IN THE MATTER OF A SETTLEMENT HEARING PURSUANT TO SECTION 24.4 OF BY-LAW NO. 1 OF THE MUTUAL FUND DEALERS ASSOCIATION OF CANADA
Re: Michael Harold Mills
- Staff of the Mutual Fund Dealers Association of Canada (“Staff”) and the Respondent, Michael Harold Mills (the “Respondent”), consent and agree to settlement of this matter by way of this agreement (the “Settlement Agreement”).
- Staff conducted an investigation of the Respondent’s activities which disclosed activity for which the Respondent could be penalized by the exercise of the discretion of the Hearing Panel pursuant to s. 24.1 of By-law No.1.
II. JOINT SETTLEMENT RECOMMENDATION
- Staff and the Respondent jointly recommend that the Hearing Panel accept the Settlement Agreement.
- The Respondent admits to the following violations of the By-laws, Rules or Policies of the Mutual Fund Dealers Association of Canada (“MFDA”):
- between December 2003 and February 2017, the Respondent obtained, possessed, and, in some instances, used to process transactions, 120 pre-signed account forms in respect of 37 clients, contrary to MFDA Rule 2.1.1.
- Staff and the Respondent agree and consent to the following terms of settlement:
- the Respondent shall pay a fine in amount of $24,000, in certified funds upon acceptance of the Settlement Agreement, pursuant to s. 24.1.1(b) of MFDA By-law No. 1;
- the Respondent shall pay costs in the amount of $2,500, in certified funds upon acceptance of the Settlement Agreement, pursuant to s. 24.2 of MFDA By-law No. 1;
- the Respondent shall in the future comply with MFDA Rule 2.1.1; and
- the Respondent will attend in person on the date set for the Settlement Hearing.
- 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
- Since 1996, the Respondent has been registered as a Mutual Fund Salesperson (now known as a Dealing Representative).
- Since May 3, 2000, the Respondent has been registered in Ontario and Alberta as a Mutual Fund Salesperson with FundEX Investments Inc. (“FundEX”), a Member of the MFDA.
- At all material times, the Respondent conducted business in the Toronto, Ontario area.
Pre-Signed Account Forms
- Since at least June 2005, FundEX’s policies and procedures prohibited Approved Persons from possessing and using pre-signed forms.
- Between December 2003 and February 2017, the Respondent obtained, possessed, and, in some instances, used to process transactions, 120 pre-signed account forms in respect of 37 clients.
- The pre-signed account forms consisted of order entry forms, new client application forms, Know-Your-Client update forms, transfer authorization forms, systematic instruction forms, and investment application forms.
- On June 7, 2017, during the course of a branch review, FundEX identified the pre-signed forms that are the subject of this Settlement Agreement.
- As part of its investigation, FundEX reviewed all client files serviced by the Respondent and sent letters to all clients serviced by the Respondent in order to determine whether the Respondent had engaged in unauthorized trading. No clients reported any concerns to FundEX.
- On July 25, 2017, FundEX placed the Respondent under close supervision for 90 days. FundEX also fined the Respondent a monthly non-compliance surcharge of $625 and imposed an administrative fee of $1,450 on the Respondent for the mailing of the letters to clients. The Respondent was charged and paid FundEX $3,325.
- There is no evidence that the Respondent received any financial benefit from engaging in the misconduct described above beyond any commissions and fees that he 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 the transactions were unauthorized.
- The Respondent has not previously been the subject of MFDA disciplinary proceedings.
- By entering into this Settlement Agreement, the Respondent has saved the MFDA the time, resources, and expenses associated with conducing a full hearing of the allegations.
Additional Terms of Settlement
- 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.
- 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.
- 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.
- Staff and the Respondent agree that if this Settlement Agreement is accepted by the Hearing Panel:
- the Settlement Agreement will constitute the entirety of the evidence to be submitted respecting the Respondent in this matter;
- 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;
- 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;
- 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
- 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.
- 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.
- 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.
- The Settlement Agreement may be signed in one or more counterparts which together shall constitute a binding agreement. An electronic copy of any signature shall be effective as an original signature.
LMWitness - Signature
LMWitness - Print Name
“Michael Harold Mills”
Michael Harold Mills
“Shaun Devlin ”
Staff of the MFDA
Per: Shaun Devlin
Member Regulation – Enforcement
IN THE MATTER OF A SETTLEMENT HEARING
PURSUANT TO SECTION 24.4 OF BY-LAW NO. 1 OF
THE MUTUAL FUND DEALERS ASSOCIATION OF CANADA
Re: Michael Harold Mills
WHEREAS on [date], the Mutual Fund Dealers Association of Canada (the “MFDA”) issued a Notice of Settlement Hearing pursuant to section 24.4 of By-law No. 1 in respect of Michael Harold Mills (the “Respondent”);
AND WHEREAS the Respondent entered into a settlement agreement with Staff of the MFDA, dated [date] (the “Settlement Agreement”), in which the Respondent agreed to a proposed settlement of matters for which the Respondent could be disciplined pursuant to ss. 20 and 24.1 of By-law No. 1;
AND WHEREAS the Hearing Panel is of the opinion that between December 2003 and February 2017, the Respondent obtained, possessed, and, in some instances, used to process transactions, 120 pre-signed account forms in respect of 37 clients, contrary to MFDA Rule 2.1.1.
IT IS HEREBY ORDERED THAT the Settlement Agreement is accepted, as a consequence of which:
- The Respondent shall pay a fine in the amount of $24,000, pursuant to s. 24.1.1(b) of MFDA By-law No. 1.
- The Respondent shall pay costs in the amount of $2,500, pursuant to s. 24.2 of MFDA By-law No. 1.
- The Respondent shall in the future comply with MFDA Rule 2.1.1.
DATED this [day] day of [month], 20[ ].
[Name of Public Representative], Chair
[Name of Industry Representative]
[Name of Industry Representative]