without having the clients initial the alterations.

10. The altered account forms consisted of:
    1. 1 pre-authorized chequing forms; and
    2. 2 transfer authorization forms.

11. Between August 2012 and January 2016, the Respondent used liquid correction fluid to alter information on 17 account forms in respect of 10 clients that had been previously signed by the clients and used in previous transactions to process new transactions in client accounts.

12. The altered account forms consisted of:
    1. 4 pre-authorized chequing forms;
    2. 3 transfer authorization forms;
    3. 3 Know Your Client (“KYC”) forms;
    4. 3 limited trading authorization (“LTA”) forms;
    5. 2 order tickets; and
    6. 2 account application forms.

13. The Respondent altered two of the above described account forms in response to supervisory inquiries, as described below.

14. On or about August 14, 2012, the Respondent attempted to open a TFSA account for a client, but failed to submit additional forms that were required to complete the account opening process. After Sun Life requested the additional forms, the Respondent submitted previously used forms for other accounts, used liquid correction fluid to alter the signature date, account number, and representative code on the previously used forms, and submitted the forms to Sun Life for processing. The Respondent states that she discussed re-using the forms with the client prior to submitting them for processing. There is no evidence that the forms contained inaccurate client information.

15. On or about January 13, 2015, the Respondent submitted a completed application form to open a new account for a client. Sun Life identified that the wrong account had been indicated on the form and instructed the Respondent to complete a new application form with the correct account type indicated. The Respondent used the signature page from the previously submitted application form and used liquid correction fluid to alter the date, which the Respondent submitted to Sun Life for processing on or about February 19, 2015. The Respondent states that she discussed re-using the form with the client prior to submitting it for processing. There is no evidence that the form contained inaccurate client information.

Pre-Signed Account Forms

16. At all material times, Sun Life’s policies and procedures prohibited its Approved Persons, including the Respondent, from obtaining, holding, or using pre-signed account forms.

17. Between February 2013 and February 2016, the Respondent obtained, possessed, and in 50 instances, used to process transactions, 51 pre-signed account forms in respect of 24 clients.

18. The pre-signed account forms consisted of:
    1. 18 order tickets;
    2. 9 pre-authorized chequing forms;
    3. 10 transfer authorization forms;
    4. 4 limited trading authorization forms;
    5. 4 KYC forms;
    6. 3 Verification of identify forms;
    7. 1 dealer or record change forms; and
    8. 2 TFSA applications.

Sun Life’s Investigation

19. On or about February 2, 2016, Sun Life’s compliance department detected one pre-signed account form that is the subject of this Settlement Agreement when the Respondent submitted the form for processing. Sun Life subsequently commenced an investigation and identified the remaining account forms that are the subject of this Settlement Agreement.

20. Effective April 30, 2016, Sun Life placed the Respondent on close supervision for a period of 12 months.

21. On or about May 9, 2016, Sun Life sent letters to all of the clients whose accounts were serviced by the Respondent in order to determine whether the transactions in the clients’ accounts were authorized. The clients did not report any concerns.

22. On or about June 1, 2016, Sun Life issued a warning letter to the Respondent, placed her on continued close supervision for a period of 12 months, and required her to complete an industry course.

23. On or about September 26, 2016, Sun Life sent additional audit letters to the 5 clients for whom pre-signed or altered KYC forms were used to ensure the KYC information recorded on those forms was accurate. The clients did not report any concerns.

24. The Respondent successfully completed the industry course as required by Sun Life. The Respondent successfully completed the close supervision term imposed by Sun Life and no issues were identified by Sun Life during that period.

Additional Factors

25. Since the Respondent became registered as a mutual fund salesperson and during the relevant period, the Respondent was employed by a senior advisor at his branch, with whom she shared responsibility for servicing clients. The senior advisor was the subject of an MFDA settlement agreement for similar misconduct.

26. The Respondent accepts responsibility for her conduct and is no longer employed by the senior advisor.

27. The Respondent states that she engaged in the conduct described in this Settlement Agreement for the purposes of client convenience.

28. There is no evidence that the Respondent sought to receive, or received any financial benefit from engaging in the misconduct described above beyond any commissions and fees that she would ordinarily be entitled to receive had the transactions been carried out in the proper manner. There is no evidence of any client loss or that any transactions were unauthorized.

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

30. The Respondent cooperated fully with Staff’s and Sun Life’s investigation into her conduct.

31. By entering into this Settlement Agreement, the Respondent expresses remorse for her misconduct and has saved the MFDA the time, resources, and expenses associated with conducting a full hearing of the allegations.

IV. ADDITIONAL TERMS OF SETTLEMENT

32. 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.

33. 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.

34. 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.

35. 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 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.

36. 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.

37. 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.

38. 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.