Settlement Agreement

I. INTRODUCTION

1. Staff of the Mutual Fund Dealers Association of Canada (“Staff”) and the Respondent, Brian Colin MacDonald (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. between October 2014 and July 2018, the Respondent altered and used to process transactions 20 account forms in respect of 17 clients by altering information on the account form without having the client initial the alterations, contrary to MFDA Rule 2.1.1; and
   2. in May 2014, the Respondent obtained and possessed 1 pre-signed account form in respect of 1 client, 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 $14,000 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 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 November 2008, the Respondent has been licensed in the securities industry.
8. Since February 17, 2011, the Respondent has been registered in Ontario as a dealing representative with Desjardins Financial Security Investments Inc. (the “Member”), a Member of the MFDA.
9. At all material times, the Respondent conducted business in the Kitchener, Ontario area.

Altered Account Forms

10. Beginning in June 2016, the policies and procedures of the Member required clients to initial any changes on documents or otherwise provide written authorization for the changes to the document.
11. Between October 2014 and July 2018, the Respondent altered and used to process transactions, 20 account forms in respect of 17 clients by altering information on the account forms without having the client initial the alterations.
12. The altered account forms included: 9 Know-Your-Client (“KYC”) Update Forms, 4 New Account Application Forms, 4 Letters of Direction, 1 Transfer Form, 1 Non Financial Change Form and 1 Transfer Authorization for Registered Investments.
13. The alterations made by the Respondent consist of changes to: client risk tolerances, employer information, investment objectives, joint applicant information, client addresses, signature dates, investment time horizon, relinquishing institution information and fund codes.

Pre-Signed Account Forms

14. At all material times, the Member’s policies and procedures prohibited its Approved Persons from retaining pre-signed or partially completed forms.
15. In May 2014, the Respondent obtained and possessed 1 pre-signed account form in respect of 1 client. The pre-signed account form was a Reimbursement of Transfer Fees form which was not used to process a transaction.

The Member’s Investigation

16. In April 2019, the Member conducted an audit of the client files maintained by the Respondent and identified the pre-signed form that is the subject of this Settlement Agreement.
17. Upon further review of the Respondent’s client files, the Member identified the altered account forms that are the subject of this Settlement Agreement.
18. As part of its investigation, the Member took steps to address the deficiencies in the account forms it identified to determine the accuracy of the information and that the alterations made to the account forms were authorized, including by: obtaining client initials on the altered forms; confirming that new updated KYC Update Forms had been obtained for the clients; or sending letters to the clients along with copies of altered forms and asking the clients to contact the Member if the changes made to the account forms were unauthorized. No clients contacted the Member to indicate that the alterations made to the altered account forms were unauthorized.
19. On August 22, 2019, the Member imposed a period of close supervision on the Respondent and issued a warning letter to the Respondent with respect to the pre-signed and altered forms described above.
20. On September 3, 2019, the Respondent signed an Undertaking to confirm, among other things, that he understands that obtaining pre-signed forms and altering forms without obtaining client initials is prohibited.
21. The Respondent remains under close supervision by the Member.

Additional Factors

22. 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.
23. There is no evidence of client loss or lack of authorization.
24. The Respondent has not previously been the subject of MFDA disciplinary proceedings.
25. 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

26. 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.
27. 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.
28. 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.
29. 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.
30. 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.
31. 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.
32. 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.