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 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, William Donald Craven (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 January 15, 2015 and July 20, 2020, the Respondent altered and used to process transactions 134 account forms in respect of 94 clients by altering information on the account forms without having the clients initial the alterations, contrary to MFDA Rule 2.1.1; and
   2. between November 1, 2016 and January 30, 2020, the Respondent obtained, possessed, and used to process transactions, 5 pre-signed account forms in respect of 5 clients, contrary to MFDA Rule 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 for a period of 30 days from conducting securities related business in any capacity while in the employ of or associated with any MFDA Member, commencing on the date the Settlement Agreement is accepted by the Hearing Panel, 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 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 $2,500 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 Ethics and Professional Conduct Course offered by the IFSE Institute, or an industry course acceptable to Staff of the MFDA, within 12 months of the acceptance of the Settlement Agreement;
   5. the Respondent shall in the future comply with MFDA Rule 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 July 2021, the Respondent has been registered in Ontario and British Columbia as a dealing representative with Investia Financial Services Inc., a Member of the MFDA.
8. From March 2003 to July 2021, the Respondent was registered in Ontario and British Columbia as a dealing representative with FundEX Investments Inc. (“FundEX”), a Member of the MFDA. The Respondent was also registered as a dealing representative with FundEX in Nova Scotia from January 2008 to December 2014, and in Alberta from January 2013 to December 2014.
9. At all material times, the Respondent conducted business in the Chatham, Ontario area.

Altered Account Forms

10. At all material times, the FundEX’s policies and procedures prohibited Approved Persons from obtaining or using pre-signed account forms from altering or correcting any information on a signed document, without having the client initial the changes.
11. Between January 15, 2015 and July 20, 2020, the Respondent altered and used to process transactions 134 account forms in respect of 94 clients by altering information on the account forms without having the clients initial the alterations.
12. The altered account forms consisted of:
    1. 2 Application for Family ESP Account Forms;
    2. 5 Automatic Rebalancing Service Forms;
    3. 1 Beneficiary Change Form;
    4. 1 Disability Savings Plan Application Form;
    5. 2 Education Savings Plan Application Forms;
    6. 1 Fee For Service Account Addendum Form;
    7. 4 Know Your Client (“KYC”) Update Forms;
    8. 1 Letter of Direction;
    9. 3 New Client Application Forms;
    10. 1 Nominee Fee-Based Account Program Agreement Form;
    11. 2 Non-Financial Change Forms;
    12. 1 Open and Registered Plan Application Form;
    13. 33 Order Entry Forms;
    14. 1 Order Ticket Form;
    15. 9 Request for Commission Rebate/Reimbursement of Fees Forms;
    16. 4 RESP Educational Assistance Payment Forms;
    17. 3 Self-Directed Account Application Forms;
    18. 30 Systematic Instruction Forms;
    19. 3 Tax-Free Savings Account Application Forms;
    20. 2 Trade Ticket Forms; and
    21. 25 Transfer Forms.
13. The information altered by the Respondent on the account forms included client objectives, client time horizons, redemption fee and commission rebate amounts, fund details and codes, plan types, and payment dates.

Pre-signed Account Forms

14. At all material times, FundEX’s policies and procedures prohibited Approved Persons from obtaining or using pre-signed account forms.
15. Between November 1, 2016 and January 30, 2020, the Respondent obtained, possessed, and used to process transactions, 5 pre-signed account forms in respect of 5 clients.
16. The account forms consisted of:
    1. 1 Order Instruction Form;
    2. 1 KYC Update Form;
    3. 2 Mutual Fund Application Forms; and
    4. 1 Systematic Instruction Form.

FundEX’s Investigation

17. In or around November 2020, during the course of a supervisory review, FundEX identified some the account forms described above. Subsequently, FundEX completed a full review of the client files serviced by the Respondent and did not identify any issues with the additional forms reviewed.
18. FundEX commenced an investigation to determine whether the transactions processed by the Respondent were authorized by the clients and that the KYC information that FundEX has on file was accurate. In or around January 2021, FundEX wrote to all active clients who had been serviced by the Respondent in order to have the clients review their KYC information. No clients reported any concerns to FundEX.
19. On or about December 23, 2020, FundEX placed the Respondent on strict supervision The Respondent completed his strict supervision on April 28, 2021 and paid FundEX $1,875 fees in respect of strict supervision. The Respondent also paid FundEX $1,260 in respect of the transaction statements and letters it sent to the clients.
20. On April 28, 2021, FundEX issued the Respondent a warning letter in respect of the account forms described above.

Additional Factors

21. 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.
22. There is no evidence of client loss, client complaints, or lack of authorization.
23. The Respondent has not previously been the subject of MFDA disciplinary proceedings.
24. By entering into this Settlement Agreement, the Respondent has saved the MFDA the time, resources, and expenses associated with conducting a full hearing on the allegations.
25. The Respondent states that he engaged in the conduct described within this Settlement Agreement for the purpose of client convenience, but he acknowledges that this is not an acceptable justification for such conduct.

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 24.1.2 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.