Settlement Agreement

I. INTRODUCTION

1. Staff of the Mutual Fund Dealers Association of Canada (the “Staff”) and the Respondent, Gilles Perron (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 May 2012 and June 2019, the Respondent obtained, possessed and, in some instances, used to process transactions, 77 pre-signed account forms for 27 clients, contrary to MFDA Rule 2.1.1; and
   2. between December 2013 and June 2019, the Respondent altered and used to process transactions, 24 account forms in respect of 17 clients by altering information on the account forms without having the clients initial the alterations, 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 $20,000 upon acceptance of this Settlement Agreement, pursuant to s. 24.1.1(b) of MFDA By-law No. 1;
   2. the Respondent shall pay the costs incurred by the MFDA in the amount of $2,500 in certified funds upon acceptance of this 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.
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 September 2003, the Respondent has been registered in the mutual fund industry.
8. Since September 28, 2009, the Respondent has been registered in New Brunswick and in Quebec as a mutual fund salesperson (now known as a Dealing Representative) with Investia Services Financiers Inc. (the “Member”), a Member of the MFDA.
9. At all material times, the Respondent conducted business in the Campbellton, New Brunswick area.

Pre-signed Account Forms

10. At all material times, the Member had policies and procedures that prohibited its authorized persons from obtaining or using pre-signed account forms.
11. Between May 2012 and June 2019, the Respondent obtained, possessed and, in some instances used to process transactions, 77 pre-signed account forms in respect of 27 clients.
12. The pre-signed account forms included:
    1. 76 investment instruction forms; and
    2. 1 Know Your Client form.

Altered Account Forms

13. At all material times, the Member had policies and procedures requiring, among other things, that its authorized persons, including the Respondent:
    1. ask clients to initial any errors or alterations made to documents or account forms; and
    2. not use liquid paper or correction fluid to modify or correct errors on documents or account forms.
14. Between December 2013 and June 2019, the Respondent altered and used to process transactions, 24 account forms in respect of 17 clients by altering information on the account forms (using correction fluid or other means) without having the clients initial the alterations.
15. The altered account forms included:
    1. 18 investment instruction forms;
    2. 5 systematic trade instruction forms; and
    3. 1 account transfer form.
16. Some of the non-initialed alterations made by the Respondent included account numbers, the names and codes of mutual funds to be traded by clients, and mutual funds amounts to be bought or sold or traded by clients.

Investigation of the Member

17. During a branch audit on or around November 14 and 15, 2018, the Member reviewed all client files processed by the Respondent and detected the pre-signed and altered account forms that are the subject of this Settlement Agreement.
18. From February 4, 2019 to July 25, 2019, the Member placed the Respondent under strict supervision. During this time, all transactions processed by the Respondent, including purchases, sales, trades and transfers, were reviewed and approved by the Investment Compliance Supervisor before being processed.
19. On July 25, 2019, the Member sent the Respondent a letter of reprimand for the pre-signed and altered
20. On July 26, 2019, the Member sent a letter including a three-year summary of transactions to all clients served by the Respondent. The Member asked clients to review their transaction summaries to ensure that all transactions were in accordance with the instructions they gave the Respondent, and to report any inconsistencies to the Member. No clients reported any

Additional Factors

21. 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.
22. There is no evidence of any loss to clients served by the Respondent or evidence that the underlying transactions were unauthorized.
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 of the allegations.

IV. ADDITIONAL TERMS OF SETTLEMENT

25. This Agreement 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 (“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 generally held in camera, in accordance with 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, the proceedings will then be available to the public and copies of the Hearing Panel’s decision and the Settlement Agreement will be 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 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 facts and the 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.
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.