TORONTO, Feb. 5, 2013 /CNW/ - The MFDA today announced that it has commenced disciplinary proceedings in respect of Robert James Thiessen ("Thiessen") and Wealth Advisory Services Ltd. ("WAS"), collectively (the "Respondents"). MFDA staff alleges in its Notice of Hearing that the Respondents engaged in the following conduct contrary the By-laws, Rules or Policies of the MFDA:
Allegation #1: Between March 4, 2003 and November 1, 2005, WAS and Thiessen sold shares of a related company of WAS to 48 clients without ensuring a reasonable level of due diligence was conducted on the investment product and without making reasonable inquiries to ensure that the product was suitable for sale to clients of WAS, contrary to MFDA Rules 2.2.1(a) and (b) and MFDA Rule 2.1.1(c).
Allegation #2: Between March 4, 2003 and November 1, 2005, WAS sold shares of a related company to WAS to 48 clients in reliance on the accredited investor and closely held insurer exemptions:
|a)||without ensuring that these investments were suitable for the clients and in keeping with the clients' investment objectives, contrary to MFDA Rule 2.2.1 (a), (b) and (c), and MFDA Rule 2.1.1(c);|
|b)||without obtaining sufficient documentation to determine if the clients qualified as accredited investors in accordance with s. 2.3 of Ontario Securities Commission Rule 45-501 and subsequently s. 2.3 of National Instrument 45-106, contrary to MFDA Rule 2.1.1(c); and;|
|c)||without complying with the requirements of the closely held issuer exemption as set out in s. 2.1 of Ontario Securities Commission Rule 45-501, in that the clients were not provided with a copy of Form 45-501F3 at least 4 days prior to their purchase of the shares, thereby engaging the jurisdiction of the Hearing Panel to impose a penalty on the Respondents pursuant to s. 24.1.1(h) and 24.1.2(n) of MFDA By-Law # 1 and contrary to MFDA Rule 2.1.1(c).|
Allegation #3: Between March 4, 2003 and November 1, 2005, WAS and Thiessen sold or facilitated the sale of shares of a related company of WAS to 48 clients without disclosing to the clients:
|a)||the relationship between WAS and the related company; and|
|b)||the financial interest of WAS and Thiessen in respect of the sales of the shares of the related company;|
thereby giving rise to a conflict or potential conflict of interest between the interests of WAS and Thiessen, on the one hand, and the clients on the other hand, which WAS and Thiessen failed to ensure was addressed by the exercise of responsible business judgment influenced only by the best interests of the clients, contrary to MFDA Rules 2.1.4 and 2.1.1.
Allegation #4: Between March 4, 2003 and November 1, 2005, Thiessen, in his capacity as a director of WAS, failed to ensure that WAS established, implemented, communicated and maintained a compliance program to:
|a)||ensure that a reasonable level of due diligence was conducted on all investment products prior to their approval for sale;|
|b)||identify and address conflicts of interest with respect to the sale of the securities of non-arm's length issuers;|
|c)||identify and address through appropriate supervision and compliance procedures material risks of non-compliance with respect to:|
|i.||ensuring the suitability of investments in clients' accounts;|
|ii.||the sale of exempt products and, in particular, reliance by clients on exemptions from the prospectus requirement; and|
|iii.||ensuring the fees and compensation earned by WAS on the sale of exempt products were adequately disclosed to clients;|
contrary to MFDA Rules 2.1.1, 2.2.1 and 2.5.1, and MFDA Policy # 2.
The first appearance in this matter will take place by teleconference before a Hearing Panel of the MFDA's Central Regional Council on February 26, 2013 at 10:00 a.m. (Eastern) in the MFDA hearing room located at 121 King Street West, Suite 1000, Toronto, Ontario. The purpose of the appearance is to set a date for the hearing of this matter on its merits and to address any other procedural matters and will be open to the public, except as may be required for the protection of confidential matters.
The MFDA is the self-regulatory organization for Canadian mutual fund dealers, regulating the operations, standards of practice and business conduct of its 115 Members and their approximately 80,000 Approved Persons with a mandate to protect investors and the public interest.
SOURCE Mutual Fund Dealers Association of Canada