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, Hui Chuan Lisa Hsu (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:
   1. Between July 2017 and June 2019, the Respondent engaged in personal financial dealings with clients by borrowing monies from clients, which gave rise to conflicts or potential conflicts of interest that she failed to disclose to the Member or otherwise ensure were addressed by the exercise of responsible business judgment influenced only by the best interest of the clients, contrary to the policies and procedures of the Member and MFDA Rules 1.1.2, 2.1.1, 2.1.4[1], and 2.5.1.

III. TERMS OF SETTLEMENT

5. Staff and the Respondent agree and consent to the following terms of settlement:
   1. 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 five (5) years commencing on the date when the Settlement Agreement is accepted, pursuant to s. 24.1.1(e) of MFDA By-law No. 1;
   2. The Respondent shall pay a fine in the amount of $20,000, pursuant to s. 24.1.l(b) of MFDA By-law No. l;
   3. The Respondent shall pay costs in the amount of $5,000, pursuant to s. 24.2 of MFDA By-law No. 1;
   4. The payment of the fine and costs shall be made to and received by the MFDA in certified funds as follows:
      1. $5,000 (Costs) upon acceptance of the Settlement Agreement by the Hearing Panel;
      2. $2,500 (Fine) upon acceptance of the Settlement Agreement by the Hearing Panel;
      3. $2,916.70 (Fine) on or before the last business day of the first month following the date of the Settlement Agreement;
      4. $2,916.66 (Fine) on or before the last business day of the second month following the date of the Settlement Agreement;
      5. $2,916.66 (Fine) on or before the last business day of the third month following the date of the Settlement Agreement;
      6. $2,916.66 (Fine) on or before the last business day of the fourth month following the date of the Settlement Agreement;
      7. $2,916.66 (Fine) on or before the last business day of the fifth month following the date of the Settlement Agreement;
      8. $2,916.66 (Fine) on or before the last business day of the sixth month following the date of the Settlement Agreement;
   5. The Respondent shall in the future comply with MFDA Rules 1.1.2, 2.1.1, 2.1.4, and 2.5.1; 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. From October 6, 2016 to May 28, 2020, the Respondent was registered in British Columbia as a dealing representative with CIBC Securities Inc. (the “Member”), a Member of the MFDA.
8. The Member terminated the Respondent as a result of the conduct described herein, and she is not currently registered in the securities industry in any capacity.
9. At all material times, the Respondent conducted business in the Richmond, British Columbia area.

Personal Financial Dealings with Clients

10. At all material times, the Member’s policies and procedures prohibited its Approved Persons from borrowing from clients.

Client YW

11. At all material times, client YW was a client of the Member.
12. In or about July 2017, the Respondent obtained a loan from client YW in the total amount of $20,000. The Respondent told client YW that she would repay the amounts owed by June 2018.
13. In or about July 2017, the Respondent provided client YW with a post-dated cheque in the amount of $20,000, dated June 4, 2018, to repay the monies that the Respondent borrowed from client YW.
14. In or about June 4, 2018, the Respondent advised client YW that she was experiencing financial difficulties. The Respondent told client YW that she would repay $10,000 in June 2018, and proposed to pay the remaining $10,000 in June 2019.
15. In or about June 2018, the Respondent retrieved the post-dated cheque in the amount of $20,000 that she had previously provided to client YW and provided her with two new post-dated cheques, each in the amount of $10,000 and dated June 4, 2018 and June 15, 2019 respectively, to repay the monies that she had borrowed from client YW.
16. In June 2018, the Respondent repaid $10,000 to client YW and, in June 2019, she repaid the remaining $10,000 that she had borrowed from client YW.

Client SYW

17. At all material times, client SYW was a client of the Member whose accounts were serviced by the Respondent.
18. In or about June 2019, the Respondent requested and obtained a loan from client SYW in the total amount of $30,000. The Respondent told client SYW that she would repay the amounts owed to him within six months, and provided him with a post-dated cheque in the amount of $30,000, dated December 20, 2019, to repay the amount that she had borrowed from him.
19. Client SYW deposited the post-dated cheque in or about January 2020 and was thereby repaid the total amount that the Respondent borrowed from him.
20. The Respondent used the monies borrowed from both clients YW and SYW as described above to pay down the Respondent’s line of credit and other outstanding debts that the Respondent owed to creditors.
21. By borrowing monies from clients YW and SJW as described above, the Respondent engaged in personal financial dealings with clients that gave rise to conflicts or potential conflicts of interest that the Respondent failed to disclose to the Member or otherwise ensure were addressed by the exercise of responsible business judgment influenced only by the best interests of the client, contrary to the policies and procedures of the Member and MFDA Rules 1.1.2, 2.1.1, 2.1.4, and 2.5.1.

Additional Factors

22. The Respondent had not previously been the subject of MFDA disciplinary proceedings.
23. There are no client complaints to the Member or to the MFDA with respect to the Respondent’s conduct described in the Settlement Agreement.
24. The Respondent states that, as a result of her limited financial means, she requires that the fine and costs amount be paid in instalments.
25. By entering into this Settlement Agreement, the Respondent has saved the MFDA the time, resources, and expense associated with conducting a contested hearing of the

V. 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. 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.
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 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.
30. 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.
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 MFDA By-law No. 1, unaffected by the Settlement Agreement or the settlement negotiations.
32. 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.
33. 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.

[1] On June 30, 2021, MFDA Rule 2.1.4 was amended to conform with client-focused reform amendments to National Instrument 31-103 that came into effect on the same day. As the conduct addressed in this Settlement Agreement pre-dated the amendment to this Rule, the contravention concerns the version of the Rule that was in effect between February 27, 2006 and June 30, 2021.