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 Prairie 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, Andrey Belskiy (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 September 22, 2015 and August 14, 2019, the Respondent altered, and used to process transactions, 3 account forms in respect of 3 clients by altering information on the forms without having the client initial the alterations, contrary to MFDA Rule 2.1.1; and
   2. between April 8, 2015 and June 10, 2020, the Respondent obtained, possessed, and used to process transactions, 26 pre-signed accounts forms in respect of 19 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 prohibited from conducting securities related business in any capacity while in the employ of or associated with any MFDA Member for a period of 9 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;
   2. the Respondent shall pay a fine in the amount of $5,000 in certified funds, pursuant to section 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, pursuant to section 24.2 of MFDA By-law No.1;
   4. the payment by the Respondent of the fine and costs shall be made to and received by the MFDA in certified funds as follows:
      1. $2,500 (costs) upon acceptance of the Settlement Agreement by the Hearing Panel;
      2. $1,250 (fine) on or before the last business day of the first month following the date of the Settlement Agreement;
      3. $1,250 (fine) on or before the last business day of the second month following the date of the Settlement Agreement;
      4. $1,250 (fine) on or before the last business day of the third month following the date of the Settlement Agreement;
      5. $1,250 (fine) on or before the last business day of the fourth month following the date 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. Commencing in 2009, the Respondent has been registered in Manitoba in the securities industry.
8. Since September 25, 2012, the Respondent has been registered in Manitoba as a dealing representative with Investia Financial Services Inc. (the “Member”).
9. On January 25, 2022, the Respondent resigned from the Member, and he is not currently registered in the securities industry in any capacity.
10. At all material times, the Respondent conducted business in the Winnipeg, Manitoba area.

Altered Account Forms

11. At all material times, the Member’s policies and procedures prohibited Approved Persons from altering or correcting any information on a signed document without the client initialing the document to show that the client approved the alteration.
12. Between September 22, 2015 and August 14, 2019, the Respondent altered, and used to process transactions, 3 account forms in respect of 3 clients by altering information on the forms without having the client initial the alterations.
13. The altered account forms included: 1 Know Your Client (“KYC”) Form, and 2 Systematic Instruction Forms.
14. The alterations that the Respondent made to the account forms consisted of two instances of adding a Fund Code and Fund Number, and once instance of altering a client’s net worth.

Pre-Signed Account Forms 

15. At all material times, the Member’s policies and procedures prohibited the use or holding of blank or incomplete pre-signed forms by Approved Persons.
16. Between April 8, 2015 and June 10, 2020, the Respondent obtained, possessed, and used to process transactions, 26 pre-signed accounts forms in respect of 19 clients.
17. The pre-signed account forms included KYC Forms, Transaction Forms, New Account Application Forms, Systematic Instruction Forms, and Transfer Forms.

The Member’s Investigation

18. In June 2020, the Member discovered the account forms described above during a branch review.
19. Effective August 31, 2020, the Member placed the Respondent under strict supervision for a period of 90 days.
20. As part of the Member’s investigation to address the deficiencies in the forms that it discovered, the Member sent letters to all clients whose accounts were serviced by the Respondent to verify the client’s KYC information for each of their accounts. No clients reported any concerns to the Member.
21. The Respondent has paid the Member a total of $799 relating to the strict supervision imposed by the Member and the cost of client letters.
22. The Member issued the Respondent a Warning Letter for the account forms addressed in this Settlement Agreement.

Additional Factors

23. There is no evidence that the Respondent received any financial benefit from the conduct set out above beyond any commissions and fees to which he would ordinarily have been entitled had the transactions been carried out in the proper manner.
24. There is no evidence of client loss, complaints, or a lack of authorization.
25. The Respondent has not previously been the subject of MFDA disciplinary proceedings.
26. 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.
27. The Respondent states that he has limited financial means and, as a result, he is unable to pay a monetary penalty that is greater than the total of the fine and costs amounts set out in this Settlement Agreement. MFDA Staff have received evidence which corroborates the Respondent’s statement.

V. ADDITIONAL TERMS OF SETTLEMENT

28. 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.
29. 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.
30. 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.
31. 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 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;
    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.
32. 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.
33. 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.
34. 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.
35. 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.