MFDA Hearing Panel accepts settlement agreement with Scott Nichols

TORONTO, Sept. 30, 2021 /CNW/ - A settlement hearing in the matter of Scott Charles Nichols (the "Respondent") was held today by electronic hearing in Halifax, Nova Scotia before a three-member Hearing Panel of the Atlantic Regional Council of the Mutual Fund Dealers Association of Canada ("MFDA").

The Hearing Panel accepted the settlement agreement dated September 28, 2021 ("Settlement Agreement"), between Staff of the MFDA and the Respondent, as a consequence of which the following sanctions were imposed on the Respondent:

• a suspension from conducting securities related business in any capacity while in the employ of or associated with any MFDA Member for a period of four months;
• a fine in the amount of $30,000 ("Fine");
• costs in the amount of $5,000 ("Costs");
• payment of the Fine and Costs shall be made as follows:
• $17,500 on September 30, 2021;
• $8,750 on or before December 31, 2021;
• $8,750 on or before March 31, 2022;
• following the four month suspension, in the event that the Respondent seeks to become re-registered to conduct securities related business while in the employ of or associated with any MFDA Member, the Respondent shall be subject to close supervision by the Member with which he becomes re-registered for a period of twelve months from the date that he becomes re-registered; and
• shall in the future comply with MFDA Rules 2.2.1, 2.3.1, 2.1.1, 2.5.1 and 1.1.2.

In the Settlement Agreement, the Respondent admitted that:

1. between September 2013 and April 2014, he allowed an unregistered individual to open new accounts at the Member and make investment recommendations for clients who the Respondent had not met, thereby facilitating stealth advising by the unregistered individual and failing to perform the necessary due diligence to learn the essential facts relative to the clients, contrary to MFDA Rules 2.2.1 and 2.1.1;
2. between April 2014 and September 2014, he signed and submitted account forms to process switches and redemptions in the investment accounts of a client who the Respondent had not met, based on instructions received from a third party who did not have trading authorization on the accounts without confirming the trading instructions with the client, thereby engaging in unauthorized trading in the client's accounts, contrary to MFDA Rules 2.3.1(a) [now MFDA Rule 2.3.1(b)], 2.1.1, 2.5.1 and 1.1.2; and
3. in April 2014, in response to a supervisory query from the Member, he signed and submitted a client's Know-Your-Client ("KYC") update form as the Approved Person responsible for servicing the client's account when he had not communicated with the client to obtain instructions concerning the KYC update, thereby failing to learn the essential facts relative to the client and preventing the Member from ensuring that the investments in the client's account were suitable for the client, contrary to MFDA Rules 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 Kentville, Nova Scotia 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

Charles Toth, Vice-President, Enforcement, 416-943-4619, [email protected]

Related Links

https://mfda.ca/