Settlement Agreement

I. INTRODUCTION

1. By Notice of Settlement Hearing, the Mutual Fund Dealers Association of Canada (“MFDA”) will announce that it proposes to hold a hearing to consider whether, pursuant to section 24.4 of By-law No. 1, a hearing panel of the Central Regional Council (“Hearing Panel”) of the MFDA should accept the settlement agreement entered into between Staff of the MFDA (“Staff”) and the Respondent, Grace Wong Uy (the “Settlement Agreement”).

II. JOINT SETTLEMENT RECOMMENDATION

2. Staff conducted an investigation of the Respondent’s activities. The investigation disclosed that the Respondent had engaged in activity for which the Respondent could be penalized on the exercise of the discretion of the Hearing Panel pursuant to section 24.1 of MFDA By-law No. 1.

3. Staff and the Respondent recommend settlement of the matters disclosed by the investigation in accordance with the terms and conditions set out below. The Respondent agrees to the settlement on the basis of the facts set out in Part IV herein and consents to the making of an Order in the form attached as Schedule “A”.

4. Staff and the Respondent agree that the terms of this 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.

III. ACKNOWLEDGEMENT

5. Staff and the Respondent agree with the facts set out in Part IV herein for the purposes of this Settlement Agreement only and further agree that this agreement of facts is without prejudice to the Respondent or Staff in any other proceeding of any kind including, but without limiting the generality of the foregoing, any proceedings brought by the MFDA (subject to Part IX) or any civil or other proceedings which may be brought by any other person or agency, whether or not this Settlement Agreement is accepted by the Hearing Panel.

IV. AGREED FACTS

Registration History

6. Between July 14, 2008 and April 17, 2016, the Respondent was registered in Ontario as a mutual fund salesperson (now known as a dealing representative) with Investia Financial Services Inc. (“Investia”), a Member of the MFDA.

7. Between March 2003 and July 14, 2008, the Respondent was registered in Ontario as a mutual fund salesperson with WFG Securities of Canada Inc. (now known as WFG Securities Inc.), a Member of the MFDA.

8. The Respondent was terminated by Investia on April 17, 2016 and is not currently registered in the securities industry in any capacity.

9. At all material times, the Respondent conducted business in Richmond Hill, Ontario.

Misconduct

10. In 2012, Approved Person HL, who was the Respondent’s branch manager, spoke with the Respondent about offering syndicated mortgage investments to clients. The syndicated mortgage investments (the “Investments”) were offered by real estate investment and development companies, Titan Equity Group Ltd. (“Titan”), Fortress Real Capital (“Fortress”) and Tier 1 Mortgages (“Tier 1”) (the “Companies”).

11. Approved Person HL had referral arrangements with the Companies. Beginning in 2012, the Respondent agreed to introduce clients to Approved Person HL to discuss the Investments and to purchase the Investments through Approved Person HL.

12. For referring clients to Approved Person HL to invest in the Investments, the Respondent received a referral fee from Approved Person HL of 5% of the total amount invested by the clients in the Investments.

13. As described in the table below, between 2012 and 2013, the Respondent recommended, sold, facilitated the sale of, and/or made referrals in respect of the sale of the Investments to at least 10 clients totaling approximately $360,000.

14. The Respondent also personally invested at least $259,000 in the Investments.

15. Between 2012 and 2013, the Respondent received referral fees totaling at least $18,000 from Approved Person HL for referring 10 clients to him. The Respondent also received referral fees totaling at least $12,950 for her own investments in the Investments.

16. The Respondent did not disclose to Investia that she was recommending, selling, facilitating the sale of, and/or making referrals in respect of the sale of the Investments to clients.

17. Investia did not approve the Investments for sale to its clients by its Approved Persons, including the Respondent.

18. None of the purchases of the Investments by clients were carried on for the account of Investia or through its facilities.

19. The Respondent also did not disclose to Investia that, between 2012 and 2013, she had a referral arrangement with Approved Person HL, and Investia was not a party to the referral arrangement.

20. None of the referral fees the Respondent received from Approved Person HL flowed through the books and records of Investia.

Securities Related Business

21. At all material times, Investia’s policies and procedures required that its Approved Persons:
    1. only offer products Investia had approved for sale, and that all products be sold through Investia; and
    2. only participate in referral arrangements that it had approved, and that all fees or commissions must flow through the books and records of Investia.

22. As described above at paragraphs 16 to 20, between 2012 and 2013, the Respondent engaged in securities related business which was not carried on for the account of Investia or conducted through its facilities by recommending, selling, facilitating the sale of, and/or making referrals in respect of the Investments to at least 10 clients totaling approximately $360,000.

Undisclosed and Unapproved Referral Arrangement with another Approved Person

23. As described above at paragraphs 16 to 20, between 2012 and 2013, the Respondent had a referral arrangement with Approved Person HL and received referral fees in the amount of at least $18,000 for referring clients to Approved Person HL, and at least $12,950 for her own investments in the Investments, which she did not disclose to Investia.

24. By virtue of the forgoing, the Respondent participated in an unapproved referral arrangement to which the Member was not a party.

Misleading the Member and the MFDA

25. On December 18, 2015, in response to Investia’s request for information, the Respondent advised Investia that she had a referral arrangement related to syndicated mortgages with Approved Person HL that began in 2013, and that she had referred three investors to Approved Person HL to purchase the Investments.

26. In or about January 2016, as part of Investia’s investigation into the activities of Approved Person HL, Investia required the Respondent to complete an online questionnaire which included the following question from Investia and corresponding answer provided by the Respondent:

27. During the Respondent’s interview with Staff on August 5, 2016 (the “First Interview”), the Respondent stated again that she had referred three investors.

28. In response to Staff’s request to provide copies of all cheques that the Respondent had received from Approved Person HL and/or Kirin Capital Corporation (“Kirin”), the Respondent provided two cheques. One was dated November 1, 2013 in the amount of $2,500 (the “November Cheque”), and the second was dated December 16, 2013 in the amount of $4,625 (the “December Cheque”).  During the First Interview, the Respondent stated that she received the November Cheque from Approved Person HL as payment for the commission she earned on her own $50,000 investment in a promissory note issued by Tread Finance Corporation, and the December Cheque from Approved Person HL as payment for the commission she earned on her own investment in the Britannia Block mortgage and the investments by Investors HC and GU.

29. Staff subsequently obtained the bank records of Kirin and found that the Respondent had received four cheques from Kirin. All four cheques were deposited into the Respondent’s bank account.  The copy of the December Cheque provided by the Respondent’s bank listed three names, HC, GU, YSG, on the memo line whereas the copy of the December Cheque provided by the Respondent only listed two names, HC, GU, on the memo line.

30. The Respondent’s bank also provided Staff with two cheques from Access Real Capital payable to the Respondent.

31. The Respondent was interviewed again by Staff on January 20, 2017 (the “Second Interview”). During the Second Interview, the Respondent stated that Approved Person HL wrote YSG’s name on the December Cheque, but she did not receive commission on YSG’s investment so she removed YSG’s name from the copy of the December Cheque she provided to Staff with white out.

32. On January 24, 2017, the Respondent provided Staff with a list of all of the syndicated mortgage investments for which she had referred a client and received a commission, as described above in paragraph 13.

V. CONTRAVENTIONS

33. The Respondent admits that between 2012 and 2013, the Respondent engaged in securities related business which was not carried on for the account of the Member or conducted through its facilities by recommending, selling, facilitating the sale of, and/or making referrals in respect of investments to at least 10 clients totaling approximately $360,000, contrary to the Member’s policies and procedures, MFDA Rules 1.1.1, 2.1.1, 2.4.2, 2.5.1 and 1.1.2, and the requirements of sections 13.7 and 13.8 of National instrument 31-103.

34. The Respondent admits that between 2012 and 2013, the Respondent referred clients to Approved Person HL to purchase investments outside the Member, and received at least $18,000 in referral fees for doing so, thereby participating in an unapproved referral arrangement to which the Member was not a party, contrary to the Member’s policies and procedures, MFDA Rules 2.1.1, 2.4.2, 2.5.1 and 1.1.2, and the requirements of sections 13.7 and 13.8 of National Instrument 31-103.

35. The Respondent admits that between December 18, 2015 and January 24, 2017, the Respondent misled the Member and the MFDA during its investigations into her conduct with respect to her knowledge and involvement in referring clients to purchase investments outside the Member, contrary to MFDA Rule 2.1.1.

VI. TERMS OF SETTLEMENT

36. The Respondent agrees to the following terms of settlement:
    1. The Respondent’s authority to conduct securities related business in any capacity while in the employ of or associated with any MFDA Member shall be prohibited for a period of one year commencing on the date the Settlement Agreement is accepted by the Hearing Panel, pursuant to section 24.1.1(e) of MFDA By-law No. 1;
    2. The Respondent shall pay a fine in the amount of $31,000, pursuant to section 24.1.1(b) of MFDA By-law No. 1, payable as follows:
       1. $1,000 payable on or before the date of the settlement hearing;
       2. $30,000 payable in 12 monthly instalments of $2,500 each, commencing one month from the date the Settlement Agreement is accepted by the Hearing Panel;
    3. The Respondent shall pay costs in the amount of $5,000, pursuant to section 24.2 of MFDA By-law No. 1;
    4. The Respondent shall in the future comply with all MFDA By-laws, Rules and Policies, and all applicable securities legislation and regulation made thereunder, including MFDA Rules 1.1, 1.2.1(c) (now MFDA Rule 1.3), 2.1.1, 2.4.2, 2.5.1 and 1.1.2, and the requirements of sections 13.7 and 13.8 of National instrument 31-103; and
    5. The Respondent will attend in person, on the date set for the Settlement Hearing.

VII. STAFF COMMITMENT

37. If this Settlement Agreement is accepted by the Hearing Panel, Staff will not initiate any proceeding under the By-laws of the MFDA against the Respondent in respect of the contraventions described in Part V of this Settlement Agreement, subject to the provisions of Part IX below. Nothing in this Settlement Agreement precludes Staff from investigating or initiating proceedings in respect of any contraventions that are not set out in Part V of this Settlement Agreement or in respect of conduct that occurred outside the specified date ranges of the contraventions set out in Part V, whether known or unknown at the time of settlement.  Furthermore, nothing in this Settlement Agreement shall relieve the Respondent from fulfilling any continuing regulatory obligations.

VIII. PROCEDURE FOR APPROVAL OF SETTLEMENT

38. Acceptance of this Settlement Agreement shall be sought at a hearing of the Central Regional Council of the MFDA on a date agreed to by counsel for Staff and the Respondent. 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 www.mfda.ca.

39. Staff and the Respondent may refer to any part, or all, of the Settlement Agreement at the Settlement Hearing. Staff and the Respondent also agree that if this Settlement Agreement is accepted by the Hearing Panel, it will constitute the entirety of the evidence to be submitted respecting the Respondent in this matter, and the Respondent agrees to waive her 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.

40. Staff and the Respondent agree that if this Settlement Agreement is accepted by the Hearing Panel, then the Respondent shall be deemed to have been penalized by the Hearing Panel pursuant to section 24.1.1 of MFDA By-law No. 1 for the purpose of giving notice to the public thereof in accordance with section 24.5 of MFDA By-law No. 1.

41. Staff and the Respondent agree that if this Settlement Agreement is accepted by the Hearing Panel, 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 her.

IX. FAILURE TO HONOUR SETTLEMENT AGREEMENT

42. If this Settlement Agreement is accepted by the Hearing Panel and, at any subsequent time, the Respondent fails to honour any of the Terms of Settlement set out herein, Staff reserves the right to bring proceedings under section 24.3 of the By-laws of the MFDA against the Respondent based on, but not limited to, the facts set out in Part IV of the Settlement Agreement, as well as the breach of the Settlement Agreement. If such additional enforcement action is taken, the Respondent agrees that the proceeding(s) may be heard and determined by a hearing panel comprised of all or some of the same members of the hearing panel that accepted the Settlement Agreement, if available.

X. NON-ACCEPTANCE OF SETTLEMENT AGREEMENT

43. If, for any reason whatsoever, this Settlement Agreement is not accepted by the Hearing Panel or an Order in the form attached as Schedule “A” is not made 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 MFDA By-law No. 1, unaffected by this Settlement Agreement or the settlement negotiations.

44. Whether or not this Settlement Agreement is accepted by the Hearing Panel, the Respondent agrees that she will not, in any proceeding, refer to or rely upon this Settlement Agreement or the negotiation or process of approval of this Settlement Agreement as the basis for any allegation against the MFDA of lack of jurisdiction, bias, appearance of bias, unfairness, or any other remedy or challenge that may otherwise be available.

XI. DISCLOSURE OF AGREEMENT

45. The terms of this Settlement Agreement will be treated as confidential by the parties hereto until accepted by the Hearing Panel, and forever if, for any reason whatsoever, this Settlement Agreement is not accepted by the Hearing Panel, except with the written consent of both the Respondent and Staff or as may be required by law.

46. Any obligations of confidentiality shall terminate upon acceptance of this Settlement Agreement by the Hearing Panel.

XII. EXECUTION OF SETTLEMENT AGREEMENT

47. This Settlement Agreement may be signed in one or more counterparts which together shall constitute a binding agreement.

48. A facsimile copy of any signature shall be effective as an original signature.