Settlement Agreement

I. INTRODUCTION

1. Staff of the Mutual Fund Dealers Association of Canada (“Staff”) and the Respondent, Aparna Prabhune (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 2010 and December 2018, the Respondent obtained and possessed 10 pre-signed account forms in respect of 7 clients, contrary to MFDA Rule 2.1.1; and
   2. between September 2013 and August 2016, the Respondent altered and used to process transactions, 16 account forms in respect of 11 clients, by altering information on the account forms without having the client 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 $8,500 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 or by teleconference 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 2004, the Respondent has been registered in Ontario as a mutual fund salesperson (now known as a dealing representative). Since 2008, the Respondent has been registered with Canfin Magellan Investments Inc. (the “Member”), a Member of the MFDA.
8. At all material times, the Respondent conducted business in the Oakville, Ontario area.

Pre-Signed Account Forms

9. At all material times, the Member’s policies and procedures prohibited its Approved Persons from using pre-signed account forms.
10. Between 2010 and December 2018, the Respondent obtained and possessed 10 pre-signed account forms in respect of 7 clients.
11. The pre-signed account forms included order forms and new account application forms.

Altered Account Forms

12. Between September 2013 and August 2016, the Respondent altered and used to process transactions, 16 account forms in respect of 11 clients, by altering information on the account forms without having the client initial the alterations.
13. The altered account forms included order forms and new account application forms.
14. The information the Respondent altered on the account forms included fund names and fund codes.

The Member’s Investigation

15. On December 3, 2018, during the course of a routine branch review, the Member identified some of the account forms that are the subject of this Settlement Agreement. As a result of this review, the Member reviewed all files for clients serviced by the Respondent and identified the remainder of the account forms.
16. The Member placed the Respondent on close supervision between December 21, 2018 and January 3, 2020, and imposed a reduced commission rate on the Respondent resulting in a reduction of commission of approximately $7,000 for the period.
17. The Member also required that the Respondent successfully complete the Conduct and Practices Handbook course offered by the Canadian Securities Institute, a condition the Respondent has satisfied.
18. Between January 24, 2019 and February 4, 2019, the Member called clients in whose accounts the pre-signed and altered account forms were identified to confirm whether the clients had authorized the transactions in their accounts. The clients who the Member reached confirmed the transactions in their account were authorized.
19. Between February 27, 2019 and August 15, 2019, the Member also sent audit letters to all clients in whose accounts the pre-signed and altered forms were identified. Where the Member had previously spoken with the client by telephone, the letter requested the clients to contact the Member if they had further questions or wished to receive a copy of account documentation. Where the Member had not been able to speak to the client, the letter asked the client to contact the Member to discuss the client’s account and to confirm the authorization of transactions in the account. No clients raised concerns to the Member in their responses.

Additional Factors

20. There is no evidence that the Respondent received any financial benefit from the conduct set out above beyond the commissions or fees she would ordinarily be entitled to receive had the transactions been carried out in the proper manner.
21. There is no evidence of client loss or lack of authorization for the underlying transactions.
22. The Respondent has not previously been the subject of MFDA disciplinary proceedings.
23. 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

24. 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.
25. 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.
26. 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.
27. 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 or appeal 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.
28. 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.
29. 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.
30. 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.