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: Erich Gilles Juillet
- The Mutual Fund Dealers Association of Canada (the “MFDA”) will announce that it proposes to hold a hearing (the “Settlement Hearing”) to consider whether, pursuant to section 24.4 of MFDA By-law No. 1, a hearing panel of the Central Regional Council (the “Hearing Panel”) of the MFDA should accept the settlement agreement (the “Settlement Agreement”) entered into between Staff of the MFDA (“Staff”) and the Respondent, Erich Gilles Juillet (the “Respondent”).
- Staff and the Respondent, consent and agree to the terms of this Settlement Agreement.
- Staff and the Respondent jointly recommend that the Hearing Panel accept the Settlement Agreement.
- The Respondent admits to the following violations of the By-laws, Rules or Policies of the MFDA:
- On or about February 6, 2018, the Respondent failed to notify the Member of a transactional error in the handling of a client account, contrary to the Member’s policies and procedures and MFDA Rules 1.1.2, 2.5.1 and 2.1.1.
- Between on or about January 25, 2018 and February 6, 2018, the Respondent failed to obtain trade instructions from both joint account holders prior to processing trades in their account, contrary to the Member’s policies and procedures and MFDA Rules 1.1.2, 2.5.1 and 2.1.1.
- On or about February 6, 2018, the Respondent provided a false or misleading statement to the Member in response to a Member supervisory inquiry, contrary to MFDA Rule 2.1.1.
- On or about October 6, 2016, the Respondent signed the signature of a client on an account form and submitted the account form to the Member for processing, contrary to MFDA Rule 2.1.1.
III. TERMS OF SETTLEMENT
- Staff and the Respondent agree and consent to the following terms of settlement:
- the Respondent shall be prohibited from conducting securities related business in any capacity while in the employ of or associated with any MFDA Member for a period of 6 months from the date that this Settlement Agreement is accepted by a Hearing Panel, pursuant to section 24.1.1(e) of MFDA By-law No.1;
- the Respondent shall pay a fine in the amount of $5,000, pursuant to s. 24.1.1(b) of MFDA By-law No. 1, which shall be payable in certified funds on the date that this Settlement Agreement is accepted by a Hearing Panel;
- the Respondent shall pay costs in the amount of $2,500, pursuant to s. 24.2 of MFDA By-law No. 1, which shall be payable in certified funds on the date that this Settlement Agreement is accepted by a Hearing Panel;
- the Respondent shall successfully complete the Ethics and Professional Conduct Course offered by the IFSE Institute, or an ethics course acceptable to Staff of the MFDA, prior to becoming re-registered as a dealing representative with a Member of the MFDA;
- the Respondent shall in the future comply with MFDA Rules 1.1.2, 2.5.1 and 2.1.1; and
- the Respondent will attend by videoconference on the date set for the Settlement Hearing.
- Staff and the Respondent agree to the settlement on the basis of the facts set out in this Settlement Agreement herein and consent to the making of an Order in the form attached as Schedule “A”.
IV. AGREED FACTS
- Between February 4, 2014 and December 7, 2018, the Respondent was registered in Ontario and Québec as a dealing representative with Investors Group Financial Services Inc. (the “Member”), a Member of the MFDA.
- On December 7, 2018 the Member terminated the Respondent, and he is not currently registered in the securities industry in any capacity.
- At all material times, the Respondent conducted business in the Ottawa, Ontario area.
Failed to Notify the Member of a Transactional Error
- At all material times, the Member’s policies and procedures required Approved Persons to notify the Member of transactional errors that occur in the handling of client accounts as soon as the errors are identified and prior to correction by the Approved Person.
- On or about November 27, 2017, the Respondent began servicing the mutual fund accounts at the Member of clients PS and SS, including a jointly held non-registered account (the “Joint Account”).
- On January 25, 2018, the Respondent received an email from client PS instructing the Respondent to process certain transactions, including a redemption of the investments held in the Joint Account, and the deposit of the proceeds of the redemption into client PS’s bank account.
- The Respondent did not act on the January 25, 2018 instructions to process the redemption in the Joint Account.
- On February 6, 2018, the Respondent received a follow-up email from client PS that questioned why the redemption had not been executed as requested in the January 25, 2018 e-mail from client PS. Client PS instructed the Respondent to process the redemption by backdating it to January 25, 2018 as the investments in the Joint Account had decreased in value between January 25, 2018 and February 6, 2018.
- On February 6, 2018, the Respondent processed the redemption of the investments held in the Joint Account and deposited the proceeds into client PS’s bank account. The Respondent failed to alert the Member that he had not processed client PS’s redemption instructions in a timely manner as required by the policies and procedures of the Member.
- On February 7, 2018, client PS complained to the Member that the Respondent had failed to process the trading instructions that client PS had sent to him on January 25, 2018 in a timely manner, and consequently, client PS incurred investment losses in the amount of $4,223.84 due to a decrease in the value of the investments held in the Joint Account. The Member subsequently reimbursed client PS for these losses.
- By virtue of the foregoing, the Respondent failed to notify the Member of his transactional error in respect of the redemption in the Joint Account.
Failed to Obtain Trade Instructions from Both Joint Account Holders
- At all material times, the Member’s policies and procedures required that all joint owners authorize all transactions involving joint accounts, and that if one of the joint owners requests that a transaction be processed, it is the responsibility of the Approved Person to obtain the authorization of the other joint owners of the account prior to submitting the transaction for processing.
- The Respondent received instructions only from client PS to process the redemption in the Joint Account described above at paragraph 12, and did not contact client SS to obtain authorization from client SS.
- By virtue of the foregoing, the Respondent failed to obtain trade instructions from both joint account holders prior to processing a trade in their account.
Misleading Statement to the Member
- As part of its investigation of the complaint from client PS described above at paragraph 16, the Member’s compliance personnel sent an inquiry to the Respondent requesting that he confirm that he received authorization from client SS to redeem the investments held in the Joint Account.
- In response to this inquiry, the Respondent stated to the Member that he had obtained verbal authorization from client SS by phone but he had failed to document the conversation that he had with client SS.
- The Respondent’s statement to the Member was false or misleading because, as described above at paragraph 19, the Respondent did not communicate with client SS to obtain authorization from client SS to process the redemption requested by client PS.
- By virtue of the foregoing, the Respondent provided false or misleading information to the Member in response to a supervisory inquiry from the Member.
Signed a Client Signature on an Account Form
- At all material times, the Member’s policies and procedures prohibited Approved Persons from, among other things, executing or signing documents on behalf of clients.
- On or about October 6, 2016, the Respondent signed the signature of a client on a client update form, and submitted the form to the Member for processing.
- During the Member’s investigation into the conduct described in this Settlement Agreement, the Member confirmed with the client that the information on the client update form was accurate.
- By signing a client’s signature on an account form, the Respondent contravened the standard of conduct.
- The Respondent states that he has limited means with which to pay a fine or costs, and has multiple dependents. The Respondent has provided evidence to Staff which confirms that he has significant levels of personal debt.
- There is no evidence that the Respondent received any financial benefit from the conduct set out above beyond any commissions or fees that he would ordinarily be entitled to receive had the transactions been carried out in the proper manner.
- The Respondent has not previously been the subject of MFDA disciplinary proceedings.
- By entering into the Settlement Agreement, the Respondent has saved the MFDA the time, resources, and expenses associated with conducting a contested hearing of the allegations.
V. ADDITIONAL TERMS OF SETTLEMENT
- 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.
- The Settlement Agreement is subject to acceptance by the Hearing Panel. 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 www.mfda.ca.
- 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.
- Staff and the Respondent agree that if this Settlement Agreement is accepted by the Hearing Panel:
- the Settlement Agreement will constitute the entirety of the evidence to be submitted at the settlement hearing, subject to rule 15.3 of the MFDA Rules of Procedure;
- 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;
- except for any proceedings commenced to address an alleged failure to comply with this Settlement Agreement, 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, 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;
- the Respondent shall be deemed to have been penalized by the Hearing Panel pursuant to section 24.1.1 of MFDA By-law No. 1 for the purpose of giving notice to the public thereof in accordance with section 24.5 of MFDA By-law No. 1; and
- 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.
- 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 this 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.
- 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 MFDA By-law No. 1, unaffected by the Settlement Agreement or the settlement negotiations.
- 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. The terms of the Settlement Agreement, including the attached Schedule “A”, will be released to the public if and when the Settlement Agreement is accepted by the Hearing Panel.
- The Settlement Agreement may be signed in one or more counterparts which together shall constitute a binding agreement. A facsimile or electronic copy of any signature shall be as effective as an original signature.
NLWitness - Signature
NLWitness - Print Name
Erich Gilles Juillet