Common use of AGREED FACTS Registration History Clause in Contracts

AGREED FACTS Registration History. 6. The Respondent is registered as a mutual fund dealer and has been a Member of the MFDA since March 8, 2002. 7. The Respondent’s head office is located in Mississauga, Ontario. 8. IPC Securities Corporation Inc. (“IPCSC”) is an affiliate of the Respondent, operates as a securities dealer, and is regulated by the Investment Industry Regulatory Organization of Canada (“IIROC”). 9. On or about October 31, 2011, the Respondent entered into a referral arrangement with IPCSC which permitted the Respondent’s Approved Persons to refer clients to IPCSC in order for clients to purchase, sell, or otherwise transact in securities (i.e., non-mutual fund securities) that Approved Persons are not registered to trade or advise in (“Referral Arrangement”). 10. The Referral Arrangement was established by the Respondent to allow its Approved Persons to refer clients wishing to purchase non-mutual fund securities to an appropriate registrant in a formal manner in which the referral could be centralized and monitored. Under the terms of the Referral Arrangement, the Respondent’s Approved Persons were required to limit their referral-related activities to providing clients with a basic description of the services available through IPCSC and providing contact information for an IPCSC representative. 11. The Respondent’s policies and procedures prohibited its Approved Persons from providing advice, recommendations or opinions about non-mutual fund investments available through other registrants, including through the Referral Arrangement. 12. The Referral Arrangement was announced in a memorandum issued by the Respondent to its Approved Persons on October 31, 2011 that included, among other things: (a) An announcement that the National Accounts Desk had been launched by IPCSC to facilitate handling of Approved Persons’ clients’ orders “for purchasing various exchange-traded investment products, including securities listed on major stock exchanges, which are not available to MFDA registered advisors;” and (b) Answers to Frequently Asked Questions about the Referral Arrangement that, among other things, indicated that: referring advisors registered with the Respondent were not permitted to place orders with IPCSC on behalf of their clients; and all paperwork in the creation, maintenance of an IPCSC account or any trading instructions must be conducted between the client and the National Accounts Desk Advisor employed by IPCSC. 13. On or about February 27, 2009, prior to the Referral Arrangement, the Respondent had also issued Compliance Bulletin 09-003 to its Approved Persons, including Approved Person Xxxxxxx Xxxxxxxx (“Mushaluk”)1, that dealt more generally with referrals to IIROC dealers, including IPCSC, and the activities by Approved Persons were not permitted when making such referrals, including: (a) assisting the client in the completion of the other firm's account opening documents; (b) assisting the client in the completion of the other firm's trade tickets; (c) obtaining or updating Know-Your-Client information such as investment objectives, risk tolerance and time horizon on behalf of the other firm; (d) actively participate in discussions where investment advice is given to the referred client by the other firm; or (e) providing advice, recommendations or opinions on the investments held through the other firm. 14. In November 2012, the Respondent issued a further Compliance Bulletin reminding its Approved Persons referring clients to IPCSC through the Referral Arrangement that they were not permitted to, among other things: i. discuss with clients the features, terms, and advantages of purchasing specific equities available through the Referral Arrangement; and ii. discuss the risks of specific issuers with clients. 15. Xxxxxxxx has admitted to the following: 2 1 One of the Respondent’s former dealing representatives who worked in and around Salmon Arm, British Columbia. 1.1. On July 26, 2016, an MFDA Hearing Panel made findings against Xxxxxxxx and imposed the following sanctions: a three year prohibition from conducting securities related business in any capacity while in the employ of, or associated with any Member of the MFDA, effective i. in or about July 2010, Mushaluk became aware of a local mineral exploration company known as Pacific Xxxxxx Minerals Inc. (“PBM”) that was based in Salmon Arm and had a potential mine located on the outskirts of Salmon Arm and whose common shares traded on the TSX Venture Exchange; ii. between July 2010 and August 2012, Mushaluk personally purchased 45,000 shares of PBM; iii. on August 24, 2012, without the prior approval or knowledge of the Respondent, Xxxxxxxx sent an email to 22 of his IPC clients recommending that the clients purchase shares of PBM (the “PBM Email”). In particular, Xxxxxxxx stated in the PBM Email: I have an opportunity that I think you can benefit from in the short term. I have been a shareholder in a junior mine for approximately 15 months which is now at the stage of some exciting developments. It is a copper, gold, silver, molybdenum mine located in Granisle B.C. called pacific Xxxxxx Minerals. The mine is days (up to 40) away from potentially receiving a permit. Currently the stock is trading at $13 and I believe within months it could sell for a lot more. In fact, the permit alone could double the value of the company. I recommend selling some of your existing investments with me to explore this opportunity. This is extremely time sensitive in that you will have to make a decision of whether you want to entertain this or not by Tuesday of next week [in 5 days]. I will be calling you either Sunday evening or Monday to explain more details. If you are not interested however, please email reply now. iv. From August 24 to 27, 2012, without the knowledge or approval of the Respondent, Xxxxxxxx further communicated with 15 of the 22 clients to whom he had sent the Recommendation Email, as well as additional clients he serviced, with respect to purchasing PBM shares. Xxxxxxxx discussed one or more of the following with the clients: a. PBM is a junior mining company; from August 1, 2014 to July 31, 2017; fine in the amount of $25,000, payable on or before July 31, 2017; and costs in the amount of $5,000, payable by August 31, 2016. Reasons for Decision are dated November 10, 2016. b. the Environmental Assessment Certificate (“EAC”) application for the property which PBM owned in central British Columbia was awaiting approval from the provincial government; c. some of the risks of investing in PBM; and d. “this could be a situation where $100k turns into $400k or greater”. 16. Where clients advised Xxxxxxxx that they intended to invest in PBM, Xxxxxxxx discussed the amounts to be invested in PBM and, where necessary, the mutual funds that the clients would redeem in order to generate monies to invest in PBM. 17. In order to process the sale of PBM shares, Xxxxxxxx provided the representative at the IPCSC National Accounts Desk who had been identified through the Referral Arrangement with, among other things, the names of clients who were investing in PBM and, in some cases, the approximate amounts to be invested in PBM, and details of any mutual fund redemptions required to facilitate the investments in PBM. 18. Following the receipt of the referrals of clients to IPCSC to purchase PBM, both the IPCSC National Accounts Desk Advisor and the National Director, IIROC Compliance for IPCSC spoke with Xxxxxxxx, who told them that he had been approached by several individuals on an unsolicited basis about investing in PBM and its future prospects. Xxxxxxxx also said that he had given these individuals only very general information about PBM and had also told them he was not registered to provide any advice about PBM before referring those clients to IPCSC for possible trades. 19. The Registered Representative from the National Accounts Desk at IPCSC who handled any referrals of clients from IPC was at the time an IIROC registrant who worked as a salaried, non-commission employee of IPCSC. The Registered Representative consulted directly with each and every Mushaluk client who approached IPCSC to purchase PBM, obtained completed and signed New Account Application Forms, and opened IPCSC accounts for all such persons who wished to purchase PBM. This person also conducted a suitability review regarding the relevant persons’ proposed purchases of PBM and, where applicable, provided appropriate warnings to those persons before any PBM shares were purchased. 20. From August 2012 to October 2013, 29 clients that were serviced by Mushaluk at IPC and referred to IPCSC by Xxxxxxxx purchased approximately $519,502 worth of shares in PBM through IPCSC.3 21. In or about August 2012, the National Accounts Desk at IPCSC was asked by Xxxxxxxx to modify the normal commission structure for any clients referred to IPCSC to purchase PBM. The normal commission structure paid a referral fee of 85% of the net commission payable in respect of IPCSC trades. Xxxxxxxx sought to have the commission modified such that he could waive the commission on the initial purchase but later charge the clients 5% commission when they sold the stock at a later date. At that time, compliance staff and staff at the National Accounts Desk for IPCSC refused to alter the commission structure for these trades and instructed Mushaluk that any details relating to the purchase of PBM were to be provided by clients to IPCSC directly, not to discuss the specifics of PBM with clients and not to promote PBM. The Respondent did not take sufficient steps at that time to ensure Xxxxxxxx was not acting outside his registration.

AGREED FACTS Registration History. 6. The Respondent is registered as a mutual fund dealer in Ontario and British Columbia, and as an exempt market dealer in Ontario. 7. The Respondent has been a Member of the MFDA since March 8July 5, 2002. 78. The Respondent’s head office is located in MississaugaRichmond Hill, Ontario (the “Head Office”). The Respondent currently has sub-branch offices in Toronto and Scarborough, Ontario. 8. IPC Securities Corporation Inc. At the relevant time, the Member also had several branch offices in Ontario including Richmond Hill, Markham and Mississauga (collectively, the “IPCSC”) is an affiliate of the Respondent, operates as a securities dealer, and is regulated by the Investment Industry Regulatory Organization of Canada (“IIROCBranches”). 9. On or about October 31Commencing on March 23, 20112009, the Respondent entered into MFDA Compliance Staff conducted a referral arrangement with IPCSC which permitted third round compliance examination of the Respondent’s Approved Persons to refer clients to IPCSC Head Office and the Branches (the “2009 Examination”) in order for clients to purchaseassess the Respondent’s compliance with MFDA by-laws, sellRules and Policies during the period May 1, or otherwise transact in securities (i.e.2007 to January 31, non-mutual fund securities) that Approved Persons are not registered to trade or advise in (“Referral Arrangement”)2009. 10. The Referral Arrangement was established by results of the 2009 Examination were summarized and delivered to the Respondent to allow its Approved Persons to refer clients wishing to purchase non-mutual fund securities to an appropriate registrant in a formal manner in which report dated July 30, 2009 (the referral could be centralized and monitored. Under the terms of the Referral Arrangement, the Respondent’s Approved Persons were required to limit their referral-related activities to providing clients with a basic description of the services available through IPCSC and providing contact information for an IPCSC representative“2009 Report”). 11. The Respondent’s 2009 Report identified a number of compliance deficiencies including the failure of the Respondent to establish, implement and maintain adequate policies and procedures prohibited its to supervise and to ensure the suitability of leveraging recommendations made by Approved Persons from providing advice, recommendations or opinions about non-mutual fund investments available through other registrants, including through the Referral Arrangementto clients. 12. The Referral Arrangement was announced During the 2009 Examination, MFDA Compliance Staff determined that the Respondent’s written policies and procedures (the “Procedures”) for the supervision of leveraging recommendations were deficient in a memorandum issued by the Respondent to its Approved Persons on October 31, 2011 that included, among other thingsfollowing ways: (a) An announcement that the National Accounts Desk had been launched by IPCSC Procedures to facilitate handling assess the suitability of Approved Persons’ clients’ orders leveraging recommendations did not consider all relevant know your client (“for purchasing various exchange-traded KYC”) information. The procedures did not consider the client’s age or investment products, including securities listed on major stock exchanges, which are knowledge or did not available to MFDA registered advisors;” adequately consider net worth when assessing the suitability of leveraging recommendations; and (b) Answers the Procedures did not include processes to Frequently Asked Questions about the Referral Arrangement thatdocument evidence of supervisory review of leveraging recommendations including records of suitability queries made, among other things, indicated that: referring advisors registered with the Respondent were not permitted to place orders with IPCSC on behalf of their clients; responses received and all paperwork in the creation, maintenance of an IPCSC account or any trading instructions must be conducted between the client and the National Accounts Desk Advisor employed by IPCSCresolutions achieved. 13. On During the 2009 Examination, MFDA Compliance Staff determined that the Respondent’s Branch Office supervision of the suitability of leveraging recommendations was deficient in that Branch Managers or about February 27, 2009, prior to other supervisory staff in the Referral Arrangement, the Respondent had also issued Compliance Bulletin 09-003 to its Approved Persons, including Approved Person Xxxxxxx Xxxxxxxx (“Mushaluk”)1, that dealt more generally with referrals to IIROC dealers, including IPCSC, and the activities by Approved Persons were not permitted when making such referrals, includingBranches: (a) assisting the client failed to detect and query leveraging recommendation that may have been unsuitable in the completion light of the other firm's account opening documents;client’s documented KYC information as recorded on the clients New Account Application Form and loan application; and (b) assisting the client failed, as a result of its conduct in the completion s.13(a) above, to maintain records of suitability queries made, responses received from Approved Persons and resolutions achieved as a result of the other firm's trade tickets; (c) obtaining or updating Know-Your-Client information such as investment objectives, risk tolerance and time horizon on behalf of the other firm; (d) actively participate in discussions where investment advice is given to the referred client by the other firm; or (e) providing advice, recommendations or opinions on the investments held through the other firmsupervisory inquiry. 14. In November 2012During the 2009 Examination, MFDA Compliance Staff determined that the Respondent issued Respondent’s Head Office supervision of the suitability of leveraging recommendations was deficient in that the Respondent’s Head Office Compliance Staff: (a) failed to detect and query leveraged recommendations that may have been unsuitable in light of the client’s documented KYC information as recorded on the clients’ New Account Application Form and loan application. (b) failed, as a further Compliance Bulletin reminding result of its conduct in s.14(a) above to maintain records of suitability queries made, responses received from Approved Persons referring clients to IPCSC through and resolutions achieved as a result of the Referral Arrangement that they were not permitted to, among other things: i. discuss with clients the features, terms, and advantages of purchasing specific equities available through the Referral Arrangement; and ii. discuss the risks of specific issuers with clientssupervisory inquiry. 15. Xxxxxxxx has admitted As a result of the deficiencies by the Respondent as outlined in paragraphs 13 and 14 above, leveraging recommendations which may have been unsuitable were processed at the Respondent without proper supervision, and those leveraging recommendations have not to the following: 2 1 One of date been subject to full supervisory scrutiny in compliance with the Respondent’s former dealing representatives who worked in policies and around Salmon Arm, British Columbiaprocedures. 1.1. On July 26, 2016, an MFDA Hearing Panel made findings against Xxxxxxxx and imposed the following sanctions: a three year prohibition from conducting securities related business in any capacity while in the employ of, or associated with any Member of the MFDA, effective i. in or about July 2010, Mushaluk became aware of a local mineral exploration company known as Pacific Xxxxxx Minerals Inc. (“PBM”) that was based in Salmon Arm and had a potential mine located on the outskirts of Salmon Arm and whose common shares traded on the TSX Venture Exchange; ii. between July 2010 and August 2012, Mushaluk personally purchased 45,000 shares of PBM; iii. on August 24, 2012, without the prior approval or knowledge of the Respondent, Xxxxxxxx sent an email to 22 of his IPC clients recommending that the clients purchase shares of PBM (the “PBM Email”). In particular, Xxxxxxxx stated in the PBM Email: I have an opportunity that I think you can benefit from in the short term. I have been a shareholder in a junior mine for approximately 15 months which is now at the stage of some exciting developments. It is a copper, gold, silver, molybdenum mine located in Granisle B.C. called pacific Xxxxxx Minerals. The mine is days (up to 40) away from potentially receiving a permit. Currently the stock is trading at $13 and I believe within months it could sell for a lot more. In fact, the permit alone could double the value of the company. I recommend selling some of your existing investments with me to explore this opportunity. This is extremely time sensitive in that you will have to make a decision of whether you want to entertain this or not by Tuesday of next week [in 5 days]. I will be calling you either Sunday evening or Monday to explain more details. If you are not interested however, please email reply now. iv. From August 24 to 27, 2012, without the knowledge or approval of the Respondent, Xxxxxxxx further communicated with 15 of the 22 clients to whom he had sent the Recommendation Email, as well as additional clients he serviced, with respect to purchasing PBM shares. Xxxxxxxx discussed one or more of the following with the clients: a. PBM is a junior mining company; from August 1, 2014 to July 31, 2017; fine in the amount of $25,000, payable on or before July 31, 2017; and costs in the amount of $5,000, payable by August 31, 2016. Reasons for Decision are dated November 10, 2016. b. the Environmental Assessment Certificate (“EAC”) application for the property which PBM owned in central British Columbia was awaiting approval from the provincial government; c. some of the risks of investing in PBM; and d. “this could be a situation where $100k turns into $400k or greater”. 16. Where clients advised Xxxxxxxx that they intended to invest in PBM, Xxxxxxxx discussed the amounts to be invested in PBM and, where necessary, the mutual funds that the clients would redeem in order to generate monies to invest in PBM. 17. In order to process the sale of PBM shares, Xxxxxxxx provided the representative at the IPCSC National Accounts Desk who had been identified through the Referral Arrangement with, among other things, the names of clients who were investing in PBM and, in some cases, the approximate amounts to be invested in PBM, and details of any mutual fund redemptions required to facilitate the investments in PBM. 18. Following the receipt of the referrals of clients to IPCSC to purchase PBM, both the IPCSC National Accounts Desk Advisor and the National Director, IIROC Compliance for IPCSC spoke with Xxxxxxxx, who told them that he had been approached by several individuals on an unsolicited basis about investing in PBM and its future prospects. Xxxxxxxx also said that he had given these individuals only very general information about PBM and had also told them he was not registered to provide any advice about PBM before referring those clients to IPCSC for possible trades. 19. The Registered Representative from the National Accounts Desk at IPCSC who handled any referrals of clients from IPC was at the time an IIROC registrant who worked as a salaried, non-commission employee of IPCSC. The Registered Representative consulted directly with each and every Mushaluk client who approached IPCSC to purchase PBM, obtained completed and signed New Account Application Forms, and opened IPCSC accounts for all such persons who wished to purchase PBM. This person also conducted a suitability review regarding the relevant persons’ proposed purchases of PBM and, where applicable, provided appropriate warnings to those persons before any PBM shares were purchased. 20. From August 2012 to October 2013, 29 clients that were serviced by Mushaluk at IPC and referred to IPCSC by Xxxxxxxx purchased approximately $519,502 worth of shares in PBM through IPCSC.3 21. In or about August 2012, the National Accounts Desk at IPCSC was asked by Xxxxxxxx to modify the normal commission structure for any clients referred to IPCSC to purchase PBM. The normal commission structure paid a referral fee of 85% of the net commission payable in respect of IPCSC trades. Xxxxxxxx sought to have the commission modified such that he could waive the commission on the initial purchase but later charge the clients 5% commission when they sold the stock at a later date. At that time, compliance staff and staff at the National Accounts Desk for IPCSC refused to alter the commission structure for these trades and instructed Mushaluk that any details relating to the purchase of PBM were to be provided by clients to IPCSC directly, not to discuss the specifics of PBM with clients and not to promote PBM. The Respondent did not take sufficient steps at that time to ensure Xxxxxxxx was not acting outside his registration.

AGREED FACTS Registration History. 6. The Respondent is has been registered in the securities industry since November 1998. 7. Since January 18, 2013, the Respondent has been registered in Ontario as a dealing representative with Equity Associates Inc. (“Equity”). 8. From June 18, 2008 to December 21, 2012, the Respondent was registered in Ontario as a mutual fund dealer and has been a Member of the MFDA since March 8, 2002. 7. The Respondent’s head office is located in Mississauga, Ontario. 8. IPC Securities Corporation salesperson with FundEX Investments Inc. (“IPCSC”) is an affiliate of the Respondent, operates as a securities dealer, and is regulated by the Investment Industry Regulatory Organization of Canada (“IIROCFundEX”). 9. On or about October 31, 2011At all material times, the Respondent entered has conducted business in the Aurora, Ontario area. 10. Waterview Capital Corp. (“Waterview”) was an exempt market dealer whose registration, as well as its principal’s, was suspended by the Ontario Securities Commission (“OSC”) on April 25, 2011 following a compliance examination by OSC Staff which identified numerous violations, including that Waterview did not maintain know-your-client forms for some investors, traded without registration while suspended, and sold investments to a non-accredited investor. 11. Prior to its suspension, Waterview sold investments that included interests in mortgages on certain properties. 12. While registered with FundEX, the Respondent met with a Waterview representative in the summer of 2010, at which time the representative of Waterview advised the Respondent that: a) Waterview was offering a real estate financing product; b) investors would receive 10% interest on monies invested with Waterview; c) Waterview would pay a commission on referrals; and d) FundEX was in the process of approving the investment in Waterview. 13. After meeting with the Waterview representative, the Respondent did not inquire of FundEX whether it was in the process of approving the Waterview investment. 14. A few weeks after meeting with the Waterview representative during the summer of 2010, the Respondent met with client HF, who was interested in investing $20,000 for one-year, and sought advice from the Respondent about where to invest her monies. 15. The Respondent states that he advised client HF that investing in mutual funds was too risky given her one-year time frame, and that she might benefit instead from investing in the Waterview product. The Respondent provided client HF with the contact information for the representative of Waterview. 16. The Respondent states that he believed the Waterview investment was appropriate for client HF since Waterview purported to offer a guaranteed return higher than that of a GIC at the time. 17. There is no evidence that the Respondent acted in any further capacity as an intermediary between the client and Waterview. 18. Client HF subsequently invested in Waterview. 19. In or about September 2010, a Waterview representative contacted the Respondent and asked him where he would like the referral fee of $750 to be paid. The Respondent then inquired of the Waterview representative whether FundEX had approved the investment, and the Respondent states that the Waterview representative told him that FundEX had not, and likely would not, approve the investment. 20. The Respondent states that he told the Waterview representative something along the lines of: “I’m probably not supposed to receive [the referral fee], but if you’re sending me the cheque, can you make it payable to my wife?” 21. The Respondent requested that Waterview issue the cheque in the name of his wife in order to “mitigate any breach … that may have occurred” after the Waterview representative had told him that FundEX had not approved the Waterview investment. 22. Waterview was not an investment approved by FundEX for sale by its Approved Persons, including the Respondent. The transactions involving Waterview were not processed for the account or through the facilities of FundEX. 23. Prior to referring client HF to invest in Waterview, the Respondent did not disclose to FundEX that he was making such a referral. FundEX did not have a referral agreement with Waterview. 24. In July 2012, the Respondent attended a FundEX compliance conference during which he voluntarily disclosed to FundEX’s compliance officer that he had referred a client to Waterview. 25. On September 24, 2012, FundEX issued a letter of reprimand to the Respondent due to the undisclosed referral arrangement and commission payment from Waterview. FundEX advised the Respondent that it was placing him under strict supervision, and would be deducting a percentage of his commissions. 26. The Respondent resigned from FundEX in December, 2012, and at that point, FundEX had deducted $1,500 from commission payments owed to the Respondent, plus a $500 fee for mailing statements to clients. In January 2013, the Respondent became registered as a dealing representative with Equity. 27. During the material time, FundEX had written policies and procedures that prohibited its Approved Persons from, among other things, entering into a referral arrangement directly with IPCSC which permitted the Respondent’s Approved Persons to refer clients to IPCSC in order for clients to purchase, sell, another person or otherwise transact in securities (i.e., non-mutual fund securities) that Approved Persons are not registered to trade or advise in (“Referral Arrangement”)entity. 1028. The Referral Arrangement was established by the Respondent knew or ought to allow its Approved Persons to refer clients wishing to purchase non-mutual fund securities to an appropriate registrant in a formal manner in which the referral could be centralized and monitored. Under the terms of the Referral Arrangement, the Respondent’s Approved Persons were required to limit their referral-related activities to providing clients with a basic description of the services available through IPCSC and providing contact information for an IPCSC representative. 11. The Respondenthave known that FundEX’s policies and procedures prohibited its Approved Persons him from providing advice, recommendations or opinions about non-mutual fund investments available through other registrants, including through engaging in the Referral Arrangementconduct described herein. 1229. The Referral Arrangement was announced in a memorandum issued by There have been no complaints against the Respondent to its Approved Persons on October 31, 2011 that included, among other things: (a) An announcement that the National Accounts Desk had been launched by IPCSC to facilitate handling of Approved Persons’ clients’ orders “for purchasing various exchange-traded investment products, including securities listed on major stock exchanges, which are not available to MFDA registered advisors;” and (b) Answers to Frequently Asked Questions about the Referral Arrangement that, among other things, indicated that: referring advisors registered with the Respondent were not permitted to place orders with IPCSC on behalf of their clients; and all paperwork in the creation, maintenance of an IPCSC account or any trading instructions must be conducted between the client and the National Accounts Desk Advisor employed by IPCSC. 13. On or about February 27, 2009, prior to the Referral Arrangement, the Respondent had also issued Compliance Bulletin 09-003 to its Approved Persons, including Approved Person Xxxxxxx Xxxxxxxx (“Mushaluk”)1, that dealt more generally with referrals to IIROC dealers, including IPCSCRespondent, and the activities by Approved Persons were not permitted when making such referrals, including: (a) assisting the client in the completion there is no evidence of the other firm's account opening documents; (b) assisting the client in the completion of the other firm's trade tickets; (c) obtaining or updating Know-Your-Client information such as investment objectives, risk tolerance and time horizon on behalf of the other firm; (d) actively participate in discussions where investment advice is given to the referred client by the other firm; or (e) providing advice, recommendations or opinions on the investments held through the other firm. 14. In November 2012, the Respondent issued a further Compliance Bulletin reminding its Approved Persons referring clients to IPCSC through the Referral Arrangement that they were not permitted to, among other things: i. discuss with clients the features, terms, and advantages of purchasing specific equities available through the Referral Arrangement; and ii. discuss the risks of specific issuers with clients. 15. Xxxxxxxx has admitted to the following: 2 1 One investor harm arising out of the Respondent’s former dealing representatives who worked in and around Salmon Arm, British Columbiaconduct described herein. 1.1. On July 26, 2016, an MFDA Hearing Panel made findings against Xxxxxxxx and imposed the following sanctions: a three year prohibition from conducting securities related business in any capacity while in the employ of, or associated with any Member of the MFDA, effective i. in or about July 2010, Mushaluk became aware of a local mineral exploration company known as Pacific Xxxxxx Minerals Inc. (“PBM”) that was based in Salmon Arm and had a potential mine located on the outskirts of Salmon Arm and whose common shares traded on the TSX Venture Exchange; ii. between July 2010 and August 2012, Mushaluk personally purchased 45,000 shares of PBM; iii. on August 24, 2012, without the prior approval or knowledge of the Respondent, Xxxxxxxx sent an email to 22 of his IPC clients recommending that the clients purchase shares of PBM (the “PBM Email”). In particular, Xxxxxxxx stated in the PBM Email: I have an opportunity that I think you can benefit from in the short term. I have been a shareholder in a junior mine for approximately 15 months which is now at the stage of some exciting developments. It is a copper, gold, silver, molybdenum mine located in Granisle B.C. called pacific Xxxxxx Minerals. The mine is days (up to 40) away from potentially receiving a permit. Currently the stock is trading at $13 and I believe within months it could sell for a lot more. In fact, the permit alone could double the value of the company. I recommend selling some of your existing investments with me to explore this opportunity. This is extremely time sensitive in that you will have to make a decision of whether you want to entertain this or not by Tuesday of next week [in 5 days]. I will be calling you either Sunday evening or Monday to explain more details. If you are not interested however, please email reply now. iv. From August 24 to 27, 2012, without the knowledge or approval of the Respondent, Xxxxxxxx further communicated with 15 of the 22 clients to whom he had sent the Recommendation Email, as well as additional clients he serviced, with respect to purchasing PBM shares. Xxxxxxxx discussed one or more of the following with the clients: a. PBM is a junior mining company; from August 1, 2014 to July 31, 2017; fine in the amount of $25,000, payable on or before July 31, 2017; and costs in the amount of $5,000, payable by August 31, 2016. Reasons for Decision are dated November 10, 2016. b. the Environmental Assessment Certificate (“EAC”) application for the property which PBM owned in central British Columbia was awaiting approval from the provincial government; c. some of the risks of investing in PBM; and d. “this could be a situation where $100k turns into $400k or greater”. 16. Where clients advised Xxxxxxxx that they intended to invest in PBM, Xxxxxxxx discussed the amounts to be invested in PBM and, where necessary, the mutual funds that the clients would redeem in order to generate monies to invest in PBM. 17. In order to process the sale of PBM shares, Xxxxxxxx provided the representative at the IPCSC National Accounts Desk who had been identified through the Referral Arrangement with, among other things, the names of clients who were investing in PBM and, in some cases, the approximate amounts to be invested in PBM, and details of any mutual fund redemptions required to facilitate the investments in PBM. 18. Following the receipt of the referrals of clients to IPCSC to purchase PBM, both the IPCSC National Accounts Desk Advisor and the National Director, IIROC Compliance for IPCSC spoke with Xxxxxxxx, who told them that he had been approached by several individuals on an unsolicited basis about investing in PBM and its future prospects. Xxxxxxxx also said that he had given these individuals only very general information about PBM and had also told them he was not registered to provide any advice about PBM before referring those clients to IPCSC for possible trades. 19. The Registered Representative from the National Accounts Desk at IPCSC who handled any referrals of clients from IPC was at the time an IIROC registrant who worked as a salaried, non-commission employee of IPCSC. The Registered Representative consulted directly with each and every Mushaluk client who approached IPCSC to purchase PBM, obtained completed and signed New Account Application Forms, and opened IPCSC accounts for all such persons who wished to purchase PBM. This person also conducted a suitability review regarding the relevant persons’ proposed purchases of PBM and, where applicable, provided appropriate warnings to those persons before any PBM shares were purchased. 20. From August 2012 to October 2013, 29 clients that were serviced by Mushaluk at IPC and referred to IPCSC by Xxxxxxxx purchased approximately $519,502 worth of shares in PBM through IPCSC.3 21. In or about August 2012, the National Accounts Desk at IPCSC was asked by Xxxxxxxx to modify the normal commission structure for any clients referred to IPCSC to purchase PBM. The normal commission structure paid a referral fee of 85% of the net commission payable in respect of IPCSC trades. Xxxxxxxx sought to have the commission modified such that he could waive the commission on the initial purchase but later charge the clients 5% commission when they sold the stock at a later date. At that time, compliance staff and staff at the National Accounts Desk for IPCSC refused to alter the commission structure for these trades and instructed Mushaluk that any details relating to the purchase of PBM were to be provided by clients to IPCSC directly, not to discuss the specifics of PBM with clients and not to promote PBM30. The Respondent did has not take sufficient steps at that time to ensure Xxxxxxxx was not acting outside his registrationbeen the subject of any previous MFDA disciplinary proceedings. V. CONTRAVENTIONS

AGREED FACTS Registration History. 67. From December 27, 2006 to April 4, 2014, the Respondent was registered in Ontario as a mutual fund salesperson (now known as a Dealing Representative) with BMO Investments Inc. (“BMO”), a Member of the MFDA. The Respondent is was also registered as a mutual fund dealer salesperson in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and has been a Member of Labrador, Nova Scotia, Northwest Territories, Nunavut, Xxxxxx Xxxxxx Island, Saskatchewan, Quebec and the MFDA since March 8Yukon until October 26, 2002. 7. The Respondent’s head office is located in Mississauga, Ontario2009. 8. IPC Securities Corporation Inc. (“IPCSC”) is an affiliate of At all material times, the RespondentRespondent conducted business in the Toronto, operates as a securities dealerOntario, and is regulated by the Investment Industry Regulatory Organization of Canada (“IIROC”)area. 9. On or about October 31, 2011, The Respondent is no longer registered in the Respondent entered into a referral arrangement with IPCSC which permitted the Respondent’s Approved Persons to refer clients to IPCSC securities industry in order for clients to purchase, sell, or otherwise transact in securities (i.e., non-mutual fund securities) that Approved Persons are not registered to trade or advise in (“Referral Arrangement”)any capacity. 10. The Referral Arrangement was established by At all material times, the Respondent held a line of credit at BMO called a RRSP Readiline account (the “Readiline Account”). The purpose of Readline accounts is for clients to allow its Approved Persons draw on the available funds to refer clients wishing make RRSP investment contributions to purchase non-mutual fund securities to an appropriate registrant in a formal manner in which the referral could be centralized and monitored. Under the terms of the Referral Arrangement, the Respondent’s Approved Persons were required to limit their referral-related activities to providing clients with a basic description of the services available through IPCSC and providing contact information for an IPCSC representativeBMO RRSP Mutual Fund Account. 11. The BMO placed a “hold” on the Respondent’s policies and procedures prohibited BMO RRSP Mutual Fund Account, in accordance with its Approved Persons from providing advicegeneral practice, recommendations or opinions about non-mutual fund investments available through other registrants, including through in order to ensure that the Referral ArrangementRespondent did not redeem funds while owing money on the Readline Account. 12. The Referral Arrangement was announced in a memorandum issued by the Respondent to its Approved Persons on October 31, 2011 that included, among other things: (a) An announcement that the National Accounts Desk had been launched by IPCSC to facilitate handling of Approved Persons’ clients’ orders “for purchasing various exchange-traded investment products, including securities listed on major stock exchanges, which are not available to MFDA registered advisors;” and (b) Answers to Frequently Asked Questions about the Referral Arrangement that, among other things, indicated that: referring advisors registered with the Respondent were not permitted to place orders with IPCSC on behalf of their clients; and all paperwork in the creation, maintenance of an IPCSC account or any trading instructions must be conducted between the client and the National Accounts Desk Advisor employed by IPCSC. 13. On or about February 27around January 30, 2009, prior to the Referral Arrangement2014, the Respondent had also issued Compliance Bulletin 09-003 to its Approved Persons, including Approved Person Xxxxxxx Xxxxxxxx (“Mushaluk”)1, that dealt more generally with referrals to IIROC dealers, including IPCSC, and the activities by Approved Persons were not permitted when making such referrals, including: (a) assisting the client in the completion of the other firm's account opening documents; (b) assisting the client in the completion of the other firm's trade tickets; (c) obtaining or updating Know-Your-Client information such as investment objectives, risk tolerance and time horizon on behalf of the other firm; (d) actively participate in discussions where investment advice is given to the referred client by the other firm; or (e) providing advice, recommendations or opinions drew on the investments held through the other firm. 14. In November 2012, the Respondent issued a further Compliance Bulletin reminding its Approved Persons referring clients RRSP Readline Account to IPCSC through the Referral Arrangement that they were not permitted to, among other things: i. discuss with clients the features, terms, and advantages of purchasing specific equities available through the Referral Arrangement; and ii. discuss the risks of specific issuers with clients. 15. Xxxxxxxx has admitted to the following: 2 1 One of the Respondent’s former dealing representatives who worked purchase an investment in and around Salmon Arm, British Columbia. 1.1. On July 26, 2016, an MFDA Hearing Panel made findings against Xxxxxxxx and imposed the following sanctions: a three year prohibition from conducting securities related business in any capacity while in the employ of, or associated with any Member of the MFDA, effective i. in or about July 2010, Mushaluk became aware of a local mineral exploration company known as Pacific Xxxxxx Minerals Inc. (“PBM”) that was based in Salmon Arm and had a potential mine located on the outskirts of Salmon Arm and whose common shares traded on the TSX Venture Exchange; ii. between July 2010 and August 2012, Mushaluk personally purchased 45,000 shares of PBM; iii. on August 24, 2012, without the prior approval or knowledge of the Respondent, Xxxxxxxx sent an email to 22 of his IPC clients recommending that the clients purchase shares of PBM (the “PBM Email”). In particular, Xxxxxxxx stated in the PBM Email: I have an opportunity that I think you can benefit from in the short term. I have been a shareholder in a junior mine for approximately 15 months which is now at the stage of some exciting developments. It is a copper, gold, silver, molybdenum mine located in Granisle B.C. called pacific Xxxxxx Minerals. The mine is days (up to 40) away from potentially receiving a permit. Currently the stock is trading at $13 and I believe within months it could sell for a lot more. In fact, the permit alone could double the value of the company. I recommend selling some of your existing investments with me to explore this opportunity. This is extremely time sensitive in that you will have to make a decision of whether you want to entertain this or not by Tuesday of next week [in 5 days]. I will be calling you either Sunday evening or Monday to explain more details. If you are not interested however, please email reply now. iv. From August 24 to 27, 2012, without the knowledge or approval of the Respondent, Xxxxxxxx further communicated with 15 of the 22 clients to whom he had sent the Recommendation Email, as well as additional clients he serviced, with respect to purchasing PBM shares. Xxxxxxxx discussed one or more of the following with the clients: a. PBM is a junior mining company; from August 1, 2014 to July 31, 2017; fine in the amount of $25,000, payable on or before July 31, 2017; and costs BMO RRSP Mutual Fund Account in the amount of $5,000, payable by August . 13. On January 31, 2016. Reasons for Decision are dated November 102014, 2016the Respondent instructed another BMO mutual fund salesperson (the “BMO Colleague”) to complete a redemption of $5,000 in the BMO RRSP Mutual Fund Account (the “First Redemption”). b. 14. On or around January 31, 2014, BMO rejected the Environmental Assessment Certificate (“EAC”) application request for the property which PBM owned in central British Columbia was awaiting approval from the provincial government; c. some First Redemption because of the risks “hold” placed on the Respondent’s BMO RRSP Mutual Fund Account. 15. On or around February 3, 2014, the Respondent reviewed his BMO RRSP Mutual Account on BMO’s internal system and identified that the First Redemption request had been rejected because of investing in PBM; and d. the “this could be hold” on the account. The Respondent, taking advantage of his position as a situation where $100k turns into $400k or greater”BMO mutual fund salesperson, then personally removed the “hold” from his BMO RRSP Mutual Fund Account. 16. Where clients advised Xxxxxxxx that they intended to invest in PBMOn February 3, Xxxxxxxx discussed the amounts to be invested in PBM and, where necessary2014, the mutual funds that Respondent instructed the clients would redeem BMO Colleague to complete a second redemption of $5,000 in order to generate monies to invest in PBMthe Respondent’s BMO RRSP Mutual Fund account (the “Second Redemption”). The Second Redemption was processed successfully. 17. In order to process On or around February 3, 2014, after the sale of PBM shares, Xxxxxxxx provided the representative at the IPCSC National Accounts Desk who had been identified through the Referral Arrangement with, among other thingsSecond Redemption request was processed, the names of clients who were investing Respondent accessed the $5,000 in PBM and, in some cases, the approximate amounts to be invested in PBM, and details of any mutual fund redemptions required to facilitate the investments in PBMredeemed funds. 18. Following On March 18, 2014, the receipt of the referrals of clients to IPCSC to purchase PBM, both the IPCSC National Accounts Desk Advisor and the National Director, IIROC Compliance for IPCSC spoke with XxxxxxxxRespondent received instructions from a client, who told them that he had been approached by several individuals was also a BMO Financial Planner, to complete a switch in the BMO Financial Planner’s mutual fund account. In order to complete the transaction, the Respondent falsified the BMO Financial Planner’s signature on an unsolicited basis about investing in PBM and its future prospects. Xxxxxxxx also said that he had given these individuals only very general information about PBM and had also told them he was not registered to provide any advice about PBM before referring those clients to IPCSC for possible tradesa redemption form. 19. The Registered Representative from BMO’s compliance staff detected the National Accounts Desk at IPCSC who handled any referrals misconduct that is the subject of clients from IPC was at this Settlement Agreement in February 2014 during the time an IIROC registrant who worked as course of a salaried, non-commission employee of IPCSC. The Registered Representative consulted directly with each routine trade review and every Mushaluk client who approached IPCSC to purchase PBM, obtained completed and signed New Account Application Forms, and opened IPCSC accounts for all such persons who wished to purchase PBM. This person also conducted a suitability review regarding the relevant persons’ proposed purchases of PBM and, where applicable, provided appropriate warnings to those persons before any PBM shares were purchasedsubsequent investigation. 20. From August 2012 to October 2013BMO contacted the BMO Financial Planner, 29 clients who confirmed that were serviced by Mushaluk at IPC and referred to IPCSC by Xxxxxxxx purchased approximately $519,502 worth of shares in PBM through IPCSC.3he authorized the transaction, but was unaware that the Respondent had signed the redemption form. 21. In There is no evidence of client harm, client complaints, or about August 2012, the National Accounts Desk at IPCSC was asked by Xxxxxxxx to modify the normal commission structure for any clients referred to IPCSC to purchase PBM. The normal commission structure paid a referral fee lack of 85% of the net commission payable in respect of IPCSC trades. Xxxxxxxx sought to have the commission modified such that he could waive the commission on the initial purchase but later charge the clients 5% commission when they sold the stock at a later date. At that time, compliance staff and staff at the National Accounts Desk for IPCSC refused to alter the commission structure for these trades and instructed Mushaluk that any details relating to the purchase of PBM were to be provided by clients to IPCSC directly, not to discuss the specifics of PBM with clients and not to promote PBMauthorization. 22. The Respondent did has not take sufficient steps at that time to ensure Xxxxxxxx was not acting outside his registrationpreviously been the subject of any MFDA disciplinary proceedings. 23. By entering into this Settlement Agreement, the Respondent has saved the MFDA the time, resources, and expenses associated with conducting a full hearing on the merits.

AGREED FACTS Registration History. ‌ 6. The Respondent is was registered in the mutual fund industry commencing in June 1995. 7. From July 31, 2009 to June 6, 2016, the Respondent was registered in Ontario as a mutual fund dealer and has been salesperson (now known as a Dealing Representative) with IPC Investment Corporation, a Member of the MFDA since March 8, 2002(the “Member”). 78. On June 6, 2016, the Member terminated the Respondent’s registration as a result of the events described herein. 9. The Respondent’s head office Respondent is located no longer registered in Mississaugathe securities industry in any capacity. 10. At all material times, the Respondent carried on business in and around Toronto, Ontario. 811. IPC Securities Corporation At all material times, the Member’s policies and procedures required that its Approved Persons: a) only offer products the Member had approved for sale, and that all products be sold through Member; and b) only participate in referral arrangements that it had approved, and that all fees or commissions must flow through the books and records of the Member. 12. On November 6, 2009, the Respondent disclosed to the Member his involvement as a mortgage agent with a mortgage brokerage as an outside activity. 13. On November 13, 2009, the Member approved the Respondent’s outside activity as a mortgage agent. 14. In October 2011, the Respondent purchased a franchise of Centum Financial Group Inc. which he operated as Centum Camelot Financial Solutions Inc. (“IPCSCCentum Camelot”) ). Centum Camelot is registered as a mortgage broker with the Financial Services Commission of Ontario (“FSCO”). The Respondent is listed as the principal broker of Centum Camelot. 15. On October 26, 2011, the Respondent disclosed to the Member his involvement with Centum Camelot as an affiliate of outside activity, and described Centum Camelot as a “Mortgage” business. 16. On March 26, 2012, the Member approved the Respondent’s outside activity with Centum Camelot. 17. On June 18, 2013, the Respondent, operates as on behalf of Centum Camelot, entered into a securities dealer, and is regulated by the Investment Industry Regulatory Organization of Canada referral agreement with FMP Mortgage Investments Inc. (“IIROCFMP”), a mortgage broker which marketed syndicated mortgage investments offered by Fortress Real Capital (“Fortress”). 918. In accordance with the terms of the FMP referral arrangement, the Respondent was to receive a referral fee from FMP of 5% of the cumulative amount invested in Fortress investment products by referred investors where those amounts totaled less than $1,000,000, and 7% of the cumulative amount invested by referred investors where those amounts totaled more than $1,000,000. 19. On or about October 31July 25, 20112013, the Respondent entered into a referral arrangement agreement with IPCSC which permitted the Respondent’s Approved Persons to refer clients to IPCSC in order for clients to purchase, sell, or otherwise transact in securities (i.e., nonHi-mutual fund securities) that Approved Persons are not registered to trade or advise in Rise Capital Inc. (“Referral ArrangementHRC”), a mortgage broker that also offered syndicated mortgage investments. 1020. The Referral Arrangement was established by the Respondent to allow its Approved Persons to refer clients wishing to purchase non-mutual fund securities to an appropriate registrant in a formal manner in which the referral could be centralized and monitored. Under In accordance with the terms of the Referral ArrangementHRC referral arrangement, the Respondent would receive a referral fee of 8% of the total amount invested in HRC investment products by referred investors. 21. On January 21, 2015, the Respondent entered into a further referral agreement with HRC on substantially similar terms as the July 25, 2013 agreement, except that in accordance with the terms of the new referral arrangement, he would receive a referral fee of 9% of the total amount investment by referred investors, where the cumulative amount invested by referred investors totaled more than $1,000,000. 22. As described in the table below, between June 2013 and March 2016, the Respondent’s Approved Persons were required to limit their referral-related activities to providing clients with a basic description , recommended, sold, facilitated the sale of, or made referrals in respect of the services available through IPCSC sales of Fortress and providing contact information for an IPCSC representative.HRC products (collectively, the “Investments”) totaling approximately $1,213,000 to at least 8 clients of the Member and 3 individuals outside the facilities of the Member. Member Clients ST Fortress Jan/28/2015 $52,000.00 $3,120.00 Fortress Jul/29/2013 $80,000.00 $4,000.00 Fortress Jul/29/2013 $80,000.00 $4,000.00 HRC Oct/22/2013 $105,000.00 $8,400.00 SD Fortress Jun/2013 $50,000.00 $2,500.00 HRC Mar/17/2015 $25,000.00 $2,000.00 AA HRC Mar/18/2015 $24,000.00 $1,920.00 YE HRC Apr/22/2015 $25,000.00 $1,920.00 HRC Feb/10/2014 $24,000.00 $1,920.00 EA HRC Oct/29/2013 $53,000.00 $4,240.00 AM HRC Nov/27/2013 $53,000.00 $4,240.00 HE HRC Dec/11/2013 $28,000.00 $2,240.00 CL HRC Jan/06/2014 $36,000.00 $2,880.00 Investor Investment Date of Investment Amount Invested Commissions Earned RB Fortress and Kingridge Developments Corp.1 Mar/16/2016 $173,000.00 $10,380.00 Fortress $150,000.00 $7,500.00 JD HRC Mar/03/2016 $80,000.00 $6,400.00 HRC Mar/03/2016 $150,000.00 $13,500.00 CB HRC Mar/25/2015 $25,000.00 $2,000.00 Total: $1,213,000.00 $83,160.00 1123. The Respondent’s policies and procedures prohibited its Approved Persons from providing advice, recommendations or opinions about non-mutual fund investments available through other registrants, including through the Referral Arrangement. 12. The Referral Arrangement was announced in a memorandum issued by the Respondent to its Approved Persons on October 31, 2011 that included, among other things: (a) An announcement that the National Accounts Desk had been launched by IPCSC to facilitate handling of Approved Persons’ clients’ orders “for purchasing various exchange-traded investment products, including securities listed on major stock exchanges, which are not available to MFDA registered advisors;” and (b) Answers to Frequently Asked Questions about the Referral Arrangement that, among other things, indicated that: referring advisors registered with the Respondent were not permitted to place orders with IPCSC on behalf of their clients; and all paperwork in the creation, maintenance of an IPCSC account or any trading instructions must be conducted between the client and the National Accounts Desk Advisor employed by IPCSC. 13. On or about February 27, 2009, prior to the Referral ArrangementAs described above, the Respondent had also issued Compliance Bulletin 09-003 earned a total of at least $83,160 in commissions. Fortress and HRC paid those commissions directly to the Respondent. 24. Some of the Respondent’s clients redeemed funds in their Registered Retirement Savings Plan accounts at the Member to purchase the Investments. 25. Despite being asked by the Member in October 2015 on an annual compliance attestation whether he sold exempt products, and specifically, “private mortgage securities”, the Respondent did not disclose to the Member that he was recommending, selling, facilitating the sale of, and/or making referrals in respect of the sale of the Investments to clients. 26. The Member did not approve the Investments for sale to its clients by its Approved Persons, including Approved Person Xxxxxxx Xxxxxxxx the Respondent (“Mushaluk”)1, that dealt more generally i.e. the Investments were not on the Member’s product shelf.) 27. None of the purchases of the Investments by clients were carried on for the account of the Member or through its facilities. 28. The Member did not have a referral arrangement with referrals to IIROC dealers, including IPCSCFortress or HRC, and the activities by Approved Persons were not permitted when making such referrals, including: (a) assisting the client in the completion none of the other firm's account opening documents; (b) assisting referral fees the client in Respondent received from Fortress or HRC flowed through the completion books and records of the other firm's trade tickets; (c) obtaining or updating Know-Your-Client information such as investment objectives, risk tolerance and time horizon on behalf of the other firm; (d) actively participate in discussions where investment advice is given to the referred client by the other firm; or (e) providing advice, recommendations or opinions on the investments held through the other firmMember. 141 Kingridge Developments Corp. is a development company that participated in a joint offering with a Fortress related entity. 29. In November 2012On April 27, 2018, FMP surrendered its mortgage brokerage license and suspended all business operations. 30. Fortress Real Developments Inc., the Respondent issued a further Compliance Bulletin reminding its Approved Persons referring clients to IPCSC through development company behind the Referral Arrangement that they were not permitted to, among other things: i. discuss with clients the features, termsFortress projects, and advantages its affiliated entities are currently the subject of purchasing specific equities available through the Referral Arrangement; and ii. discuss the risks at least four legal actions following a series of specific issuers with clients. 15. Xxxxxxxx has admitted to the following: 2 1 One payment defaults, at least one of which concerns a project that one of the Respondent’s former dealing representatives who worked clients invested in. Further, in April 2018, FSCO placed Fortress’ affiliated syndicated mortgage company, Building and around Salmon Arm, British ColumbiaDevelopment Mortgages Canada Inc. into receivership. 1.131. On July 26, 2016, an MFDA Hearing Panel made findings against Xxxxxxxx and imposed the following sanctions: a three year prohibition from conducting securities related business in any capacity while in the employ of, or associated with any Member of the MFDA, effective i. in or about July 2010, Mushaluk became aware of a local mineral exploration company known as Pacific Xxxxxx Minerals Inc. (“PBM”) that was based in Salmon Arm and had a potential mine located on the outskirts of Salmon Arm and whose common shares traded on the TSX Venture Exchange; ii. between July 2010 and August 2012, Mushaluk personally purchased 45,000 shares of PBM; iii. on August 24, 2012, without the prior approval or knowledge of the Respondent, Xxxxxxxx sent an email to 22 of his IPC clients recommending that the clients purchase shares of PBM (the “PBM Email”). In particular, Xxxxxxxx stated in the PBM Email: I have an opportunity that I think you can benefit from in the short term. I have been a shareholder in a junior mine for approximately 15 months which Staff is now at the stage of some exciting developments. It is a copper, gold, silver, molybdenum mine located in Granisle B.C. called pacific Xxxxxx Minerals. The mine is days (up to 40) away from potentially receiving a permit. Currently the stock is trading at $13 and I believe within months it could sell for a lot more. In fact, the permit alone could double the value of the company. I recommend selling some of your existing investments with me to explore this opportunity. This is extremely time sensitive in that you will have to make a decision of whether you want to entertain this or not by Tuesday of next week [in 5 days]. I will be calling you either Sunday evening or Monday to explain more details. If you are not interested however, please email reply now. iv. From August 24 to 27, 2012, without the knowledge or approval of the Respondent, Xxxxxxxx further communicated with 15 of the 22 clients to whom he had sent the Recommendation Email, as well as additional clients he serviced, with respect to purchasing PBM shares. Xxxxxxxx discussed one or more of the following with the clients: a. PBM is a junior mining company; from August 1, 2014 to July 31, 2017; fine in the amount of $25,000, payable on or before July 31, 2017; and costs in the amount of $5,000, payable by August 31, 2016. Reasons for Decision are dated November 10, 2016. b. the Environmental Assessment Certificate (“EAC”) application for the property which PBM owned in central British Columbia was awaiting approval from the provincial government; c. some of the risks of investing in PBM; and d. “this could be a situation where $100k turns into $400k or greater”. 16. Where clients advised Xxxxxxxx that they intended to invest in PBM, Xxxxxxxx discussed the amounts to be invested in PBM and, where necessary, the mutual funds that the clients would redeem in order to generate monies to invest in PBM. 17. In order to process the sale of PBM shares, Xxxxxxxx provided the representative at the IPCSC National Accounts Desk who had been identified through the Referral Arrangement with, among other things, the names of clients who were investing in PBM and, in some cases, the approximate amounts to be invested in PBM, and details unaware of any mutual fund redemptions required to facilitate the investments in PBM. 18. Following the receipt of the referrals of clients to IPCSC to purchase PBM, both the IPCSC National Accounts Desk Advisor and the National Director, IIROC Compliance for IPCSC spoke with Xxxxxxxx, who told them that he had been approached by several individuals on an unsolicited basis about investing in PBM and its future prospects. Xxxxxxxx also said that he had given these individuals only very general information about PBM and had also told them he was not registered to provide any advice about PBM before referring those clients to IPCSC for possible trades. 19. The Registered Representative from the National Accounts Desk at IPCSC who handled any referrals of clients from IPC was at the time an IIROC registrant who worked as a salaried, non-commission employee of IPCSC. The Registered Representative consulted directly with each and every Mushaluk client who approached IPCSC to purchase PBM, obtained completed and signed New Account Application Forms, and opened IPCSC accounts for all such persons who wished to purchase PBM. This person also conducted a suitability review regarding the relevant persons’ proposed purchases of PBM and, where applicable, provided appropriate warnings to those persons before any PBM shares were purchased. 20. From August 2012 to October 2013, 29 clients that were serviced by Mushaluk at IPC and referred to IPCSC by Xxxxxxxx purchased approximately $519,502 worth of shares in PBM through IPCSC.3 21. In or about August 2012, the National Accounts Desk at IPCSC was asked by Xxxxxxxx to modify the normal commission structure for any clients referred to IPCSC to purchase PBM. The normal commission structure paid a referral fee of 85% of the net commission payable in respect of IPCSC trades. Xxxxxxxx sought to have the commission modified such that he could waive the commission on the initial purchase but later charge the clients 5% commission when they sold the stock at a later date. At that time, compliance staff and staff at the National Accounts Desk for IPCSC refused to alter the commission structure for these trades and instructed Mushaluk that any details complaints relating to the purchase of PBM were to be provided by clients to IPCSC directly, not to discuss the specifics of PBM with clients and not to promote PBMInvestments. 32. The Respondent did himself personally invested at least $400,000 in the Investments. 33. The Respondent has cooperated with MFDA Staff throughout the investigation and the disciplinary proceedings. 34. The Respondent has not take sufficient steps at that been subject to previous MFDA disciplinary proceedings. 35. By admitting the facts and contraventions described above, the Respondent has saved the MFDA the time to ensure Xxxxxxxx was not acting outside his registrationand resources associated with conducting a fully contested hearing on the merits. V. CONTRAVENTION

AGREED FACTS Registration History. 67. The Since March 2015, the Respondent is has been registered in Ontario as a mutual fund dealer and has been salesperson (now known as a Dealing Representative) with BMO Investments Inc. (“BMO”), a Member of the MFDA since March 8, 2002. 7. The Respondent’s head office is located in Mississauga, OntarioMFDA. 8. IPC Securities Corporation Inc. (“IPCSC”) is an affiliate At all material times, the Respondent conducted business in the Alliston, Ontario area. 9. At all material times, client MR was a client of BMO whose account was serviced by the Respondent. 10. On April 17, operates as 2015, client MR signed an account form in order to complete a securities dealerpurchase of a mutual fund with a risk rating of “low to medium”, and is regulated by which the Investment Industry Regulatory Organization of Canada Respondent submitted to BMO for processing (the “IIROCTrade”). 911. On or about October 31Upon review of the Trade, 2011, BMO identified an inconsistency between the Respondent entered into a referral arrangement with IPCSC which permitted “low to medium” risk rating of the Respondent’s Approved Persons to refer clients to IPCSC in order for clients to purchase, sell, or otherwise transact in securities (i.e., non-mutual fund securities) that Approved Persons are not registered to trade or advise in (selected by client MR and the “Referral Arrangement”). 10. The Referral Arrangement was established by the Respondent to allow its Approved Persons to refer clients wishing to purchase non-mutual fund securities to an appropriate registrant in a formal manner in which the referral could be centralized and monitored. Under the terms of the Referral Arrangement, the Respondent’s Approved Persons were required to limit their referral-related activities to providing clients with a basic description of the services available through IPCSC and providing contact information low” risk tolerance for an IPCSC representative. 11. The Respondent’s policies and procedures prohibited its Approved Persons from providing advice, recommendations or opinions about non-mutual fund investments available through other registrants, including through the Referral Arrangementclient MR on file at BMO. 12. The Referral Arrangement was announced in a memorandum issued by BMO asked the Respondent to its Approved Persons on October 31, 2011 that included, among other things: (a) An announcement that the National Accounts Desk had been launched by IPCSC to facilitate handling of Approved Persons’ clients’ orders “for purchasing various exchange-traded investment products, including securities listed on major stock exchanges, which are not available to MFDA registered advisors;” and (b) Answers to Frequently Asked Questions about the Referral Arrangement that, among other things, indicated that: referring advisors registered with the Respondent were not permitted to place orders with IPCSC on behalf of their clients; and all paperwork in the creation, maintenance of an IPCSC account or any trading instructions must be conducted between contact the client to re-attend at the bank to discuss her account and the National Accounts Desk Advisor employed by IPCSC“Know-Your-Client” information on file. 13. On or about February November 27, 20092015, prior to the Referral Arrangementrather than contact client MR, the Respondent completed a Non-Financial Account Amendment Form, on which he indicated that client MR had also issued Compliance Bulletin 09-003 a “low to its Approved Personsmedium” risk tolerance, including Approved Person Xxxxxxx Xxxxxxxx signed client MR’s signature on the form (the “Mushaluk”)1, that dealt more generally with referrals to IIROC dealers, including IPCSCAccount Form”), and submitted to BMO the activities by Approved Persons were not permitted when making such referralsAccount Form for processing. BMO’s Investigation 14. On November 27, including: (a) assisting 2015, BMO’s compliance department became aware of the Respondent’s conduct after the Respondent’s branch manager identified that the client signature on the Account Form was in the completion Respondent’s handwriting. 15. As part of its investigation, BMO reviewed approximately 40 transactions processed by the Respondent and identified no other firm's account opening documents; (b) assisting the concerns. BMO contacted client in the completion of the other firm's trade tickets; (c) obtaining or updating MR, who confirmed her risk tolerance was “low to medium” and signed an updated Know-Your-Client information such as investment objectives, risk tolerance and time horizon on behalf of the other firm; (d) actively participate in discussions where investment advice is given form to the referred client by the other firm; or (e) providing advice, recommendations or opinions on the investments held through the other firm. 14. In November 2012, the Respondent issued a further Compliance Bulletin reminding its Approved Persons referring clients to IPCSC through the Referral Arrangement that they were not permitted to, among other things: i. discuss with clients the features, terms, and advantages of purchasing specific equities available through the Referral Arrangement; and ii. discuss the risks of specific issuers with clients. 15. Xxxxxxxx has admitted to the following: 2 1 One of the Respondent’s former dealing representatives who worked in and around Salmon Arm, British Columbia. 1.1. On July 26, 2016, an MFDA Hearing Panel made findings against Xxxxxxxx and imposed the following sanctions: a three year prohibition from conducting securities related business in any capacity while in the employ of, or associated with any Member of the MFDA, effective i. in or about July 2010, Mushaluk became aware of a local mineral exploration company known as Pacific Xxxxxx Minerals Inc. (“PBM”) that was based in Salmon Arm and had a potential mine located on the outskirts of Salmon Arm and whose common shares traded on the TSX Venture Exchange; ii. between July 2010 and August 2012, Mushaluk personally purchased 45,000 shares of PBM; iii. on August 24, 2012, without the prior approval or knowledge of the Respondent, Xxxxxxxx sent an email to 22 of his IPC clients recommending that the clients purchase shares of PBM (the “PBM Email”). In particular, Xxxxxxxx stated in the PBM Email: I have an opportunity that I think you can benefit from in the short term. I have been a shareholder in a junior mine for approximately 15 months which is now at the stage of some exciting developments. It is a copper, gold, silver, molybdenum mine located in Granisle B.C. called pacific Xxxxxx Minerals. The mine is days (up to 40) away from potentially receiving a permit. Currently the stock is trading at $13 and I believe within months it could sell for a lot more. In fact, the permit alone could double the value of the company. I recommend selling some of your existing investments with me to explore this opportunity. This is extremely time sensitive in that you will have to make a decision of whether you want to entertain this or not by Tuesday of next week [in 5 days]. I will be calling you either Sunday evening or Monday to explain more details. If you are not interested however, please email reply now. iv. From August 24 to 27, 2012, without the knowledge or approval of the Respondent, Xxxxxxxx further communicated with 15 of the 22 clients to whom he had sent the Recommendation Email, as well as additional clients he serviced, with respect to purchasing PBM shares. Xxxxxxxx discussed one or more of the following with the clients: a. PBM is a junior mining company; from August 1, 2014 to July 31, 2017; fine in the amount of $25,000, payable on or before July 31, 2017; and costs in the amount of $5,000, payable by August 31, 2016. Reasons for Decision are dated November 10, 2016. b. the Environmental Assessment Certificate (“EAC”) application for the property which PBM owned in central British Columbia was awaiting approval from the provincial government; c. some of the risks of investing in PBM; and d. “this could be a situation where $100k turns into $400k or greater”effect. 16. Where clients advised Xxxxxxxx that they intended On January 13, 2016, BMO issued a warning letter to invest in PBM, Xxxxxxxx discussed the amounts to be invested in PBM and, where necessary, the mutual funds that the clients would redeem in order to generate monies to invest in PBM.Respondent. Additional Factors 17. In order There is no evidence that the Respondent received any benefit from the conduct set out above beyond the commissions or fees he would ordinarily be entitled to process receive had the sale of PBM shares, Xxxxxxxx provided transactions been carried out in the representative at the IPCSC National Accounts Desk who had been identified through the Referral Arrangement with, among other things, the names of clients who were investing in PBM and, in some cases, the approximate amounts to be invested in PBM, and details of any mutual fund redemptions required to facilitate the investments in PBMproper manner. 18. Following the receipt There is no evidence of the referrals client loss or lack of clients to IPCSC to purchase PBM, both the IPCSC National Accounts Desk Advisor and the National Director, IIROC Compliance for IPCSC spoke with Xxxxxxxx, who told them that he had been approached by several individuals on an unsolicited basis about investing in PBM and its future prospects. Xxxxxxxx also said that he had given these individuals only very general information about PBM and had also told them he was not registered to provide any advice about PBM before referring those clients to IPCSC for possible tradesauthorization. 19. The Registered Representative from the National Accounts Desk at IPCSC who handled any referrals of clients from IPC was at the time an IIROC registrant who worked as a salaried, non-commission employee of IPCSC. The Registered Representative consulted directly Respondent cooperated with each and every Mushaluk client who approached IPCSC to purchase PBM, obtained completed and signed New Account Application Forms, and opened IPCSC accounts for all such persons who wished to purchase PBM. This person also conducted a suitability review regarding the relevant persons’ proposed purchases of PBM and, where applicable, provided appropriate warnings to those persons before any PBM shares were purchasedBMO during its investigation into his conduct. 20. From August 2012 to October 2013, 29 clients that were serviced by Mushaluk at IPC and referred to IPCSC by Xxxxxxxx purchased approximately $519,502 worth The Respondent has not previously been the subject of shares in PBM through IPCSC.3MFDA disciplinary proceedings. 21. In or about August 2012By entering into this Settlement Agreement, the National Accounts Desk at IPCSC was asked by Xxxxxxxx to modify Respondent has saved the normal commission structure for any clients referred to IPCSC to purchase PBM. The normal commission structure paid MFDA the time, resources, and expenses associated with conducting a referral fee of 85% of the net commission payable in respect of IPCSC trades. Xxxxxxxx sought to have the commission modified such that he could waive the commission full hearing on the initial purchase but later charge the clients 5% commission when they sold the stock at a later date. At that time, compliance staff and staff at the National Accounts Desk for IPCSC refused to alter the commission structure for these trades and instructed Mushaluk that any details relating to the purchase of PBM were to be provided by clients to IPCSC directly, not to discuss the specifics of PBM with clients and not to promote PBM. The Respondent did not take sufficient steps at that time to ensure Xxxxxxxx was not acting outside his registrationallegations.