Settlement Agreement

I. INTRODUCTION

1. Staff of the Mutual Fund Dealers Association of Canada (“Staff”) and the Respondent, Nicholas Del Plavignano (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. on March 29, 2016 and March 30, 2016, the Respondent processed a total of two transactions without the client’s authorization, contrary to MFDA Rule 2.1.1;
   2. on April 4, 2016, the Respondent failed to use due diligence to learn the essential facts of a client, when he completed the client’s Know-Your-Client information on an account form without having met or discussed the information with the client, contrary to MFDA Rules 2.2.1 and 2.1.1;
   3. on April 4, 2016, the Respondent failed to comply with two Member directives to contact a client to review the client’s Know-Your Client information and the suitability of investments in the client’s account, contrary to MFDA Rule 2.1.1; and
   4. on April 4, 2016, the Respondent falsely represented to the Member that the client reviewed and approved the risk tolerance for the client’s account, 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 $5,000 pursuant to s. 24.1.1(b) of MFDA By-law No.1;
   2. 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 18 months, pursuant to s. 24.1.1(e), contrary to MFDA By-Law No. 1;
   3. the Respondent shall pay costs in the amount of $2,500 pursuant to s. 24.2 of MFDA By-law No.1;
   4. the Respondent shall in the future comply with MFDA Rules 2.2.1 and 2.1.1; and
   5. 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. Between February 23, 2012 and May 25, 2016, the Respondent was registered in Ontario as a Dealing Representative with TD Investment Services Inc. (“TD”), a Member of the MFDA.
8. At all material times, the Respondent conducted business in the Woodbridge, Ontario area.
9. On May 25, 2016, TD terminated the Respondent’s registration as a result of the conduct that is the subject of this Settlement Agreement. The Respondent is not currently registered in the securities industry in any capacity.

Unauthorized Trades

10. At all material times, TD’s policies and procedures prohibited its Approved Persons, including the Respondent, from placing an order without client authorization.
11. At all material times, client JC was a client of TD whose account was serviced by the Respondent (the “TD Account”). Concurrently, client JC also had a retirement income fund account at TD Canada Trust (the “RIF Account”).
12. The Respondent processed 2 transfers of cash from the RIF Account to the TD Account to purchase mutual funds (the “Purchases”), without the authorization of client JC, as follows:
    1. on March 29, 2016, $20,000 from the RIF Account to the TD Account; and
    2. on March 30, 2016, $13,742.04 from the RIF Account to the TD Account.

Failed to Use Due Diligence to Learn Essential Facts about the Client, Failed to Comply with Member Directive and Misled the Member

13. On or about April 4, 2016, as part of its review of the Purchases, TD identified that client JC’s asset allocation profile (20% income, 80% growth) was inconsistent with the composition of the holdings in his TD Account and directed the Respondent to conduct a suitability review with client JC.
14. On April 4, 2016, without contacting client JC to do a suitability review, the Respondent prepared a new account form containing the same Know-Your-Client information on file with TD (the “KYC Form”), and submitted the KYC Form to TD.
15. On April 4, 2016, based on the information contained in the KYC Form, TD’s back-office system automatically directed the Respondent to confirm with client JC his risk tolerance information in respect of the TD Account.
16. The Respondent did not have a discussion with client JC as directed by TD. Without communicating with client JC, the Respondent falsely advised TD: “(r)isk tolerance has been reviewed. Customer understands risk/return relationship and is comfortable with the market fluctuations.”

TD’s Investigation

17. On or about May 11, 2016, client JC advised TD that he did not authorize the Purchases.
18. TD commenced an investigation and reviewed the trade activity of 139 client accounts serviced by the Respondent and reviewed 14 files of client accounts he serviced. TD did not identify further unauthorized transactions.
19. On or about May 16, 2016, TD reversed the Purchases.
20. On May 25, 2016, TD terminated the Respondent’s registration.

Additional Factors

21. 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.
22. There is no evidence of client loss.
23. The Respondent has not previously been the subject of MFDA disciplinary proceedings.
24. 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

25. 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.
26. 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.
27. 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.
28. 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.
29. 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.
30. 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.
31. 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.