MFDA issues Notice of Hearing regarding Stephen Smith

TORONTO, Oct. 13 /CNW/ -The MFDA today announced that it has commenced disciplinary proceedings against Stephen Arnold Smith (the "Respondent").

MFDA staff alleges in its Notice of Hearing that the Respondent engaged in the following conduct contrary to the By-laws, Rules or Policies of the MFDA:

	Allegation #1: Between March 8, 2002 and February 20, 2007, the Respondent engaged in personal financial dealings with client WS by having and continuing with a profit sharing agreement and a co-investing arrangement with client WS in respect of the Respondent's company, Smith & Tomyak International Inc. ("Smith & Tomyak") in which client WS had invested $26,000, thereby giving rise to an actual or potential conflict of interest between the Respondent and client WS which the Respondent failed to address by the exercise of responsible business judgment influenced only by the best interests of client WS, contrary to MFDA Rules 2.1.4 and 2.1.1.
	Allegation #2: Between September 2004 and February 20, 2007, the Respondent failed to deal fairly, honestly and in good faith with client WS by deliberately misleading client WS about the status of his investment in Smith & Tomyak, contrary to MFDA Rule 2.1.1.
	Allegation #3: From September 2004 to February 20, 2007, the Respondent failed to handle complaints received from client WS on numerous occasions concerning the status of client WS's investment in Smith & Tomyak promptly and fairly by failing to inform the Member of the complaints and attempting to settle the complaints without the Member's involvement, contrary to MFDA Policy No. 3 and MFDA Rules 2.11 and 2.1.1.
	Allegation #4: Between September 2004 and February 20, 2007, the Respondent failed to inform the Member of complaints received from client WS on numerous occasions concerning the status of client WS's investment in Smith & Tomyak and attempted to settle the complaints without the Member's involvement, thereby failing to comply with the Member's policies and procedures and interfering with the ability of the Member to supervise the Respondent and comply with its obligations under MFDA Rule 2.11, contrary to MFDA Rules 1.1.2 and 2.5.1, and MFDA Rule 2.1.1.
	Allegation #5: Commencing on or about May 12, 2009, the Respondent has failed to produce for inspection copies of documents and records requested by the MFDA during the course of an investigation, contrary to section 22.1 of MFDA By-law No. 1.

The first appearance in this matter will take place by teleconference before a Hearing Panel of the MFDA's Central Regional Council on December 15, 2010 at 10:00 a.m. (Eastern). The purpose of the first appearance is to schedule a date for the commencement of the hearing on the merits and to address any other procedural matters, and 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 137 Members and their approximately 75,000 Approved Persons with a mandate to protect investors and the public interest.

For further information:

Shaun Devlin
Vice-President, Enforcement
416-943-4672 or [email protected]