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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: Alim Kassam

Settlement Agreement

I. INTRODUCTION

  1. Staff (“Staff”) of the Mutual Fund Dealers Association of Canada (the “MFDA”) and the Respondent, Alim Kassam (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. The investigation disclosed that the Respondent had engaged in activity for which the Respondent could be penalized on the exercise of the discretion of a Hearing Panel pursuant to s. 24.1 of By-law No.1.

II. JOINT SETTLEMENT RECOMMENDATION

  1. Staff and the Respondent recommend settlement of the matters disclosed by the investigation in accordance with the terms and conditions set out below. The Respondent agrees to the settlement on the basis of the facts set out in Part IV herein and consents to the making of an Order in the form attached as Schedule “A”.
  2. Staff and the Respondent agree that the terms of this 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.

III. ACKNOWLEDGEMENT

  1. Staff and the Respondent agree with the facts set out in Part IV herein for the purposes of this Settlement Agreement only and further agree that this agreement of facts is without prejudice to the Respondent or Staff in any other proceeding of any kind including, but without limiting the generality of the foregoing, any proceedings brought by the MFDA (subject to Part IX) or any civil or other proceedings which may be brought by any other person or agency, whether or not this Settlement Agreement is accepted by the Hearing Panel.

IV. AGREED FACTS

Registration History

  1. From October 20, 2010 to October 22, 2020, the Respondent was registered in British Columbia as a dealing representative with Sun Life Financial Investment Services (Canada) Inc. (the “Member”), a Member of the MFDA.
  2. From November 4, 2010 to July 22, 2020, the Member designated the Respondent as a branch manager.
  3. On October 22, 2020, the Member terminated the Respondent, and he is no longer registered in the securities industry in any capacity.
  4. At all material times, the Respondent conducted business in the city of Abbotsford, British Columbia area.

Related Proceeding Against Matthew Elliott de Haan

  1. In a separate but related proceeding, by Notice of Hearing issued on January 18, 2021, Staff commenced a disciplinary proceeding (the “De Haan Proceeding”) against Matthew Elliott de Haan (“de Haan”) [MFDA File No. 202101]. De Haan was an Approved Person of the Member who carried on business in the city of Abbotsford, British Columbia subject to the supervision of the Respondent who was the designated branch manager of de Haan’s branch office.
  2. On August 10, 2021, a hearing of the De Haan Proceeding on the merits took place before a hearing panel of the Pacific Regional Council of the MFDA. At the conclusion of the hearing, the hearing panel found that de Haan had engaged in misconduct, including that:
    1. Between on or about October 29, 2018 and December 3, 2018, de Haan solicited a client and other individuals to invest in an investment that was not approved for sale by the Member, thereby engaging in securities related business that was not carried on for the account of the Member or through the facilities of the Member, contrary to the Member’s policies and procedures and MFDA Rules 1.1.1, 1.1.2, 2.1.1, and 2.5.1; and
    2. Between on or about October 29, 2018 and December 3, 2018, de Haan engaged in an unapproved outside activity when he, acting on behalf of a third party company, solicited a client and other individuals to invest in an investment that was not approved for sale by the Member, contrary to the Member’s policies and procedures and MFDA Rules 1.1.2, 1.3.2, 2.1.1, and 2.5.1.
  3. As a consequence of that misconduct, the hearing panel prohibited de Haan from conducting securities related business while in the employ of, or in association with, any Member of the MFDA for a period of five (5) years and imposed a fine of $15,000 on de Haan. In its Reasons for Decision dated September 27, 2021, the hearing panel described the investment product which de Haan had unsuccessfully promoted as an “extremely risky proposition” which “exposed prospective investors to a truly severe risk of harm”.
  4. As described in further detail below, on November 8, 2018, the Respondent was informed about the fact that de Haan was soliciting investments in a product outside of the Member but he failed to take appropriate supervisory action in response.

The Respondent’s Failure to Adequately Query and Report Potential Misconduct  

  1. At all material times, the Member’s policies and procedures (the “PPM”) provided that branch managers were responsible for supervising to ensure that advisors were complying with regulatory requirements and the policies and procedures of the Member.
  2. At all material times, the PPM prohibited the sale of investment products by Approved Persons that were not approved for sale by the Member, sold for the account of the Member and processed through the facilities of the Member. In addition, the PPM prohibited Approved Persons from engaging in outside activities without the prior written approval of the Member.
  3. At all material times, the PPM required branch managers to report to the Member all complaints alleging that Approved Persons may be involved in securities related business outside the Member or other undisclosed outside activities.
  4. On November 8, 2018, individual X sent a message to the Respondent advising him that one of the advisors who the Respondent was responsible for supervising had solicited individual X to invest in “a private investment bond guaranteeing 100% returns for some wind farm in Wyoming.” In his message to the Respondent, individual X did not name the person who solicited him to invest.
  5. On November 10, 2018, the Respondent responded to the message sent by individual X and advised that he would “look into” the matter. At this time, the Respondent did not ask individual X to identify who had solicited him to invest in the private investment, nor did he report the information that he had received from individual X to the Member.
  6. On November 16, 2018, the Respondent sent a further message to individual X inquiring as to the identity of the advisor who had solicited individual X to invest in the private investment.
  7. On November 28, 2018, individual X responded to the Respondent’s inquiry and provided him with information which enabled the Respondent to identify that the individual who had solicited individual X to invest was de Haan, who at the time was an Approved Person registered as a dealing representative with the Member.
  8. After receiving the information from individual X, the Respondent did not take any further steps to investigate the matter such as contacting de Haan to obtain further information about his solicitation of money for investment from individual X or from any other individuals nor did he report the information that he had received from individual X to the Member.
  9. On November 27, 2018, de Haan resigned from the Member effective December 12, 2018. The Respondent states that he did not approach de Haan in respect of his solicitation of individual X or report de Haan’s activities to the Member because de Haan had already submitted his resignation to the Member. However, the Respondent acknowledges that he was required to report to the Member the information that he received on November 8, 2018 from individual X. The Respondent further acknowledges that this obligation continued to apply to him even after de Haan announced his resignation from the Member.
  10. As noted above, an MFDA hearing panel found that de Haan engaged in misconduct which included attempts by de Haan to solicit a client and other individuals to invest in securities that had not been approved for sale by the Member and which were not being sold for the account of the Member or through the facilities of the Member. The subject-matter of the disciplinary proceeding against de Haan concerned the same product that individual X reported to the Respondent that de Haan was promoting. At least one of the attempts by de Haan to solicit investments in this unapproved product occurred after the Respondent learned, but failed to report to the Member that an Approved Person under his supervision was soliciting investments in securities outside the Member.
  11. In his capacity as branch manager, the Respondent ought to have reported to the Member the information that he received on November 8, 2018 from individual X. If he had done so, his report would have triggered an obligation of the Member to conduct a reasonable supervisory investigation into these activities, take steps to ensure that the Respondent ceased engaging in these activities, and report the alleged conduct to the MFDA in accordance with MFDA Rule 1.4(a) and MFDA Policy No. 6.

Additional Factors

  1. There is no evidence that the Respondent received any financial benefit from engaging in the misconduct described above.
  2. The Respondent has not previously been the subject of MFDA disciplinary proceedings.
  3. By entering into this Settlement Agreement, the Respondent has saved the MFDA the time, resources and expenses that would have otherwise been necessary to conduct a contested hearing of the allegations.

V. CONTRAVENTIONS

  1. The Respondent admits that between November 8, 2018 and December 2018, in his capacity as a branch manager, he did not adequately query or report to the Member information that he had received that an Approved Person who the Respondent was responsible for supervising had solicited an individual to purchase an investment outside the Member, contrary to the Member’s policies and procedures, MFDA Rules 1.1.2, 2.5.1, 1.4(b) and 2.5.5(f) and MFDA Policy No. 6.

VI. TERMS OF SETTLEMENT

  1. The Respondent agrees to the following terms of settlement:
    1. The Respondent shall be prohibited from acting as a branch manager or in any supervisory capacity for a Member of the MFDA for a period of six months, effective from the date of the Order, pursuant to section 24.1.1(f) of MFDA By-law No. 1;
    2. The Respondent shall successfully complete the branch manager’s course offered by the Investment Funds Institute of Canada or another course offered by the Canadian Securities Institute or the Investment Funds Institute of Canada that is acceptable to Staff of the MFDA prior to acting as a branch manager in the future, pursuant to section 24.1.1(f) of MFDA By-law No. 1;
    3. The Respondent shall pay a fine in the amount of $5,000 in certified funds upon acceptance of this Settlement Agreement, pursuant to s. 24.1.1(b) of MFDA By-Law No. 1;
    4. The Respondent shall pay costs in the amount of $5,000 in certified funds upon acceptance of this Settlement Agreement, pursuant to s. 24.2 of MFDA By-Law No 1;
    5. The Respondent shall in the future comply with MFDA Rules 1.1.2, 2.5.1, 1.4(b) and 2.5.5(f) and MFDA Policy No. 6; and
    6. The Respondent will attend in person, on the date set for the Settlement Hearing.

VII. STAFF COMMITMENT

  1. If this Settlement Agreement is accepted by the Hearing Panel, Staff will not initiate any proceeding under the By-laws of the MFDA against the Respondent in respect of the facts described in Part IV of this Settlement Agreement, subject to the provisions of Part IX below. Nothing in this Settlement Agreement precludes Staff from investigating or initiating proceedings in respect of any facts or contraventions that are not set out in Parts IV or V of this Settlement Agreement or in respect of conduct that occurred outside the specified date ranges of the facts and contraventions set out in Parts IV and V, whether known or unknown at the time of settlement.  Furthermore, nothing in this Settlement Agreement shall relieve the Respondent from fulfilling any continuing regulatory obligations.

VIII. PROCEDURE FOR APPROVAL OF SETTLEMENT

  1. Acceptance of this Settlement Agreement shall be sought at a hearing of the Pacific Regional Council of the MFDA on a date agreed to by counsel for Staff and the Respondent. 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.
  2. Staff and the Respondent may refer to any part, or all, of the Settlement Agreement at the Settlement Hearing. Staff and the Respondent also agree that if this Settlement Agreement is accepted by the Hearing Panel, it will constitute the entirety of the evidence to be submitted respecting the Respondent in this matter, and 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 and the Respondent agree that if this Settlement Agreement is accepted by the Hearing Panel, then the Respondent shall be deemed to have been penalized by the Hearing Panel pursuant to s. 24.1.1 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.
  4. Staff and the Respondent agree that if this Settlement Agreement is accepted by the Hearing Panel, 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 him.

IX. FAILURE TO HONOUR SETTLEMENT AGREEMENT

  1. If this Settlement Agreement is accepted by the Hearing Panel and, at any subsequent time, the Respondent fails to honour any of the Terms of Settlement set out herein, Staff reserves the right to bring proceedings under section 24.3 of the By-laws of the MFDA against the Respondent based on, but not limited to, the facts set out in Part IV of the Settlement Agreement, as well as the breach of the Settlement Agreement. If such additional enforcement action is taken, the Respondent agrees that the proceeding(s) may be heard and determined by a hearing panel comprised of all or some of the same members of the hearing panel that accepted the Settlement Agreement, if available.

X. NON-ACCEPTANCE OF SETTLEMENT AGREEMENT

  1. If, for any reason whatsoever, this Settlement Agreement is not accepted by the Hearing Panel or an Order in the form attached as Schedule “A” is not made 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 this Settlement Agreement or the settlement negotiations.
  2. Whether or not this Settlement Agreement is accepted by the Hearing Panel, the Respondent agrees that he will not, in any proceeding, refer to or rely upon this Settlement Agreement or the negotiation or process of approval of this Settlement Agreement as the basis for any allegation against the MFDA of lack of jurisdiction, bias, appearance of bias, unfairness, or any other remedy or challenge that may otherwise be available.

XI. DISCLOSURE OF AGREEMENT

  1. The terms of this Settlement Agreement will be treated as confidential by the parties hereto until accepted by the Hearing Panel, and forever if, for any reason whatsoever, this Settlement Agreement is not accepted by the Hearing Panel, except with the written consent of both the Respondent and Staff or as may be required by law.
  2. Any obligations of confidentiality shall terminate upon acceptance of this Settlement Agreement by the Hearing Panel.

XII. EXECUTION OF SETTLEMENT AGREEMENT

  1. This Settlement Agreement may be signed in one or more counterparts which together shall constitute a binding agreement.
  2. A facsimile copy of any signature shall be effective as an original signature.
  • SK
    Witness - Signature
  • SK
    Witness - Print Name
  • “Alim Kassam”

    Alim Kassam

  • “Charles Toth”

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

854506


Schedule “A”

Order
File No. 202133

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: Alim Kassam

ORDER

WHEREAS on July 19, 2021, the Mutual Fund Dealers Association of Canada (the “MFDA”) issued a Notice of Hearing pursuant to section 24.4 of MFDA By-law No. 1 in respect of Alim Kassam (the “Respondent”);

AND WHEREAS the Respondent entered into a settlement agreement with Staff of the MFDA, dated [date] (the “Settlement Agreement”), in which the Respondent agreed to a proposed settlement of matters for which the Respondent could be disciplined pursuant to ss. 20 and 24.1 of MFDA By-law No. 1;

AND WHEREAS on the basis of the admissions of the Respondent that are set out in the Settlement Agreement, the Hearing Panel is of the opinion that between November 8, 2018 and December 2018, the Respondent, in his capacity as a branch manager, did not adequately query or report to the Member information that he had received that an Approved Person who the Respondent was responsible for supervising had solicited an individual to purchase an investment outside the Member, contrary to the Member’s policies and procedures, MFDA Rules 1.1.2, 2.5.1, 1.4(b) and 2.5.5(f) and MFDA Policy No. 6.

IT IS HEREBY ORDERED THAT the Settlement Agreement is accepted, as a consequence of which:

  1. The Respondent shall be prohibited from acting as a branch manager or in any supervisory capacity for a Member of the MFDA for a period of six months, effective from the date of the Order, pursuant to section 24.1.1(f) of MDFA By-law No. 1;
  2. The Respondent shall successfully complete the branch manager’s course offered by the Investment Funds Institute of Canada or another course offered by the Canadian Securities Institute or the Investment Funds Institute of Canada that is acceptable to Staff of the MFDA prior to acting as a branch manager in the future, pursuant to section 24.1.1(f) of MFDA By-law No. 1;
  3. The Respondent shall pay a fine in the amount of $5,000, in certified funds, pursuant to s. 24.1.1(b) of MFDA By-Law No. 1;
  4. The Respondent shall pay costs in the amount of $5,000, in certified funds, pursuant to s. 24.2 of MFDA By-Law No 1; and
  5. If at any time a non-party to this proceeding, with the exception of the bodies set out in section 23 of MFDA By-law No. 1, requests production of or access to exhibits in this proceeding that contain personal information as defined by the MFDA Privacy Policy, then the MFDA Corporate Secretary shall not provide copies of or access to the requested exhibits to the non-party without first redacting from them any and all personal information, pursuant to Rules 1.8(2) and (5) of the MFDA Rules of Procedure.

DATED this [day] day of [month], 20[  ].

Per:      __________________________
[Name of Public Representative], Chair

Per:      _________________________
[Name of Industry Representative]

Per:      _________________________
[Name of Industry Representative]