MFDA announces disciplinary proceeding in respect of International Capital Management Inc., John Paul Sanchez and Javier Andreas Sanchez
TORONTO, June 5, 2017 /CNW/ - The Mutual Fund Dealers Association of Canada ("MFDA") has commenced disciplinary proceedings in respect of International Capital Management Inc. ("ICM"), John Paul Sanchez ("John") and Javier Andreas Sanchez ("Javier") (collectively referred to as the "Respondents"). In its Notice of Hearing dated May 30, 2017 ("Notice of Hearing"), Staff of the MFDA alleges that the Respondents engaged in the following conduct contrary to the By-laws, Rules and/or Policies of the MFDA:
Allegation #1: Between 2006 and 2016, the Respondents engaged in securities related business that was not carried on for the account of ICM, through the facilities of ICM or recorded on the books and records of ICM by:
| a) |
selling, recommending, referring or facilitating the sale of at least $24.5 million of investments in a non-arm's length company to least 170 ICM clients; and |
| b) |
selling, recommending, referring or facilitating the sale of at least $1.7 million of investments in a non-arm's length company to at least 19 ICM clients; |
| contrary to MFDA Rules 1.1.1 and 2.1.1, or in the alternative, MFDA Rules 2.4.2 and 2.1.1 and sections 13.8 to 13.10 of National Instrument 31-103. |
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Allegation #2: Since 2006, John and Javier Sanchez have engaged in outside business activities that were not approved by ICM in writing or reflected on the books and records of ICM, and in any event were prohibited, contrary to MFDA Rule 1.3.
Allegation #3: Since 2006, John and Javier Sanchez solicited at least $26.2 million from ICM clients for investment in two non-arm's length companies, thereby engaging in conduct that gave rise to conflicts of interest which the Respondents failed to address 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 2006 and 2016, the Respondents recommended that at least 170 ICM clients purchase investments distributed by two non-arm's length companies, without conducting adequate due diligence to know the products, and/or without ensuring that the products were suitable for sale to ICM clients having regard to the essential Know-Your-Client ("KYC") information relevant to each individual client, contrary to MFDA Rules 2.2.1 and 2.1.1.
Allegation #5: Since October 2006, the Respondents have disregarded or failed to comply with the terms of an Agreement and Undertaking entered into between the Respondents and Staff, thereby engaging in conduct contrary to MFDA Rule 2.1.1 and engaging the authority of the Hearing Panel to impose a penalty on the Respondents pursuant to sections 24.1.1 and 24.1.2 of MFDA By-law No. 1.
Allegation #6: Since 2008, the Respondents have failed to cooperate with Staff's investigations into their conduct by, among other things, providing false or misleading statements to Staff, concealing and withholding information about some of their business activities, and withholding, concealing or destroying emails on ICM's systems during an on-site inspection conducted by Staff, contrary to section 22 of MFDA By-law No. 1 and MFDA Rule 2.1.1.
Allegation #7: Since February 2009, the Respondents have failed to:
| a) |
establish, implement and maintain policies and procedures which ensured adequate head office account supervision; |
| b) |
maintain records of trade supervision that was conducted including inquiries made, responses received from Approved Persons and resolutions achieved as a result of supervisory inquiries; and |
| c) |
establish, implement and maintain policies and procedures which ensured the identification of trends in trading activity, |
| contrary to MFDA Rules 2.1.1, 2.5.1, 2.5.7, and MFDA Policy No. 2. |
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The first appearance in this proceeding will take place by teleconference before a Hearing Panel of the MFDA's Central Regional Council on June 27, 2017 at 9:30 a.m. (Eastern), or as soon thereafter as the appearance can be held, in order to schedule a date for the commencement of the hearing on the merits and to address any other procedural matters. The appearance will be open to the public, except as may be required for the protection of confidential matters.
A copy of the Notice of Hearing is available on the MFDA website at www.mfda.ca.
The MFDA is the self-regulatory organization for Canadian mutual fund dealers, regulating the operations, standards of practice and business conduct of its Members and their approximately 83,000 Approved Persons with a mandate to protect investors and the public interest. For more information about the MFDA's complaint and enforcement processes, as well as links to 'Check an Advisor' and other Investor Tools, visit the For Investors page on the MFDA website.
SOURCE Mutual Fund Dealers Association of Canada
Charles Toth, Director, Litigation, 416-943-4619, [email protected]
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