Settlement Agreement

I. INTRODUCTION

1. Staff of the Mutual Fund Dealers Association of Canada (“Staff”) and the Respondent, Jovan Knezevic (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 Mutual Fund Dealers Association of Canada (“MFDA”):
   1. between June 2009 and December 2015, the Respondent altered and, in some instances, used to process transactions, 29 account forms in respect of 18 clients by altering information on the account forms without having the client initial the alterations, contrary to MFDA Rule 2.1.1; and
   2. between January 2010 and March 2017, the Respondent obtained, possessed, and in some instances, used to process transactions, 16 pre-signed account forms in respect of 15 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 $13,500, pursuant to section 24.1.1(b) of By-law No. 1, in installments as follows:
      1. $3,500 in certified funds upon acceptance of the Settlement Agreement;
      2. $5,000 in certified funds on or before the last business day of the first month following the acceptance of the Settlement Agreement; and
      3. $5,000 in certified funds on or before the last business day of the second month following the acceptance of the Settlement Agreement;
   2. the Respondent shall pay costs in the amount of $2,500 in certified funds upon acceptance of this Settlement Agreement, pursuant to section 24.2 of By-law No. 1;
   3. the Respondent shall in the future comply with MFDA Rule 2.1.1; and
   4. 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. The Respondent was registered in the mutual fund industry commencing in March 1997.
8. Since September 2009, the Respondent has been 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.
9. At all material times, the Respondent conducted business in the Toronto, Ontario area.

Altered Forms

10. Beginning in November 2013, Investia’s policies and procedures required that where any material changes were made to a client’s trade documents, they must be initialed by the client.
11. Between June 2009 and December 2015, the Respondent altered and, in some instances, used to process transactions, 29 account forms in respect of 18 clients by altering information on the account forms without having the client initial the alterations.
12. The altered account forms consisted of new account application, Registered Education Savings Plan (“RESP”) withdrawal, Know-Your-Client (“KYC”) update, and fund order forms.

Pre-Signed Account Forms

13. At all material times, Investia’s policies and procedures prohibited its Approved Persons from using pre-signed account forms.
14. On or about January 8, 2016, the Respondent obtained, possessed, and in some instances, used to process transactions, 16 pre-signed account forms in respect of 15 clients.
15. The pre-signed account forms consisted of new account application, RESP withdrawal, KYC update, change of dealer, and fund order forms.

Investia’s Response

16. On May 1, 2017, Investia’s compliance staff identified the altered and pre-signed forms that are the subject of this Settlement Agreement as a result of a routine branch audit.
17. As part of its investigation, Investia conducted a review of all of the client files serviced by the Respondent and sent letters to all of the clients serviced by the Respondent to determine whether the Respondent had engaged in any unauthorized trading. No clients reported any concerns.
18. On May 30, 2017, Investia placed the Respondent under strict supervision.
19. On March 7, 2018, Investia issued a warning letter to the Respondent.

Additional Factors

20. There is no evidence that the Respondent received any financial benefit from engaging in the misconduct described above other than the commissions or fees he would ordinarily be entitled to had the transactions been completed in the proper manner.
21. There is no evidence of client loss or lack of authorization.
22. The Respondent states that 16 of the altered forms were altered prior to the clients signing the forms, and that 2 of the altered forms were not used to process a transaction. The Respondent acknowledges that he was required to have clients initial all alterations to the forms.
23. The Respondent states that 11 of the pre-signed forms were not used to process a transaction.
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.