Settlement Agreement

I. INTRODUCTION

1. Staff of the Mutual Fund Dealers Association of Canada (“Staff”) and the Respondent, Byron Todd Briske (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 or about May 12, 2016, the Respondent recorded the risk tolerance of a client on an account form without speaking with the client, thereby failing to use due diligence to learn and accurately record the client’s “Know Your Client” information to ensure that each order accepted and recommendation made for the account was suitable for the client, contrary to MFDA Rules 2.2.1 and 2.1.1;
   2. on or about May 26, 2016, the Respondent processed a mutual fund purchase totaling approximately $14,239 in a client’s account without client authorization, contrary to MFDA Rule 2.1.1;
   3. between November 2012 and October 2015, the Respondent altered 11 account forms in respect of 7 clients, by altering information on the account forms without having the clients initial the alterations, contrary to MFDA Rule 2.1.1; and
   4. between February 2011 and May 2016, the Respondent obtained, possessed, and used to process transactions, 8 pre-signed account forms in respect of 5 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 $15,000 in certified funds upon acceptance 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 in certified funds upon acceptance pursuant to s. 24.2 of MFDA By-law No. 1;
   3. the Respondent shall in the future comply with MFDA Rules 2.2.1 and 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. Since July 2005, the Respondent has been registered in Saskatchewan as a mutual fund salesperson (now known as a dealing representative) with Assante Financial Management Ltd. (“Assante”), a Member of the MFDA.
8. The Respondent is also currently registered in Alberta, British Columbia, and Ontario.
9. At all material times, the Respondent conducted business in the Saskatoon, Saskatchewan area.

Account Opening and Unauthorized Trade

10. At all material times, Assante’s policies and procedures:
    1. prohibited its Approved Persons from engaging in unauthorized trading; and
    2. required its Approved Persons to conduct due diligence to learn the essential facts about a client before opening a new account, including the client’s risk tolerance.
11. At all material times, client TP was a client of Assante who had a group registered retirement savings plan (“RRSP”) account through her employer, which was serviced by the Respondent.
12. The Respondent states that he knew client TP and had managed investments for her since approximately October 2013, and had discussed client TP’s financial circumstances and goals on multiple occasions.
13. In February 2016, client TP was provided notice that her employment was to be terminated because the company she worked for had been sold. In or around March 23, 2016, client TP’s employer advised client TP that she had the opportunity to exercise an option by May 22, 2016, to move her group RRSP into an individual RRSP account.
14. In May 2016, client TP spoke with the Respondent’s assistant in order to open an individual RRSP account using the monies from her group RRSP plan with her employer.
15. In May 2016, the Respondent directed his assistant to send a partially completed New Account Application Form (“NAAF”), transfer authorization form, and mutual fund application form to client TP to complete, sign and return.
16. The Respondent did not have any discussions with client TP regarding her Know Your Client information, including risk tolerance, prior to directing his assistant to send the partially completed forms to client TP. In addition, the Respondent did not discuss with client TP which mutual fund she was to purchase in her individual RRSP account.
17. On or about May 12, 2016, client TP completed some of the information on the account forms as described above at paragraph 15, signed them, and returned them to the Respondent’s office. In particular, Client TP returned to the Respondent a signed NAAF that contained a completed time horizon and investment objective, but did not contain client TP’s risk tolerance, as well as transfer authorization and mutual fund application forms that each did not specify the mutual fund that client TP would purchase in her individual RRSP account.
18. Prior to May 22, 2016, without either discussing with client TP her KYC information and which mutual fund she would purchase for her individual RRSP account, the Respondent:
    1. directed his assistant to fill in client TP’s risk tolerance on the signed NAAF as 100% medium risk; and
    2. selected the mutual fund on the transfer authorization form and mutual fund application form.
19. The Respondent states that:
    1. he directed his assistant to fill in the risk tolerance on the signed NAAF after first unsuccessfully trying to contact client TP on multiple occasions; and
    2. he based the risk tolerance he completed on the signed NAAF on the risk level of the mutual fund in which client TP had previously held in her group RRSP.
20. On or before May 22, 2016, the Respondent sent the NAAF, transfer authorization form, and mutual fund application form to Assante for processing. On or about May 26, 2016, Assante processed a mutual fund purchase of $14,239.31 in client TP’s individual RRSP Account.
21. On or about November 7, 2016, client TP complained to Assante that the transaction in her individual RRSP account was unauthorized. Assante subsequently transferred out the balance of the client TP’s RRSP account without any loss or fees payable by client TP.

Altered Account Forms

22. At all material times, Assante’s policies and procedures prohibited its Approved Persons from making changes on account forms without client initials authorizing the change.
23. Between November 2012 and October 2015, the Respondent altered 11 forms in respect of 7 clients by using liquid correction fluid to make alterations on the account forms, without having the clients initial the alterations.
24. The altered account forms consisted of:
    1. 4 fund switch request forms;
    2. 2 letters of direction;
    3. 1 leverage analysis and disclosure form;
    4. 1 mutual fund application form; and
    5. 3 purchase and redemption request forms.
25. The Respondent sent the altered account forms to Assante to process transactions in the clients’ accounts.

Pre-Signed Account Forms

26. At all material times, Assante’s policies and procedures prohibited its Approved Persons from obtaining, holding, or using pre-signed account forms.
27. Between February 2011 and May 2016, the Respondent obtained, possessed, and used to process transactions, 8 pre-signed account forms in respect of 5 clients.
28. The pre-signed account forms consisted of:
    1. 2 NAAFs;
    2. 1 mutual fund application form;
    3. 2 transfer authorization forms; and
    4. 3 letters of direction.

Assante’s Investigation

29. As described above, on or about November 7, 2016, Assante received a complaint from client TP, and subsequently commenced an investigation.
30. Effective January 12, 2017, Assante placed the Respondent under close supervision.
31. In May 2017, as part of its investigation, Assante conducted a client file review and identified the altered and pre-signed account forms that are the subject of this settlement agreement.
32. On or about December 15, 2017, Assante issued the Respondent a warning letter as a result of the conduct that is the subject of this Settlement Agreement. Assante also imposed the following on the Respondent:
    1. a fine of $5,000 with respect to the unauthorized trading;
    2. a fine of $10,000 with respect to the pre-signed account forms;
    3. a requirement to complete an industry course; and
    4. an additional 3 months of close supervision.
33. The Respondent has paid the fines imposed by Assante.

Additional Factors

34. 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.
35. Except with respect to client TP as described above, there is no evidence that transactions were unauthorized, and no clients have complained with respect to the obtaining and using of pre-signed or altered account forms as described above.
36. There is no evidence of any client loss resulting from the transactions and use of forms as described above.
37. The Respondent states that he has since corrected his practices going forward and no longer obtains or uses pre-signed or altered account forms.
38. The Respondent has not previously been the subject of MFDA disciplinary proceedings.
39. The Respondent has co-operated with the MFDA in its investigation.
40. By entering into this Settlement Agreement, the Respondent has saved the MFDA the time, resources, and expenses associated with conducting a full hearing of the allegations.

 IV. ADDITIONAL TERMS OF SETTLEMENT

41. 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.
42. 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.
43. 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.
44. 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.
45. 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.
46. 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.
47. 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.