Settlement Agreement

I. INTRODUCTION

1. 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 Pacific 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, Jerry Bo Song (the “Respondent”).
2. Staff and the Respondent consent and agree to the terms of this Settlement Agreement.
3. Staff and the Respondent jointly recommend that the Hearing Panel accept the Settlement Agreement.

II. CONTRAVENTIONS

4. The Respondent admits to the following violations of the By-laws, Rules or Policies of the MFDA:

Between approximately October 2017 and November 2019, the Respondent, acting in his capacity as branch manager, reviewed and approved the use of a total of 24 altered and pre-signed forms, contrary to MFDA Rules 2.5.5(f) and 2.1.1.

III. TERMS OF SETTLEMENT

5. Staff and the Respondent agree and consent to the following terms of settlement:
   1. The Respondent shall be suspended from acting as a branch manager or in any supervisory capacity for a Member of the MFDA for a period of four 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 pay a fine in the amount of $9,000 in certified funds upon acceptance of the Settlement Agreement, pursuant to s. 24.1.1(b) of MFDA By-law No. 1;
   3. The Respondent shall pay costs in the amount of $5,000 in certified funds upon acceptance of the Settlement Agreement, pursuant to s. 24.2 of MFDA By-law No. 1;
   4. The Respondent shall successfully complete the branch manager’s course offered by the Investment Funds Institute of Canada, the Investment Dealer Supervisors Course offered by the Canadian Securities Institute, or another industry course that is acceptable to Staff of the MFDA prior to acting as a branch manager or in any supervisory capacity in the future, pursuant to section 24.1.1(f) of MFDA By-law No. 1;
   5. The Respondent shall in the future comply with MFDA Rule 2.5.5(f) and 2.1.1; and
   6. The Respondent shall 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 this Settlement Agreement herein and consent to the making of an Order in the form attached as Schedule “A”.

IV. AGREED FACTS

Registration History

7. Since September 2009, the Respondent has been registered in the securities industry.
8. Since September 22, 2017, the Respondent has been registered in British Columbia as a dealing representative with Queen Financial Group Inc. (the “Member”), a Member of the MFDA.
9. On September 22, 2017, the Member designated the Respondent as a branch manager.
10. At all material times, the Respondent conducted business in the Richmond, British Columbia area.

Approval of Pre-Signed Forms

11. Between approximately October 2017 and November 2019, two Approved Persons who the Respondent had the responsibility to supervise as branch manager submitted to the Respondent for approval 11 incomplete New Account Application Forms that had been signed by the clients.
12. The forms described above were missing information including: intended use, purpose of funds, dollar amount, employment information, and banking information.
13. The Respondent queried the Approved Persons in respect of the missing information on the account forms. The Respondent signed and approved as branch manager the incomplete account forms that had been signed by the client. Subsequently, the Approved Persons added the information that was missing from the account forms without having the client initial the additions to the forms.
14. The Respondent approved the account forms and they were submitted to the Member for processing without the Respondent verifying that the information that was subsequently added to the forms by the Approved Persons had been authorized by the clients.

Approval of Altered Account Forms

15. Between approximately October 2017 and November 2019, an Approved Person who the Respondent had the responsibility to supervise as branch manager submitted to the Respondent for approval 13 account forms where information had been altered on the forms without having the client initial the alterations.
16. The Respondent, acting in his capacity as branch manager, approved the use of the altered account forms and they were submitted to the Member for processing.
17. The altered account forms described above included Switch/Systemic Instruction and Know Your Client Forms.
18. The altered forms described above contained alterations to information including: transaction amount, net worth, investment objective, risk tolerance, fund code and name, and client’s signature date.

The Member’s Investigation

19. During a 2019 Compliance Examination of the Member, the MFDA identified some of the account forms described above.
20. In or about May 2020, the Member commenced an investigation into pre-signed and altered forms described above. As part of it investigation, the Member wrote the affected clients to determine if they had knowledge of and authorized the transactions.  No clients reported any concerns to the Member.

Additional Factors

21. There is no evidence of client loss, client complaints, or lack of authorization.
22. The Respondent has not previously been the subject of MFDA disciplinary proceedings.
23. There is no evidence that the Respondent received any financial benefit from the conduct set out above beyond the commissions or fees he would ordinarily be entitled to receive had the transactions been carried out in the proper manner.
24. By entering into this Settlement Agreement, the Respondent has saved the MFDA the time, resources, and expense associated with conducting a full hearing on the allegations.

V. ADDITIONAL TERMS OF SETTLEMENT

25. 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.
26. 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.
27. 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.
28. 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 at the settlement hearing, subject to rule 15.3 of the MFDA Rules of Procedure;
    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. 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 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, 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;
    4. 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
    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.
29. 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.
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 MFDA By-law No. 1, unaffected by the Settlement Agreement or the settlement negotiations.
31. 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.
32. 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.