re: de thomas wealth management corp.mfda by-laws, rules and policies for the period from d ecember...

of 24

Reasons for Decision File No. 2018133

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: De Thomas Wealth Management Corp.

Heard: February 14, 2019 in Toronto, Ontario Decision: February 14, 2019

Reasons for Decision: April 25, 2019

REASONS FOR DECISION Hearing Panel of the Central Regional Council:

Appearances:

Malliha Wilson Chair Brigitte J. Geisler Industry Representative Kenneth P. Mann Industry Representative

H. C. Clement Wai ) Counsel for the Mutual Fund Dealers Association of Canada )

) ) Anthony De Thomasis )

) President and UDP, De Thomas Wealth Management Corp.

)

of 24

I. BACKGROUND

1. Pursuant to a Notice of Settlement Hearing, the Mutual Fund Dealers Association of

Canada (the “MFDA”) held a hearing on February 14, 2019 to consider whether, pursuant to

section 24.4 of 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, De Thomas Wealth

Management Corp. (the “Respondent” or “De Thomas”).

II. CONTRAVENTIONS

2. De Thomas admits the following contraventions of the MFDA Rules, Policies or By-Law:

a) commencing in June 2011, the Respondent failed to conduct an on-site compliance

review of every sub-branch location at least once every three years, contrary to

MFDA Policy No. 5 and MFDA Rule 2.5.1; and

b) between June 2016 and March 2017, the Respondent failed to adequately supervise

an Approved Person by approving and permitting the Approved Person to sell

syndicated mortgages outside of the Member, contrary to MFDA Rules 1.1.1, 1.3

and 2.5.

III. AGREED PENALTY

3. De Thomas agrees to the following terms of settlement:

a) De Thomas shall pay a fine in the amount of $40,000 pursuant to s. 24.1.2(b) of

MFDA By-law No. 1;

b) De Thomas shall pay costs in the amount of $10,000 pursuant to s. 24.2 of MFDA

By-law No. 1; and

c) A representative of De Thomas shall attend in person, on the date set for the

Settlement Hearing.

of 24

IV. SETTLEMENT AGREEMENT

4. The Hearing Panel accepted the Settlement Agreement dated February 6, 2019 (the

“Settlement Agreement”) between the Staff of the MFDA and the Respondent. A copy of the

Settlement Agreement is attached hereto as Schedule “1” and a copy of the Order is attached as

Schedule “2”.

V. AGREED FACTS

5. The agreed facts are set out in section IV of the Settlement Agreement, and the pertinent

facts are set out as follows.

Registration History

6. The Respondent is registered in the provinces of Ontario, Alberta, British Columbia,

Manitoba, Saskatchewan and Quebec as a Mutual Fund Dealer. The Respondent is registered in

the provinces of Ontario, Alberta, British Columbia and Quebec as an Exempt Market Dealer. The

Respondent became a Member of the MFDA on April 12, 2002.

Failure to Conduct Branch Reviews

7. From January 16, 2017 to February 3, 2017, MFDA Sales Compliance completed an

examination of De Thomas, which included an assessment of compliance by De Thomas with

MFDA By-laws, Rules and Policies for the period from December 1, 2012 to November 30, 2016.

The examination included a review of De Thomas’ head office, two branch locations (Toronto and

Kelowna) and 2 sub-branch locations (Vaughan and Thornhill). The findings of the examination

were reported to De Thomas in the MFDA Compliance Examination Report dated May 17, 2017.

(the “2017 Examination Report”).

8. The 2017 MFDA Report identified, amongst other things, deficiencies in the following

areas:

a) the sale of syndicated mortgages outside the facilities of the Member;

b) failing to conduct branch and sub-branch reviews;

of 24

c) failing to develop a risk based methodology to rank branch locations as high

medium or low risk using appropriate criteria such as results of previous reviews;

d) failing to ensure adequacy in the documentation of branch reviews; and

e) failing to ensure branch reviews were conducted by an independent reviewer.

9. The 2017 Examination identified the following branch/sub-branches which De Thomas

had failed to conduct a review in a timely manner:

# Branch/Sub-branch Address

Scheduled Review Date

Issue

1 45389 Luckakuck Way Chilliwack, BC (Sub-branch)

September 2017 During the 2013 Targeted Examination, De Thomas agreed to review this location in March 2014; the review was never conducted. This branch was scheduled to be reviewed in 2017, more than 6 years after it was registered on May 19, 2011. This branch was reviewed in November 2018.

2 5 Crestwood Drive Cambridge, ON (Sub-branch)

Noted as N/A This location was noted as ‘N/A’ on the De Thomas’ schedule, a review has never been conducted, nor has De Thomas scheduled one. The location was registered more than 8 years ago on June 12, 2008. This branch was reviewed in September 2018.

3 1210 Sheppard Ave. E. Toronto, ON (Sub-branch)

Noted as N/A This location was noted as ‘N/A’ on the De Thomas’ schedule, a review has never been conducted, nor has De Thomas scheduled one. The location was registered more than 8 years ago on June 12, 2008. This branch was reviewed in November 2018. This location will no longer be registered as a sub-branch location as of December 31, 2018.

4 903 Dorchester Avenue, Winnipeg MB (Sub-branch)

N/A – noted as Law Office

This location was noted as ‘N/A’ on the De Thomas’ schedule, a review has never been conducted, nor has De Thomas scheduled one. The location was registered more than 5 years ago on June 15, 2011. This branch was reviewed in November 2018.

5 309 Banks Road Kelowna, BC (Sub-branch)

March 2014 This location was last reviewed in March 2010. De Thomas agreed to a Policy No. 5 review schedule of March 2014, during the 2013 Targeted Examination that was not adhered to. De Thomas has scheduled the next review for September 2017, more than 7

of 24



Issue

years after the previous review was conducted. This branch was reviewed in March 2018.

6 235 Yorkland Blvd. Toronto, ON (Branch)

November 2015 This location was last reviewed in November 2013. De Thomas agreed to a Policy No. 5 review schedule of November 2015 during the 2013 Targeted Examination that was not adhered to. De Thomas had scheduled the next review for November 2017, 4 years after the previous review was conducted. This branch was reviewed in September 2018.

10. De Thomas cannot demonstrate the branches or sub-branch that have not been subject to

an on-site review were low risk and have been subject to alternative compliance review procedures

performed by head office.

11. The deficiencies found in the 2017 Examination Report were similar to deficiencies found

in a MFDA Targeted Compliance Examination of De Thomas conducted on December 2, 2013.

The 2013 examination identified that, among other things, De Thomas had failed to adhere to a

branch review schedule previously agreed upon with the MFDA.

12. In addition to the branches and sub-branches identified in paragraph 9 above, Staff of the

MFDA identified during the course of an investigation into a client complaint that De Thomas had

failed to conduct a compliance review of a sub-branch located at 1333 Dorval Drive, Old Abbey

Building, Oakville, Ontario (the “Legacy Sub-Branch”). The Legacy Sub-Branch opened in or

around November 2012 and had never been the subject of a sub-branch compliance review or risk

ranked by De Thomas. The Legacy Sub-Branch location has since re-located with a Scheduled

Review Date of December 2017 and will be subject to annual reviews until classified as a low risk

location.

13. De Thomas has hired an additional full-time compliance officer at the Head Office to

ensure the Branch Review schedule is adhered to.

of 24

Permitting an Approved Person to Sell Syndicated Mortgages

14. On November 12, 2013, the MFDA issued Bulletin #0853-P, Transactions by Approved

Person in Syndicated Mortgage Securities. The Bulletin provided guidance with respect to

syndicated mortgages. The Bulletin specifically advised that all syndicated mortgages sold or

referred by Approved Persons must be facilitated through the accounts and facilities of the Member

in accordance with the requirement of Rule 1.1.1 and are subject to all applicable MFDA Rules.

15. On January 21, 2015, the MFDA issued Bulletin #0628-P Transactions in Syndicated

Mortgage Securities. The Bulletin referenced MFDA Bulletin #0583-P and reminded Members

and Approved Persons that Approved Persons who are also licensed as Mortgage Agents or

Mortgage Brokers cannot sell syndicated mortgage investments under their Mortgage Agent or

Mortgage Broker license outside the Member.

16. Commencing on June 7, 2016, Michel Bedard (“Bedard”) became registered in Ontario as

a mutual fund salesperson (now known as a dealing representative) with De Thomas. From April

19, 2013 to May 10, 2016, Bedard was registered in Ontario as a mutual fund salesperson with

Desjardins Financial Security Investments Inc. (“Desjardins”), a Member of the MFDA. At all

material times, Bedard conducted business in the Richmond Hill, Ontario area.

17. On March 3, 2016, while registered at Desjardins and in anticipation of becoming

registered with De Thomas, Bedard completed a De Thomas Approved Person Disclosure and

Dual Occupation Form (the “Disclosure Form”). On the Disclosure Form, Bedard disclosed that

he, among other things, sold insurance, mortgages, and syndicated mortgages through Core

Advisory Group (“Core”).

18. On May 11, 2016, De Thomas sent an email to Bedard requesting amongst other things,

information regarding Bedard’s duties with respect to Core.

19. On May 12, 2016, Bedard sent an email to De Thomas describing his duties at Core as

follows: “Consulting with clients and providing Life Insurance, Health Insurance, Mortgages and

Syndicate Mortgages”.

of 24

20. On June 7, 2016, at the time Bedard became registered with De Thomas, De Thomas

approved Bedard engaging in the activities described in the Disclosure Form.

21. On or around July 15, 2016, Bedard facilitated the purchase of a syndicated mortgage

investment in the amount of $100,000 for client CA outside the accounts and facilities of De

Thomas.

22. On or around July 20, 2016, Bedard facilitated an additional purchase of a syndicated

mortgage investment in the amount of $100,000 for client CA outside the accounts and facilities

of De Thomas.

23. As described above in paragraph 8, the 2017 Examination Report identified Bedard’s sale

or referral of syndicated mortgages outside the accounts and facilities of De Thomas as a

contravention of MFDA Rules 1.1.1 and 2.5.1.

24. On February 14, 2017, De Thomas sent an email to Bedard stating: “…either relinquish

your mutual fund license with our firm and/or cease from selling syndicated mortgages”.

25. As of February 14, 2017, De Thomas’ policies have been amended and currently prohibit

the sale of syndicated mortgages by any approved person, both as an outside business activity and

through the accounts and facilities of De Thomas. In addition, 100% of Bedard’s client files were

reviewed in December 2017 to ensure no additional syndicated mortgages were sold to clients

while a registered representative of De Thomas. Upon completion of the review, there was no

further evidence that any additional syndicated mortgage products were sold beyond what was

disclosed.

26. Client CA has not made a complaint to De Thomas or the MFDA with respect to the

syndicated mortgage investments described above.

27. As of March 9, 2017, Bedard ceased his syndicated mortgage activities.

VI. CONSIDERATIONS

28. The following considerations guided the Hearing Panel’s acceptance of the Settlement

Agreement. Firstly, the agreed penalty needed to be within an acceptable range considering similar

of 24

cases. Secondly, the agreed penalty had to be fair and reasonable, i.e. proportional to the

seriousness of the contravention and relevant circumstances. Thirdly, the agreed penalty should

serve as a deterrent to the Respondent and the industry.

VII. IMPORTANCE OF RESPECTING SETTLEMENTS

29. The case law makes it clear that Settlement Agreements should be encouraged and

respected.

30. Settlements can be important and useful in achieving outcomes which further the goals of

the securities regulatory context. The British Columbia Court of Appeal stated with respect to a

settlement by the B.C. Securities Commission (B.C. Securities Commission v. Seifert [2007] B.C.J.

No. 2186, para. 49 (B.C.C.A.)):

“Settlements assist the Commission to ensure that its overriding objective, the protection of the public, is met. Settlements proscribe activities that are harmful to the public. In so doing, they are effective in accomplishing the purposes of the statute. They provide means of reaching a flexible remedy that is tailored to address the interests of both the Commission and the person under investigation.”

31. Hearing Panels should respect settlements worked out by the parties. A Panel does not

know what led to a settlement, what was given up by one party or the other in the course of the

negotiations, and what interest each party has in agreeing to resolve the matter. The Panel cannot

go beyond the Settlement Agreement. There are almost always facts that play a role in the

settlement which are not set out in the Settlement Agreement or brought to the attention of the

Panel. There were significant negotiations in the present case.

32. As a Panel stated (Re Keshet, File No. 201419 at paragraph 7), to take one of many such

cases: “It is well established that hearing panels should not interfere lightly in negotiated

settlements and should not reject a settlement agreement unless it views the proposed penalty

clearly falling outside a reasonable range of appropriateness.” There are many similar statements

by MFDA Panels, stemming from the leading decision of Re Milewski [1999] I.D.A.C.D. No. 17,

which stated:

of 24

“A District Council considering a settlement agreement will tend not to alter a penalty that it considers to be within a reasonable range, taking into account the settlement process and the fact that the parties have agreed. It will not reject a settlement unless it views the penalty as clearly falling outside a reasonable range of appropriateness.”

VIII. NATURE OF THE MISCONDUCT

33. The Respondent's misconduct is serious. The Respondent engaged in serious

contraventions of the MFDA’s Rules as set out in paragraph 2 above.

IX. OTHER CONSIDERATIONS REGARDING ACCEPTABILITY OF AGREED

PENALTY

34. De Thomas was previously the subject of an MFDA proceeding in 2009 (MFDA File No.

200921) which dealt with different misconduct than the events described in this Settlement

Agreement.

35. De Thomas has cooperated with Staff throughout the course of Staff’s investigation and

these proceedings.

36. By entering into this Settlement Agreement, De Thomas has saved the MFDA significant

time and resources associated with conducting a fully contested hearing on the merits.

X. SHOULD THE PANEL ACCEPT THE SETTLEMENT AGREEMENT?

37. A Panel can accept or reject a Settlement Agreement. It cannot modify it.

38. The agreed penalties help the MFDA to send a message to the Respondent and others with

respect to specific and general deterrence.

39. The agreed penalties are within the reasonable range of appropriateness with respect to

other decisions, as submitted to us by Staff, made by MFDA hearing panels in similar

circumstances.

of 24

XI. CONCLUSION

40. Having regard to all the aforementioned factors, the Panel concludes that the penalties

proposed in the Settlement Agreement are reasonable, proportionate and will deter the Respondent

and others from engaging in the impugned conduct. The Panel is of the view that the acceptance

of this Settlement Agreement is in the public interest and will advance the objective of investor

protection. The Settlement Agreement is therefore accepted.

DATED this 25th day of April, 2019.

DM 669566

“Malliha Wilson” Malliha Wilson Chair “Brigitte J. Geisler” Brigitte J. Geisler Industry Representative “Kenneth P. Mann” Kenneth P. Mann Industry Representative

of 24

Schedule “1” Settlement Agreement

File No. 2018133





SETTLEMENT AGREEMENT

I. INTRODUCTION

1. By Notice of Settlement Hearing, the Mutual Fund Dealers Association of Canada (the

“MFDA”) will announce that it proposes to hold a hearing to consider whether, pursuant to section

24.4 of 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, De Thomas Wealth Management Corp.

(the “Respondent” or “De Thomas”).

II. JOINT SETTLEMENT RECOMMENDATION 2. Staff conducted an investigation of the Respondent’s activities. The investigation disclosed

that the Respondent had engaged in activity for which the Respondent could be penalized on the

exercise of the discretion of the Hearing Panel pursuant to s. 24.1 of By-law No.1.

3. Staff and the Respondent recommend settlement of the matters disclosed by the

investigation in accordance with the terms and conditions set out below. The Respondent agrees

of 24

to the settlement on the basis of the facts set out in Part IV herein and consents to the making of

an Order in the form attached as Schedule “A”.

4. Staff and the Respondent agree that the terms of this Settlement Agreement, including the

attached Schedule “A”, will be released to the public only if and when the Settlement Agreement

is accepted by the Hearing Panel.

III. ACKNOWLEDGEMENT 5. Staff and the Respondent agree with the facts set out in Part IV herein for the purposes of

this Settlement Agreement only and further agree that this agreement of facts is without prejudice

to the Respondent or Staff in any other proceeding of any kind including, but without limiting the

generality of the foregoing, any proceedings brought by the MFDA (subject to Part XI) or any civil

or other proceedings which may be brought by any other person or agency, whether or not this

Settlement Agreement is accepted by the Hearing Panel.

IV. AGREED FACTS 6. De Thomas Wealth Management Corp. (“De Thomas”) is registered in the provinces of

Ontario, Alberta, British Columbia, Manitoba, Saskatchewan and Quebec as a Mutual Fund

Dealer. De Thomas is registered in the provinces of Ontario, Alberta, British Columbia and

Quebec as an Exempt Market Dealer. De Thomas became a Member of the MFDA on April 12,

2002.

Failure to Conduct Branch Reviews 7. MFDA Policy No. 5 came into effect on July 24, 2006, which requires each MFDA

Member to establish a branch review program to effectively assess and monitor compliance with

regulatory requirements. Branch reviews are required to be conducted by qualified individuals who

are independent from the branch and the branch manager. An MFDA Member is generally

expected to perform an on-site review of its branches and sub-branches no less than once every

three years, unless the Member can demonstrate the branches that have not been subject to an on-

site review are low risk and have been subject to alternative compliance review procedures

performed by head office, such as an off-site desk review.

of 24

8. From January 16, 2017 to February 3, 2017, MFDA Sales Compliance completed an

examination of De Thomas, which included an assessment of compliance by De Thomas with

MFDA By-laws, Rules and Policies for the period from December 1, 2012 to November 30, 2016.

The examination included a review of De Thomas’ head office, two branch locations (Toronto and

Kelowna) and 2 sub-branch locations (Vaughan and Thornhill). The findings of the examination

were reported to De Thomas in the MFDA Compliance Examination Report dated May 17, 2017.

(the “2017 Examination Report”).

9. The 2017 MFDA Report identified, amongst other things, deficiencies in the following

areas:

a) the sale of syndicated mortgages outside the facilities of the Member;

b) failing to conduct branch and sub-branch reviews;

c) failing to develop a risk based methodology to rank branch locations as high

medium or low risk using appropriate criteria such as results of previous reviews;

d) failing to ensure adequacy in the documentation of branch reviews; and

e) failing to ensure branch reviews were conducted by an independent reviewer.

10. The 2017 Examination identified the following branch/sub-branches which De Thomas

had failed to conduct a review in a timely manner:



Issue

1 45389 Luckakuck Way Chilliwack, BC (Sub-branch)

September 2017 During the 2013 Targeted Examination, De Thomas agreed to review this location in March 2014; the review was never conducted. This branch was scheduled to be reviewed in 2017, more than 6 years after it was registered on May 19, 2011. This branch was reviewed in November 2018.

2 5 Crestwood Drive Cambridge, ON (Sub-branch)

Noted as N/A This location was noted as ‘N/A’ on the De Thomas’ schedule, a review has never been conducted, nor has De Thomas scheduled one. The location was registered more than 8 years ago on June 12, 2008. This branch was reviewed in September 2018.

3 1210 Sheppard Ave. E. Toronto, ON (Sub-branch)

Noted as N/A This location was noted as ‘N/A’ on the De Thomas’ schedule, a review has never been conducted, nor has the De Thomas scheduled one. The location was registered more than 8 years ago on June 12, 2008. This branch was reviewed in November 2018. This location will no longer be registered as a sub-branch location as of December 31, 2018.

4 903 Dorchester Avenue, Winnipeg MB (Sub-branch)

N/A – noted as Law Office

This location was noted as ‘N/A’ on the De Thomas’ schedule, a review has never been conducted, nor has the De Thomas scheduled one. The location was registered more

of 24



Issue

than 5 years ago on June 15, 2011. This branch was reviewed in November 2018.

5 309 Banks Road Kelowna, BC (Sub-branch)

March 2014 This location was last reviewed in March 2010. De Thomas agreed to a Policy No. 5 review schedule of March 2014, during the 2013 Targeted Examination that was not adhered to. De Thomas has scheduled the next review for September 2017, more than 7 years after the previous review was conducted. This branch was reviewed in March 2018.

6 235 Yorkland Blvd. Toronto, ON (Branch)

November 2015 This location was last reviewed in November 2013. De Thomas agreed to a Policy No. 5 review schedule of November 2015 during the 2013 Targeted Examination that was not adhered to. De Thomas has scheduled the next review for November 2017, 4 years after the previous review was conducted. This branch was reviewed in September 2018.

11. De Thomas cannot demonstrate the branches or sub-branch that were not been subject to

an on-site review were low risk and have been subject to alternative compliance review procedures

performed by head office.

12. The deficiencies found in the 2017 Examination Report were similar to deficiencies found

in a MFDA Targeted Compliance Examination of De Thomas conducted on December 2, 2013.

The 2013 examination identified that, among other things, De Thomas had failed to adhere to a

branch review schedule previously agreed upon with the MFDA.

13. In addition to the branches and sub-branches identified in paragraph 10 above, Staff of the

MFDA identified during the course of an investigation into a client complaint that De Thomas had

failed to conduct a compliance review of a sub-branch located at 1333 Dorval Drive, Old Abbey

Building, Oakville, Ontario (the “Legacy Sub-Branch”). The Legacy Sub-Branch opened in or

around November 2012 and had never been the subject of a sub-branch compliance review or risk

ranked by De Thomas. The Legacy Sub-Branch location has since re-located with a Scheduled

Review Date of December 2017 and will be subject to annual reviews until classified as a low risk

location.

14. De Thomas has hired an additional full-time compliance officer at the Head Office to

ensure the Branch Review schedule is adhered to.

of 24

Permitting an Approved Person to Sell Syndicated Mortgages

15. On November 12, 2013, the MFDA issued Bulletin #0853-P, Transactions by Approved

Person in Syndicated Mortgage Securities. The Bulletin provided guidance with respect to

syndicated mortgages. The Bulletin specifically advised that all syndicated mortgages sold or

referred by Approved Persons must be facilitated through the accounts and facilities of the Member

in accordance with the requirement of Rule 1.1.1 and are subject to all applicable MFDA Rules.

16. On January 21, 2015, the MFDA issued Bulletin #0628-P Transactions in Syndicated

Mortgage Securities. The Bulletin referenced MFDA Bulletin #0583-P and reminded Members

and Approved Persons that Approved Persons who are also licensed as Mortgage Agents or

Mortgage Brokers cannot sell syndicated mortgage investments under their Mortgage Agent or

Mortgage Broker license outside the Member.

17. Commencing on June 7, 2016, Michel Bedard (“Bedard”) became registered in Ontario as

a mutual fund salesperson (now known as a dealing representative) with De Thomas. From April

19, 2013 to May 10, 2016, Bedard was registered in Ontario as a mutual fund salesperson with

Desjardins Financial Security Investments Inc. (“Desjardins”), a Member of the MFDA. At all

material times, Bedard conducted business in the Richmond Hill, Ontario area.

18. On March 3, 2016, while registered at Desjardins and in anticipation of becoming

registered with De Thomas, Bedard completed a De Thomas Approved Person Disclosure and

Dual Occupation Form (the “Disclosure Form”). On the Disclosure Form, Bedard disclosed that

he, among other things, sold insurance, mortgages, and syndicated mortgages through Core

Advisory Group (“Core”).

19. On May 11, 2016, De Thomas sent an email to Bedard requesting amongst other things,

information regarding Bedard’s duties with respect to Core.

20. On May 12, 2016, Bedard sent an email to De Thomas with a describing his duties at Core

as follows: “Consulting with clients and providing Life Insurance, Health Insurance, Mortgages

and Syndicate Mortgages”.

of 24

21. On June 7, 2016, at the time of Bedard became registered with De Thomas, De Thomas

approved Bedard engaging in the activities described in the Disclosure Form.

22. On or around July 15, 2016, Bedard facilitated the purchase of a syndicated mortgage

investment in the amount of $100,000 for client CA outside the accounts and facilities of De

Thomas.

23. On or around July 20, 2016, Bedard facilitated an additional purchase of a syndicated

mortgage investment in the amount of $100,000 for client CA outside the accounts and facilities

of De Thomas.

24. As described above in paragraph 9, the 2017 Examination Report identified Bedard’s sale

or referral of syndicated mortgages outside the accounts and facilities of De Thomas as a

contravention of MFDA Rules 1.1.1 and 2.5.1.

25. On February 14, 2017, De Thomas sent an email to Bedard stating: “…either relinquish

your mutual fund license with our firm and/or cease from selling syndicated mortgages”.

26. As of February 14, 2017, De Thomas’ policies have been amended and currently prohibit

the sale of syndicated mortgages by any approved person, both as an outside business activity and

through the accounts and facilities De Thomas. In addition, 100% of Bedard’s client files were

reviewed in December 2017 to ensure no additional syndicated mortgages were sold to clients

while a registered representative of De Thomas. Upon completion of the review, there was no

further evidence that any additional syndicated mortgage products were sold beyond what was

disclosed.

27. Client CA has not made a complaint to De Thomas or the MFDA with respect to the

syndicated mortgage investments described above.

28. As of March 9, 2017, Bedard ceased his syndicated mortgage activities.

of 24

V. ADDITIONAL FACTORS 29. De Thomas was previously the subject of an MFDA proceeding in 2009 (MFDA File No.

200921) which dealt with different misconduct than the events described in this Settlement

Agreement.

30. De Thomas has cooperated with Staff throughout the course of Staff’s investigation and

these proceedings.

31. By entering into this Settlement Agreement, De Thomas has saved the MFDA significant

time and resources associated with conducting a fully contested hearing on the merits

VI. CONTRAVENTIONS 32. De Thomas admits the following contraventions of the MFDA Rules, Policies or By-Law:

a) Commencing in June 2011, the Respondent failed to conduct an on-site compliance


MFDA Policy No. 5 and MFDA Rule 2.5.1; and

b) Between June 2016 and March 2017, the Respondent failed to adequately supervise



and 2.5.

VII. TERMS OF SETTLEMENT 33. De Thomas agrees to the following terms of settlement:

a) De Thomas shall pay a fine in the amount of $40,000 pursuant to s. 24.1.2(b) of

MFDA By-law No. 1;

b) De Thomas shall pay costs in the amount of $10,000 pursuant to s. 24.2 of MFDA

By-law No. 1; and

c) A representative of De Thomas shall attend in person, on the date set for the

Settlement Hearing.

of 24

VIII. STAFF COMMITMENT 34. If this Settlement Agreement is accepted by the Hearing Panel, Staff will not initiate any

proceeding under the By-laws of the MFDA against the Respondent or any of its officers or

directors in respect of the facts set out in Part IV and the contraventions described in Part VI of

this Settlement Agreement, subject to the provisions of Part X below. 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 Parts IV and VI of this Settlement Agreement or in respect

of conduct that occurred outside the specified date ranges of the facts and contraventions set out

in Parts IV and VI, 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.

IX. PROCEDURE FOR APPROVAL OF SETTLEMENT 35. Acceptance of this Settlement Agreement shall be sought at a hearing of the Central

Regional Council of the MFDA on a date agreed to by counsel for Staff and the Respondent.

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.

36. Staff and the Respondent may refer to any part, or all, of the Settlement Agreement at the

Settlement Hearing. Staff and the Respondent also agree that if this Settlement Agreement is

accepted by the Hearing Panel, it will constitute the entirety of the evidence to be submitted

respecting the Respondent in this matter, and the Respondent agrees to waive its rights to a full

hearing, a review hearing 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.

37. Staff and the Respondent agree that if this Settlement Agreement is accepted by the

Hearing Panel, then the Respondent shall be deemed to have been penalized by the Hearing Panel

of 24

pursuant to s. 24.1.2 of By-law No. 1 for the purpose of giving notice to the public thereof in

accordance with s. 24.5 of By-law No. 1.

38. Staff and the Respondent agree that if this Settlement Agreement is accepted by the

Hearing Panel, 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 it.

X. FAILURE TO HONOUR SETTLEMENT AGREEMENT 39. 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

or any of its officers or directors based on, but not limited to, the facts set out in Part IV of the

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.

XI. NON-ACCEPTANCE OF SETTLEMENT AGREEMENT 40. If, for any reason whatsoever, this Settlement Agreement is not accepted by the Hearing

Panel or an Order in the form attached as Schedule “A” is not made 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 By-law No. 1,

unaffected by this Settlement Agreement or the settlement negotiations.

41. Whether or not this Settlement Agreement is accepted by the Hearing Panel, the

Respondent agrees that it will not, in any proceeding, refer to or rely upon this Settlement

Agreement or the negotiation or process of approval of this Settlement Agreement as the basis for

any allegation against the MFDA of lack of jurisdiction, bias, appearance of bias, unfairness, or

any other remedy or challenge that may otherwise be available.

of 24

XII. DISCLOSURE OF AGREEMENT 42. 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.

43. Any obligations of confidentiality shall terminate upon acceptance of this Settlement

Agreement by the Hearing Panel.

XIII. EXECUTION OF SETTLEMENT AGREEMENT 44. This Settlement Agreement may be signed in one or more counterparts which together shall

constitute a binding agreement.

45. A facsimile copy of any signature shall be effective as an original signature.

DATED this 6th day of February, 2019.

“Anthony De Thomasis”

Anthony De Thomasis De Thomas Wealth Management Corp.

“JDT”

JDT Witness – Signature Witness – Print Name

“Shaun Devlin”

Shaun Devlin Staff of the MFDA Per: Shaun Devlin Senior Vice-President, Member Regulation – Enforcement

of 24

Schedule “A” Order

File No. 2018133





ORDER

WHEREAS on [date], the Mutual Fund Dealers Association of Canada (the “MFDA”)

issued a Notice of Settlement Hearing pursuant to section 24.4 of By-law No. 1 in respect of De

Thomas Wealth Management Corp. (the “Respondent”);

AND WHEREAS the Respondent entered into a settlement agreement with Staff of the

MFDA, dated [date] (the “Settlement Agreement”), in which the Respondent agreed to a proposed

settlement of matters for which the Respondent could be disciplined pursuant to ss. 20 and 24.1 of

By-law No. 1;

AND WHEREAS the Hearing Panel is of the opinion that the Respondent:

a) Commencing in June 2011, the Respondent failed to conduct an on-site compliance


MFDA Policy No. 5 and MFDA Rule 2.5.1.

b) Between June 2016 and March 2017, the Respondent failed to adequately supervise


of 24


and 2.5.

IT IS HEREBY ORDERED THAT the Settlement Agreement is accepted, as a

consequence of which:

1. The Respondent shall pay a fine in the amount of $40,000 pursuant to s. 24.1.2(b) of MFDA

By-law No. 1.

2. The Respondent shall pay costs in the amount of $10,000 pursuant to s. 24.2 of MFDA By-

law No. 1.

3. If at any time a non-party to this proceeding, with the exception of the bodies set out in

section 23 of MFDA By-law No. 1, requests production of or access to exhibits in this proceeding

that contain personal information as defined by the MFDA Privacy Policy, then the MFDA

Corporate Secretary shall not provide copies of or access to the requested exhibits to the non-party

without first redacting from them any and all personal information, pursuant to Rules 1.8(2) and

(5) of the MFDA Rules of Procedure.

DATED this [day] day of [month], 20[ ].

Per: __________________________

[Name of Public Representative], Chair

Per: _________________________

[Name of Industry Representative]

Per: _________________________

[Name of Industry Representative]

of 24

Schedule “2” Order

File No. 2018133





ORDER (ARISING FROM SETTLEMENT HEARING ON FEBRUARY 14, 2019)

WHEREAS on December 21, 2018, the Mutual Fund Dealers Association of Canada (the

“MFDA”) issued a Notice of Settlement Hearing pursuant to section 24.4 of By-law No. 1 in

respect of De Thomas Wealth Management Corp. (the “Respondent”);

AND WHEREAS the Respondent entered into a settlement agreement with Staff of the

MFDA, dated February 6, 2019 (the “Settlement Agreement”), in which the Respondent agreed to

a proposed settlement of matters for which the Respondent could be disciplined pursuant to ss. 20

and 24.1 of By-law No. 1;

AND WHEREAS the Hearing Panel is of the opinion that the Respondent:

a) commencing in June 2011, failed to conduct an on-site compliance review of every

sub-branch location at least once every three years, contrary to MFDA Policy No.

5 and MFDA Rule 2.5.1; and

http://www.mfda.ca/

of 24

b) between June 2016 and March 2017, failed to adequately supervise an Approved

Person by approving and permitting the Approved Person to sell syndicated

mortgages outside of the Member, contrary to MFDA Rules 1.1.1, 1.3 and 2.5.

IT IS HEREBY ORDERED THAT the Settlement Agreement is accepted, as a

consequence of which:

1. The Respondent shall pay a fine in the amount of $40,000 pursuant to s. 24.1.2(b) of MFDA

By-law No. 1.

2. The Respondent shall pay costs in the amount of $10,000 pursuant to s. 24.2 of MFDA By-

law No. 1.

3. If at any time a non-party to this proceeding, with the exception of the bodies set out in

section 23 of MFDA By-law No. 1, requests production of or access to exhibits in this proceeding

that contain personal information as defined by the MFDA Privacy Policy, then the MFDA

Corporate Secretary shall not provide copies of or access to the requested exhibits to the non-party

without first redacting from them any and all personal information, pursuant to Rules 1.8(2) and

(5) of the MFDA Rules of Procedure.

DATED this 14th day of February, 2019.

“Malliha Wilson” Malliha Wilson Chair “Brigitte J. Geisler” Brigitte J. Geisler Industry Representative “Kenneth P. Mann” Kenneth P. Mann Industry Representative

re: de thomas wealth management corp.mfda by-laws, rules and policies for the period from d ecember...

Documents