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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: Re: David Bruce Lasher

Settlement Agreement

I. INTRODUCTION

  1. Staff of the Mutual Fund Dealers Association of Canada (“Staff”) and the Respondent, David Bruce Lasher (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

  1. Staff and the Respondent jointly recommend that the Hearing Panel accept the Settlement Agreement.
  2. 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 September 2013 and August 2018, the Respondent altered and used to process transactions 35 account forms in respect of 39 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 2013 and October 2018, the Respondent obtained, possessed and, in some instances, used to process transactions, 96 pre-signed account forms in respect of 78 clients, contrary to MFDA Rule 2.1.1.
  3. Staff and the Respondent agree and consent to the following terms of settlement:
    1. the Respondent shall pay a fine in the amount of $18,000 in certified funds upon acceptance of the Settlement Agreement, 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 of the Settlement Agreement, pursuant to s. 24.2 of MFDA 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.
  4. 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

  1. Since September 1994, the Respondent has been registered in the securities industry.
  2. Since October 2002, the Respondent has been registered in Ontario as a dealing representative (formerly known as a mutual fund salesperson)[1] with Investia Financial Services Inc. (the “Member”), a Member of the MFDA.
  3. At all material times, the Respondent conducted business in the Belleville, Ontario area.

Altered Account Forms

  1. Between September 2013 and August 2018, the Respondent altered and used to process transactions 35 account forms in respect of 39 clients by altering information on the account forms without having the client initial the alterations.
  2. The altered account forms included: 25 Know Your Client (“KYC”) Update Forms, 5 Order Instruction Forms, 3 Investment Applications and 2 New Client Application Forms.
  3. The alterations made by the Respondent include alterations to: client KYC information, client contact information, plan types, investment amounts and fund descriptions.

Pre-Signed Account Forms

  1. At all material times, the Member’s policies and procedures prohibited Approved Persons from holding blank or incomplete forms that had been signed by a client.
  2. Between January 2013 and October 2018, the Respondent obtained, possessed and, in some instances, used to process transactions, 96 pre-signed account forms in respect of 78 clients.
  3. The pre-signed forms included: 53 KYC Update Forms, 24 New Client Account Forms, 6 Registered Education Savings Plan Redemption Forms, 6 Order Instruction Forms, 3 Systematic Instruction Forms, 2 Transfer Authorization Forms, 1 Investment Application and 1 Fee for Service Agreement.

The Member’s Investigation

  1. In or around December 2018, the Member conducted an audit of the client files maintained by the Respondent, during which the Member identified some of the account forms that are the subject of this Settlement Agreement.
  2. In January 2019, the Member commenced an investigation that identified the remaining account forms that are the subject of this Settlement Agreement.
  3. On May 13, 2019, as a result of the Member’s findings during its investigation, the Member placed the Respondent under strict supervision. The Member also required that the Respondent pay $2,200 in respect of the Member’s investigation.
  4. On May 17, 2019, the Member sent letters to clients whose accounts the Respondent serviced along with a transaction history for the prior 3 years and, in some cases, the KYC information on file for the client. The Member asked the clients to review the transactions within their account and to review their KYC information to ensure that all transactions and KYC information were accurate. No clients raised any concerns to the Member about the activity within their accounts.
  5. On September 12, 2019, the Member removed the Respondent from strict supervision and issued the Respondent a warning letter in respect of the misconduct described herein.
  6. Since September 12, 2019, the Respondent has engaged the Member’s auditor to review all forms and related transactions processed by him. Beginning in September 2019, 10% of the Respondent’s commissions were deducted by the Member as a result of additional supervisory functions imposed by the Member. As of July 2020, the total amount deducted from the Respondent’s commissions is approximately $10,764.

Additional Factors

  1. 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.
  2. The Respondent states that he has since corrected his practices going forward and no longer obtains or uses pre-signed forms or alters information on account forms without clients initialing the alterations.
  3. There is no evidence of client loss or lack of authorization.
  4. The Respondent has not previously been the subject of MFDA disciplinary proceedings.
  5. 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

  1. 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.
  2. 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 www.mfda.ca.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.

[1] In September 2009, the registration category mutual fund salesperson was changed to “dealing representative” when National Instrument 31-103 came into force.

  • -----
    Witness - Signature
  • -----
    Witness - Print Name
  • “David Bruce Lasher”

    David Bruce Lasher

  •  

    “Charles Toth”

    Staff of the MFDA
    Per: Charles Toth
    Vice-President, Enforcement

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