MFDA Hearing Panel accepts settlement agreement with Kenneth Russell

TORONTO, April 5, 2022 /CNW/ - A settlement hearing in the matter of Kenneth George Russell (the "Respondent") was held electronically by videoconference on April 1, 2022 in Toronto, Ontario before a three-member Hearing Panel of the Central Regional Council of the Mutual Fund Dealers Association of Canada ("MFDA").

The Hearing Panel accepted the settlement agreement dated March 9, 2022 (the "Settlement Agreement"), between Staff of the MFDA and the Respondent as a consequence of which the following sanctions were imposed on the Respondent:

• a fine in the amount of $26,000 ("Fine");
• costs in the amount of $5,000 ("Costs");
• payment of the Fine and Costs shall be made as follows:
• $15,500 on April 1, 2022;
• $5,500 on or before May 31, 2022;
• $5,000 on or before June 30, 2022;
• $5,000 on or before July 29, 2022;
• shall complete an ethics or professional conduct course or another course acceptable to Staff of the MFDA, prior to becoming re-registered as an Approved Person; and
• shall in the future comply with MFDA Rules 2.2.1, 2.1.1, 1.4(b), 2.1.4, 1.1.2, 2.5.1 as well as MFDA Policies No. 3 and No. 6.

In the Settlement Agreement, the Respondent admitted that:

a.  between approximately June 2016 and May 2019, he misrepresented or failed to adequately and accurately explain to two clients who were spouses the tax liability consequences associated with a mutual fund investment that he recommended that the clients purchase in the clients' joint account, thereby failing to ensure that the investment was suitable for the clients and was in keeping with their investment objectives, contrary to MFDA Rules 2.2.1 and 2.1.1;

b.  between approximately May 2017 and December 2019, he failed to report to the Member that he received complaints from the two clients who alleged that he had failed to accurately explain the tax liability associated with a mutual fund investment that he had recommended, and directly paid compensation to the complainants in respect of the tax liability without the knowledge or written consent of the Member, contrary to the Member's policies and procedures, MFDA Rules 2.1.4, 2.1.1, 1.4(b), 1.1.2 and 2.5.1, and MFDA Policy No. 3 and MFDA Policy No. 6; and

c.  in June 2016, he completed a Know-Your-Client form on behalf of a client using information obtained from the client's spouse without communicating with the client, thereby failing to use due diligence to:

  i.  learn and accurately record the essential facts relative to the client;
 ii.  ensure that orders accepted in respect of the account were within the bounds of good business practice; and
 iii.  ensure that each order accepted for the account was suitable,
prior to making investment recommendations and accepting investment orders for the client's account, contrary to MFDA Rule 2.2.1 and 2.1.1.

A copy of the Settlement Agreement is available on the MFDA website at www.mfda.ca. During the period described in the Settlement Agreement, the Respondent conducted business in the London, Ontario area.

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 80,000 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

For further information, please contact: Charles Toth, Vice-President, Enforcement, 416-943-4619, [email protected]