TORONTO, June 19, 2012 /CNW/ - A Settlement Hearing in the matter of Douglas A. Lawson (the "Respondent") was held today in Toronto, Ontario before a Hearing Panel of the MFDA's Central Regional Council.
The Hearing Panel approved the Settlement Agreement between MFDA Staff and the Respondent, as a consequence of which:
|1)||The Respondent has paid a fine in the amount of $20,000;|
|2)||shall be permanently prohibited from holding the position of Officer, Director, Compliance Officer, Ultimate Designated Person or Branch Manager of an MFDA Member, except with respect to his continuing status as President and Chief Compliance Officer of Wealth Advisory Services ("WAS") for the purpose of ensuring the orderly resignation of WAS;|
|3)||shall be permanently prohibited from selling any securities pursuant to any exemptions under applicable securities legislation;|
|4)||shall successfully complete the Canadian Securities Course or such other course acceptable to the MFDA within 12 months of the approval of this Settlement Agreement;|
|5)||has paid costs in the amount of $5,000;|
|6)||shall appear and give truthful testimony at a hearing commenced by the MFDA against any person or entity in relation to any of the facts or allegations referred to in this Settlement Agreement, if requested by Staff;|
|7)||shall, in future, comply with all MFDA By-laws, Rules and Policies, and all applicable securities legislation and regulations.|
In the Settlement Agreement, the Respondent admitted that he:
|(a)||approved, recommended and allowed the sale of shares of Promittere S & P 500 Limited ("Promittere"), a related company of WAS, to clients without conducting or ensuring that adequate due diligence had been conducted on the product and without making adequate inquiries to ensure that the product was suitable for sale to clients of WAS and after having provided clients with incomplete and inaccurate information as to the risk level associated with the product, contrary to MFDA Rules 2.2.1(a) and (b) and MFDA Rule 2.1.1(c);|
|(b)||sold shares of Promittere to 48 clients of WAS without ensuring that these investments were suitable for all of these 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);|
|(c)||sold shares of Promittere to 9 clients of WAS in reliance on the accredited investor exemption without obtaining sufficient documentation to enable him to qualify them 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, prior to selling them shares of Promittere, contrary to MFDA Rule 2.1.1(c);|
|(d)||sold shares of Promittere to clients of WAS in reliance on the closely held issuer exemption when he had not complied with the requirements of such exemption as set out in s. 2.1 of Ontario Securities Commission Rule 45-501, in that he failed to provide any of the clients with a copy of Form 45-501F3 at least 4 days prior to their purchase of shares of Promittere. This contravention engages the jurisdiction of the Hearing Panel to impose a penalty on Lawson pursuant to s. 24.1.1(h) of MFDA By-Law No. 1 and contrary to MFDA Rule 2.1.1(c); and|
|(e)||facilitated the sale of shares of Promittere to 48 clients of WAS without providing clients with written disclosure of the relationship between WAS and Promittere at the time of sale or of WAS' financial interest in the sale of shares of Promittere, thereby giving rise to an actual or potential conflict of interest which Lawson did not ensure was addressed by the exercise of responsible business judgment influenced only by the best interests of the clients, contrary to MFDA Rule 2.1.4.|
The MFDA is the self-regulatory organization for Canadian mutual fund dealers, regulating the operations, standards of practice and business conduct of its 121 Members and their approximately 75,000 Approved Persons with a mandate to protect investors and the public interest.