Settlement Agreement

I. INTRODUCTION

1. Staff of the Mutual Fund Dealers Association of Canada (“Staff”) and the Respondent, Benjamin Stewart (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 section 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. On January 22, 2019, the Respondent completed two account forms without communicating with the client about the forms, signed the client’s signature on the account forms, and submitted the forms to the Member for processing, 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 $6,000 in certified funds upon acceptance of the Settlement Agreement, pursuant to section 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 section 24.2 of MFDA By-law No.1;
   3. the Respondent shall be suspended from acting as a branch manager or in any other supervisory capacity for a period of 2 months, pursuant to section 24.1.1(e) of MFDA By-law No. 1;
   4. the Respondent shall successfully complete the branch manager’s course offered by either the Canadian Securities Institute or the Investment Funds Institute of Canada prior to acting as a branch manager in the future, pursuant to 24.1.1(f) of MFDA By-law No. 1;
   5. the Respondent shall in the future comply with MFDA Rule 2.1.1, 1.1.2, and 2.5.1; and
   6. the Respondent will attend in person or by videoconference 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. Commencing January 2004, the Respondent was registered in the securities industry.
8. Since April 13, 2011 in Ontario, and since November 18, 2019 in Quebec, the Respondent has been registered as a dealing representative with Royal Mutual Funds Inc. (the “Member”), a Member of the MFDA.
9. On November 19, 2014, the Member designated the Respondent as a branch manager.
10. At all material times, the Respondent conducted business at a branch located in Cornwall, Ontario (the “Branch”).

The Respondent completed account forms without communicating with the client and signed the client’s signature

11. At all material times, the Member’s policies and procedures prohibited its Approved Persons from signing or initialing documentation for or on behalf of clients.
12. On January 9, 2019, the Respondent met with client SH at the Branch. At the time, client SH held a registered retirement savings plan (the “RRSP”) and a tax free savings account (“TFSA”) with the Member.
13. During the meeting, client SH instructed the Respondent to transfer his monies from his Member accounts to cash or a guaranteed investment certificate (“GIC”). As client SH’s Member accounts could not hold cash or GICs, client SH’s monies had to be transferred to a retail account with the Member’s affiliate bank (the “Bank”). The Respondent completed documentation with client SH to open an RRSP and TFSA account with the Bank and transfer client SH’s monies from the Member to the Bank.
14. Between January 14 and 18, 2019, the Respondent was away from the office for the birth of his child. During this period, client SH contacted representatives of the Member at the Branch to inquire about the transfer of his accounts and expressed concern about the delay. 
15. On January 21, 2019, the Member informed the Respondent that the transfer of client SH’s monies from the Member to the Bank could not proceed until a mutual fund reclassification form was completed for both Member accounts. This form required transfer instructions, including information such as account type and account number, and required client SH’s signature.
16. On January 22, 2019, without communicating with client SH, the Respondent completed the mutual fund reclassification forms for both Member accounts, signed client SH’s signature on the forms, and submitted them to the Member for processing.
17. The Respondent states that he completed the reclassification forms and signed client SH’s signature in order to process the transactions without any further delay. The Respondent recognizes that he ought to have contacted the client in order to complete the forms and obtained the client signature.
18. Commencing January 25, 2019, client SH made inquiries of a representative of the Member at the Branch regarding the delay in transferring his monies to the Bank, and advised that he did not meet with the Respondent on January 22, 2019 and that he did not sign any forms on that date.
19. By February 5, 2019, the monies held in client SH’s TFSA were transferred from the Member to the Bank.
20. The Member paid client SH $180 in compensation for the delay in transferring his monies to the Bank.

Member Investigation

21. Commencing in February 2019, the Member began an investigation into the Respondent’s conduct. The Member confirmed that client SH did not sign the client account forms described above at paragraphs 14 and 15.
22. On March 28, 2019, the Member issued a written warning to the Respondent. The Member required the Respondent complete a Code of Conduct action plan and put the Respondent on heightened supervision. Further, the Member imposed a reduction of compensation on the Respondent in the amount of $8,250.

Additional Factors

23. There is no evidence that the Respondent received any financial benefit from the conduct set out above.
24. There is evidence client SH authorized the underlying transactions.
25. The Respondent has not previously been the subject of MFDA disciplinary proceedings.
26. 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

27. 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.
28. 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.
29. 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.
30. 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 agrees to waive 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 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 section 24.1.2 of By-law No. 1 for the purpose of giving notice to the public thereof in accordance with section 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.
31. 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.
32. 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.
33. 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.