MFDA Hearing Panel makes findings against twelve Respondents and schedules penalty hearing date
TORONTO, May 23, 2018 /CNW/ - The Mutual Fund Dealers Association of Canada ("MFDA") commenced a disciplinary proceeding in respect of Mahmoud Rihawi ("Rihawi"), Attal Golzay ("Attal"), Ajmal Golzay ("Ajmal"), Roomal Golzay ("Roomal"), Mustafa Sayed Hashimi ("Mustafa"), Zobair Hashimi ("Zobair"), Sama Tabesh ("Tabesh"), Saadet Kolgekaya ("Kolgekaya"), Hammond Lieu ("Lieu"), Rhea Galias Fortes ("Fortes"), Shameel Rawani ("Rawani"), Anjum Pathan ("Pathan"), Mohammad Yunas Masood ("Masood") and Juliene da Rosa Lima ("Lima") (collectively referred to as the "Respondents") by Notice of Hearing dated February 28, 2017.
A disciplinary hearing in respect of Rihawi, Attal, Ajmal, Roomal, Mustafa, Zobair, Kolgekaya, Fortes, Rawani, Pathan, and Masood was held on May 16 and May 17, 2018 in Toronto, Ontario before a three-member Hearing Panel of the MFDA's Central Regional Council. After hearing the evidence and submissions from Staff of the MFDA, the Hearing Panel found that the six allegations set out in the Notice of Hearing had been established. In particular, the Hearing Panel made findings of misconduct concerning the following:
1) Mahmoud Rihawi
Allegation #1:
Between January 26, 2012 and August 21, 2014, Rihawi falsified, fabricated or altered:
| a) |
clients' Know-Your-Client ("KYC") information such as income, net worth, investment objectives, and risk tolerance on account forms submitted to the Member, including new account application forms; and |
| b) |
information on loan applications and client documents submitted to lenders, including bank statements, investment statements, pay stubs, or Canada Revenue Agency Notices of Assessment; |
in order to obtain at least eight investment loans to purchase mutual funds on behalf of clients, thereby failing to observe the high standards of ethics and conduct in the transaction of business, and engaging in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1.
Allegation #2:
Between January 26, 2012 and August 21, 2014, Rihawi failed to ensure that at least eight investment loans recommended to clients were suitable for the clients and in keeping with the clients' investment objectives, having regard to the clients' relevant KYC information and financial circumstances, contrary to the Member's policies and procedures, and MFDA Rules 2.2.1 and 2.1.1.
Allegation #3:
Commencing December 2013, Rihawi engaged in conduct unbecoming Approved Persons by providing false and misleading responses to the Member during the course of the Member's investigation into their conduct, contrary to MFDA Rule 2.1.1.
Allegation #6:
Commencing in March 6, 2015, Rihawi misled MFDA Staff during an interview and/or failed to produce copies of documents and records requested by MFDA Staff during the course of an investigation, contrary to section 22.1 of MFDA By-law No. 1.
2) Attal Golzay
Allegation #1:
Between 2008 and August 21, 2014, Attal falsified, fabricated or altered:
| a) |
clients' KYC information such as income, net worth, investment objectives, and risk tolerance on account forms submitted to the Member, including new account application forms; and |
| b) |
information on loan applications and client documents submitted to lenders, including bank statements, investment statements, pay stubs, or Canada Revenue Agency Notices of Assessment; |
in order to obtain at least one investment loan to purchase mutual funds on behalf of a client, thereby failing to observe the high standards of ethics and conduct in the transaction of business, and engaging in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1.
Allegation #2:
Between 2008 and August 21, 2014, Attal failed to ensure that at least one investment loan recommended to a client was suitable for the client and in keeping with the client's investment objectives, having regard to the client's relevant KYC information and financial circumstances, contrary to the Member's policies and procedures, and MFDA Rules 2.2.1 and 2.1.1.
Allegation #3:
Commencing December 2013, Attal engaged in conduct unbecoming Approved Persons by providing false and misleading responses to the Member during the course of the Member's investigation into their conduct, contrary to MFDA Rule 2.1.1.
Allegation #4:
Between December 12, 2011 and August 21, 2014, Attal failed to fulfill his responsibilities as Branch Manager by failing to adequately supervise the other Respondents to this proceeding, and report to the Member that the Respondents to this proceeding (including himself) were falsifying, fabricating or altering client KYC information and client documents in order to obtain investment loans to purchase mutual funds, which prevented the Member from conducting a reasonable supervisory investigation and take such other supervisory measures as may have been warranted in the circumstances, contrary to MFDA Rules 2.5.1, 2.5.5, 1.1.2, and 2.1.1, and MFDA Policy No. 2.
Allegation #6:
Commencing in March 2015, Attal misled MFDA Staff during an interview conducted pursuant to an MFDA investigation, contrary to section 22.1 of MFDA By-law No. 1.
3) Ajmal Golzay
Allegation #1:
Between May 8, 2012 and August 21, 2014, Ajmal falsified, fabricated or altered:
| a) |
clients' KYC information such as income, net worth, investment objectives, and risk tolerance on account forms submitted to the Member, including new account application forms; and |
| b) |
information on loan applications and client documents submitted to lenders, including bank statements, investment statements, pay stubs, or Canada Revenue Agency Notices of Assessment; |
in order to obtain at least two investment loans to purchase mutual funds on behalf of clients, thereby failing to observe the high standards of ethics and conduct in the transaction of business, and engaging in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1.
Allegation #2:
Between May 8, 2012 and August 21, 2014, Ajmal failed to ensure that at least two investment loans recommended to clients were suitable for the clients and in keeping with the clients' investment objectives, having regard to the clients' relevant KYC information and financial circumstances, contrary to the Member's policies and procedures, and MFDA Rules 2.2.1 and 2.1.1.
Allegation #3:
Commencing December 2013, Ajmal engaged in conduct unbecoming Approved Persons by providing false and misleading responses to the Member during the course of the Member's investigation into their conduct, contrary to MFDA Rule 2.1.1.
Allegation #6:
Commencing in March 6, 2015, Ajmal misled MFDA Staff during an interview and/or failed to produce copies of documents and records requested by MFDA Staff during the course of an investigation, contrary to section 22.1 of MFDA By-law No. 1.
4) Roomal Golzay
Allegation #1:
Between 2008 and August 21, 2014, Roomal falsified, fabricated or altered:
| a) |
clients' KYC information such as income, net worth, investment objectives, and risk tolerance on account forms submitted to the Member, including new account application forms; and |
| b) |
information on loan applications and client documents submitted to lenders, including bank statements, investment statements, pay stubs, or Canada Revenue Agency Notices of Assessment; |
in order to obtain at least three investment loans to purchase mutual funds on behalf of clients, thereby failing to observe the high standards of ethics and conduct in the transaction of business, and engaging in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1.
Allegation #2:
Between 2008 and August 21, 2014, Roomal failed to ensure that at least three investment loans recommended to clients were suitable for the clients and in keeping with the clients' investment objectives, having regard to the clients' relevant KYC information and financial circumstances, contrary to the Member's policies and procedures, and MFDA Rules 2.2.1 and 2.1.1.
Allegation #3:
Commencing December 2013, Roomal engaged in conduct unbecoming Approved Persons by providing false and misleading responses to the Member during the course of the Member's investigation into their conduct, contrary to MFDA Rule 2.1.1.
Allegation #5:
Commencing December 2014, Roomal failed to attend an interview with MFDA Staff and produce information, documents and records requested by MFDA Staff during the course of an investigation, contrary to section 22.1 of MFDA By-law No. 1.
5) Mustafa Sayed Hashimi
Allegation #1:
Between 2008 and August 21, 2014, Mustafa falsified, fabricated or altered:
| a) |
clients' KYC information such as income, net worth, investment objectives, and risk tolerance on account forms submitted to the Member, including new account application forms; and |
| b) |
information on loan applications and client documents submitted to lenders, including bank statements, investment statements, pay stubs, or Canada Revenue Agency Notices of Assessment; |
in order to obtain at least 51 investment loans to purchase mutual funds on behalf of clients, thereby failing to observe the high standards of ethics and conduct in the transaction of business, and engaging in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1.
Allegation #2:
Between 2008 and August 21, 2014, Mustafa failed to ensure that at least 51 investment loans recommended to clients were suitable for the clients and in keeping with the clients' investment objectives, having regard to the clients' relevant KYC information and financial circumstances, contrary to the Member's policies and procedures, and MFDA Rules 2.2.1 and 2.1.1.
Allegation #3:
Commencing December 2013, Mustafa engaged in conduct unbecoming Approved Persons by providing false and misleading responses to the Member during the course of the Member's investigation into their conduct, contrary to MFDA Rule 2.1.1.
Allegation #6:
Commencing June 10, 2015, Mustafa misled MFDA Staff during an interview conducted pursuant to an investigation of the MFDA, contrary to section 22.1 of MFDA By-law No. 1.
6) Zobair Hashimi
Allegation #1:
Between March 29, 2012 and August 21, 2014, Zobair falsified, fabricated or altered:
| a) |
clients' KYC information such as income, net worth, investment objectives, and risk tolerance on account forms submitted to the Member, including new account application forms; and |
| b) |
information on loan applications and client documents submitted to lenders, including bank statements, investment statements, pay stubs, or Canada Revenue Agency Notices of Assessment; |
in order to obtain at least two investment loans to purchase mutual funds on behalf of clients, thereby failing to observe the high standards of ethics and conduct in the transaction of business, and engaging in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1.
Allegation #2:
Between March 29, 2012 and August 21, 2014, Zobair failed to ensure that at least two investment loans recommended to clients were suitable for the clients and in keeping with the clients' investment objectives, having regard to the clients' relevant KYC information and financial circumstances, contrary to the Member's policies and procedures, and MFDA Rules 2.2.1 and 2.1.1.
Allegation #3:
Commencing December 2013, Zobair engaged in conduct unbecoming Approved Persons by providing false and misleading responses to the Member during the course of the Member's investigation into their conduct, contrary to MFDA Rule 2.1.1.
Allegation #5:
Commencing December 2014, Zobair failed to attend an interview with MFDA Staff and produce information, documents and records requested by MFDA Staff during the course of an investigation, contrary to section 22.1 of MFDA By-law No. 1.
7) Saadet Kolgekaya
Allegation #1:
Between 2008 and August 21, 2014, Kolgekaya falsified, fabricated or altered:
| a) |
clients' KYC information such as income, net worth, investment objectives, and risk tolerance on account forms submitted to the Member, including new account application forms; and |
| b) |
information on loan applications and client documents submitted to lenders, including bank statements, investment statements, pay stubs, or Canada Revenue Agency Notices of Assessment; |
in order to obtain at least ten investment loans to purchase mutual funds on behalf of clients, thereby failing to observe the high standards of ethics and conduct in the transaction of business, and engaging in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1.
Allegation #2:
Between 2008 and August 21, 2014, Kolgekaya failed to ensure that at least ten investment loans recommended to clients were suitable for the clients and in keeping with the clients' investment objectives, having regard to the clients' relevant KYC information and financial circumstances, contrary to the Member's policies and procedures, and MFDA Rules 2.2.1 and 2.1.1.
Allegation #3:
Commencing December 2013, Kolgekaya engaged in conduct unbecoming Approved Persons by providing false and misleading responses to the Member during the course of the Member's investigation into their conduct, contrary to MFDA Rule 2.1.1.
Allegation #6:
Commencing in May 28, 2015, Kolgekaya misled MFDA Staff during an interview conducted pursuant to an investigation of the MFDA, contrary to section 22.1 of MFDA By-law No. 1.
8) Rhea Galias Fortes
Allegation #1:
Between May 16, 2012 and August 21, 2014, Fortes falsified, fabricated or altered:
| a) |
clients' KYC information such as income, net worth, investment objectives, and risk tolerance on account forms submitted to the Member, including new account application forms; and |
| b) |
information on loan applications and client documents submitted to lenders, including bank statements, investment statements, pay stubs, or Canada Revenue Agency Notices of Assessment; |
in order to obtain at least one investment loan to purchase mutual funds on behalf of a client, thereby failing to observe the high standards of ethics and conduct in the transaction of business, and engaging in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1.
Allegation #2:
Between May 16, 2012 and August 21, 2014, Fortes failed to ensure that at least one investment loan recommended to a client was suitable for the client and in keeping with the client's investment objectives, having regard to the client's relevant KYC information and financial circumstances, contrary to the Member's policies and procedures, and MFDA Rules 2.2.1 and 2.1.1.
Allegation #3:
Commencing December 2013, Fortes engaged in conduct unbecoming Approved Persons by providing false and misleading responses to the Member during the course of the Member's investigation into their conduct, contrary to MFDA Rule 2.1.1.
Allegation #6:
Commencing in April 29, 2015, Fortes misled MFDA Staff during an interview and/or failed to produce copies of documents and records requested by MFDA Staff during the course of an investigation, contrary to section 22.1 of MFDA By-law No. 1.
9) Shameel Rawani
Allegation #1:
Between January 10, 2010 and August 21, 2014, Rawani falsified, fabricated or altered:
| a) |
clients' KYC information such as income, net worth, investment objectives, and risk tolerance on account forms submitted to the Member, including new account application forms; and |
| b) |
information on loan applications and client documents submitted to lenders, including bank statements, investment statements, pay stubs, or Canada Revenue Agency Notices of Assessment; |
in order to obtain at least three investment loans to purchase mutual funds on behalf of clients, thereby failing to observe the high standards of ethics and conduct in the transaction of business, and engaging in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1.
Allegation #2:
Between January 10, 2010 and August 21, 2014, Rawani failed to ensure that at least three investment loans recommended to clients were suitable for the clients and in keeping with the clients' investment objectives, having regard to the clients' relevant KYC information and financial circumstances, contrary to the Member's policies and procedures, and MFDA Rules 2.2.1 and 2.1.1.
Allegation #3:
Commencing December 2013, Rawani engaged in conduct unbecoming Approved Persons by providing false and misleading responses to the Member during the course of the Member's investigation into their conduct, contrary to MFDA Rule 2.1.1.
Allegation #5:
Commencing December 2014, Rawani failed to attend an interview with MFDA Staff and produce information, documents and records requested by MFDA Staff during the course of an investigation, contrary to section 22.1 of MFDA By-law No. 1.
10) Anjum Pathan
Allegation #1:
Between January 10, 2010 and August 21, 2014, Pathan falsified, fabricated or altered:
| a) |
his own KYC information such as income, net worth, investment objectives, and risk tolerance on account forms submitted to the Member, including new account application forms; and |
| b) |
information on loan applications and client documents submitted to lenders, including bank statements, investment statements, pay stubs, or Canada Revenue Agency Notices of Assessment; |
in order to obtain, for himself, an investment loan to purchase mutual funds, thereby failing to observe the high standards of ethics and conduct in the transaction of business, and engaging in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1.
Allegation #2:
Between January 10, 2010 and August 21, 2014, Pathan failed to ensure that the investment loan he processed and obtained for himself (and his wife) was suitable and in keeping with his and his wife's investment objectives, having regard to his and his wife's relevant KYC information and financial circumstances, contrary to the Member's policies and procedures, and MFDA Rules 2.2.1 and 2.1.1.
Allegation #3:
Commencing December 2013, Pathan engaged in conduct unbecoming Approved Persons by providing false and misleading responses to the Member during the course of the Member's investigation into their conduct, contrary to MFDA Rule 2.1.1.
Allegation #5:
Commencing December 2014, Pathan failed to attend an interview with MFDA Staff and produce information, documents and records requested by MFDA Staff during the course of an investigation, contrary to section 22.1 of MFDA By-law No. 1.
11) Mohammad Yunas Masood
Allegation #1:
Between November 8, 2013 and August 21, 2014, Masood falsified, fabricated or altered:
| a) |
clients' KYC information such as income, net worth, investment objectives, and risk tolerance on account forms submitted to the Member, including new account application forms; and |
| b) |
information on loan applications and client documents submitted to lenders, including bank statements, investment statements, pay stubs, or Canada Revenue Agency Notices of Assessment; |
in order to obtain at least three investment loans to purchase mutual funds on behalf of clients, thereby failing to observe the high standards of ethics and conduct in the transaction of business, and engaging in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1.
Allegation #2:
Between November 8, 2013 and August 21, 2014, Masood failed to ensure that at least three investment loans recommended to clients were suitable for the clients and in keeping with the clients' investment objectives, having regard to the clients' relevant KYC information and financial circumstances, contrary to the Member's policies and procedures, and MFDA Rules 2.2.1 and 2.1.1.
Allegation #3:
Commencing December 2013, Masood engaged in conduct unbecoming Approved Persons by providing false and misleading responses to the Member during the course of the Member's investigation into their conduct, contrary to MFDA Rule 2.1.1.
Allegation #5:
Commencing December 2014, Masood failed to attend an interview with MFDA Staff and produce information, documents and records requested by MFDA Staff during the course of an investigation, contrary to section 22.1 of MFDA By-law No. 1.
12) Sama Tabesh
A disciplinary hearing in the matter of Sama Tabesh was held on May 16, 2018 in Toronto, Ontario, before a three-member hearing panel of the Central Regional Council of the MFDA. Prior to the hearing, Staff of the MFDA and Tabesh filed an Agreed Statement of Facts dated May 15, 2018. The Hearing Panel made the following findings of misconduct against Tabesh:
Allegation #1:
Between 2008 and August 21, 2014, Tabesh falsified, fabricated or altered:
| a) |
clients' KYC information such as income, net worth, investment objectives, and risk tolerance on account forms submitted to the Member, including new account application forms; and |
| b) |
information on loan applications and client documents submitted to lenders, including bank statements, investment statements, pay stubs, or Canada Revenue Agency Notices of Assessment; |
in order to obtain at least six investment loans to purchase mutual funds on behalf of clients, thereby failing to observe the high standards of ethics and conduct in the transaction of business, and engaging in conduct unbecoming an Approved Person, contrary to MFDA Rule 2.1.1;
Allegation#2:
Between 2008 and August 21, 2014, Tabesh failed to ensure that at least six investment loans recommended to clients were suitable for the clients and in keeping with the clients' investment objectives, having regard to the clients' relevant KYC information and financial circumstances, contrary to the Member's policies and procedures, and MFDA Rules 2.2.1 and 2.1.1.
Allegation #3:
Commencing December 2013, Tabesh engaged in conduct unbecoming an Approved Person by providing false and misleading responses to the Member during the course of the Member's investigation into their conduct, contrary to MFDA Rule 2.1.1.
Allegation #6:
Commencing in March 2015, Tabesh misled MFDA Staff during an interview conducted pursuant to an investigation, contrary to section 22.1 of MFDA By-law No. 1.
The Hearing Panel reserved its decision on penalty and advised that it will issue its decision and written reasons in due course.
13) Hammond Lieu
A settlement hearing in the matter of Hammond Lieu commenced on May 16, 2018 in Toronto, Ontario before a three-member Hearing Panel of the Central Regional Council of the MFDA. The Hearing Panel reserved its decision as to whether it will accept or reject the settlement agreement between Staff of the MFDA and Lieu.
In the event that the Hearing Panel accepts the settlement agreement with Lieu, the Hearing Panel will provide written reasons for its decision. If the Hearing Panel rejects the settlement agreement, then the Hearing Panel may provide written reasons for its decision at its own initiative or shall provide written reasons at the request of a party to the proceeding.
14) Juliene da Rosa Lima
Staff of the MFDA has withdrawn the allegations in the Notice of Hearing concerning Juliene da Rosa Lima, and the disciplinary proceeding against her is concluded.
Reasons for Decision (Misconduct)
Written reasons regarding misconduct against Rihawi, Attal, Ajmal, Roomal, Mustafa, Zobair, Tabesh, Kolgekaya, Fortes, Rawani, Pathan, and Masood will be issued by the Hearing Panel in due course.
Penalty Hearing
A penalty hearing with respect to Rihawi, Attal, Ajmal, Roomal, Mustafa, Zobair, Tabesh, Kolgekaya, Fortes, Rawani, Pathan, and Masood will take place May 25, 2018, commencing at 10:00 a.m. (Eastern), in the hearing room at the offices of the MFDA, located at 121 King Street West, Suite 1000, Toronto, Ontario. The proceeding will continue to 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. During the period described in the Notice of Hearing, the Respondents conducted business in the Mississauga, 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 82,000 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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