MFDA Hearing Panel issues Reasons for Decision in the matter of Mervyn Fried

TORONTO, Nov. 10, 2014 /CNW/ - A Hearing Panel of the Central Regional Council of the Mutual Fund Dealers Association of Canada ("MFDA") has issued its Reasons for Decision in connection with a settlement hearing held in Toronto, Ontario, on October 15, 2014, in the matter of Mervyn Jacheil Fried (the "Respondent"). The Reasons for Decision relate to the Hearing Panel's acceptance of the settlement agreement (the "Settlement Agreement") entered into between the Respondent and Staff of the MFDA. The following sanctions were levied on the Respondent:

a)	is prohibited from re-applying for registration as an Approved Person or conducting securities related business while in the employ of or associated with any Member of the MFDA for a period of 4 months from the date that this Settlement Agreement is accepted by a Hearing Panel of the MFDA;
b)	shall pay a fine in the amount of $30,000 within 30 days of the date when this Settlement Agreement is accepted by a Hearing Panel of the MFDA;
c)	shall immediately make a voluntary payment to clients DH and EH in the amount of $25,000;
d)	shall pay costs in the amount of $10,000 within 30 days of the date when this Settlement Agreement is accepted by a Hearing Panel of the MFDA;
e)	shall successfully complete the Conduct and Practices Handbook course offered by the Canadian Securities Institute or another course acceptable to Staff of the MFDA within 12 months of the date when this Settlement Agreement is accepted by a Hearing Panel of the MFDA;
f)	if the Respondent fails to comply with:
	(i)	subparagraphs (b), (c) and/or (d) above, then without further notice to the Respondent, the Respondent shall summarily be permanently prohibited from conducting securities related business in any capacity while in the employ of or associated with any Member of the MFDA;
	(ii)	subparagraph (e) above, then without further notice to the Respondent, the Respondent shall summarily be prohibited from conducting securities related business while in the employ of or associated with any Member of the MFDA until he has complied with subparagraph (e);
In the Settlement Agreement, the Respondent admitted that:
a)	between June and July 2008, he failed to:
	(i)	use due diligence to learn the essential facts relative to clients DH and EH and two joint accounts that he opened for them in order to ensure, among other things, that any recommendations made and orders accepted for the clients would be suitable, contrary to MFDA Rule 2.2.1(a); and
	(ii)	obtain a New Account Application Form ("NAAF") signed and dated by clients DH and EH in respect of each of the two joint accounts he opened for them, contrary to MFDA Rule 2.2.2.
b)	between June 2008 and April 2009, he engaged in authorized discretionary trading in the two joint accounts of clients DH and EH by using blank order entry forms signed by the clients, or photocopies of the blank signed order entry forms, to purchase mutual funds in the accounts without obtaining instructions from the clients with respect to:
	(i)	the mutual funds to be purchased; and
	(ii)	the amount of each mutual fund to be purchased;
	contrary to MFDA Rules 2.3 and 2.1.1 and the terms of his registration as a mutual fund salesperson.
c)	between June 2008 and April 2009, he failed to ensure that the trades that he made in the two joint accounts of clients DH and EH were suitable for the clients, in keeping with the clients' investment objectives, and within the bounds of good business practice, contrary to MFDA Rules 2.2.1 and 2.1.1.
d)	between 2005 and 2010, he received a total amount of approximately $9,953 in remuneration or fees from at least 21 clients in respect of business conducted by the Respondent on behalf of the Member which was not paid to the Member or recorded on its books and records, contrary to MFDA Rules 2.4.1, 1.1.1(b) and 2.1.1.
e)	between 2005 and 2010, the Respondent:
	(i)	obtained and maintained blank pre-signed forms for at least 9 clients, including at least 7 forms that could be used to process trades in client accounts;
	(ii)	processed trades in 23 client accounts using documents containing client signatures photocopied from blank pre-signed forms;
	(iii)	processed trades for 19 clients without a client signature or a limited trading authorization on file;
	(iv)	processed trades for 8 clients (for whom there was a signed limited trading authorization on file) without a client signature or any records of trading instructions received from the client and without indicating on the trade ticket that the trade was processed using a limited trading authorization; and
	(v)	processed trades for 3 clients using the client signature of a third party who did not have trading authority on the client account and without evidence on file that the third party had been granted power of attorney or trading authorization on the account;
contrary to MFDA Rules 2.3 and 2.1.1.

Copies of the Reasons for Decision and the Settlement Agreement are available on the MFDA website at www.mfda.ca. During the period described in the Settlement Agreement, the Respondent carried on business in Vaughan, Ontario.

The MFDA is the self-regulatory organization for Canadian mutual fund dealers, regulating the operations, standards of practice and business conduct of its 108 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

Hugh Corbett, Managing Director, Enforcement, 416-943-4685, [email protected]

Related Links

http://www.mfda.ca