MFDA issues Notice of Hearing regarding ASL Direct Inc. and Adrian Samuel Leemhuis



    TORONTO, Oct. 20 /CNW/ - The Mutual Fund Dealers Association of Canada
("MFDA") today announced that it has commenced disciplinary proceedings
against ASL Direct Inc. and Adrian Samuel Leemhuis (the "Respondents").
    MFDA staff alleges in its Notice of Hearing that the Respondents engaged
in the following conduct contrary to the By-laws, Rules or Policies of the
MFDA:

    
    Allegation No. 1:  (a) Commencing in March 2003, ASL failed to:
    -----------------      (i) consistently maintain minimum capital and risk
                           adjusted capital required by MFDA Rule 3.1.1; and
                           (ii)consistently maintain the minimum amount of
                           insurance required by MFDA Rules 4.1 and 4.4;
                       (b) Commencing in March 2004, ASL failed to:
                           (i) consistently maintain risk adjusted capital
                           ("RAC") to avoid triggering early warning tests
                           set out in MFDA rule 3.4.2(a); and
                           (ii) file monthly and annual financial
                           questionnaires and reports ("FQRs") on a timely
                           basis as required by MFDA Rule 3.5.1;
                       (c) Commencing in April 2008, ASL has failed to:
                           (i) comply with early warning requirements that
                           were applicable pursuant to MFDA Rule 3.4.2(b);
                           and
                           (ii) respond to requests for information from the
                           MFDA Compliance Department concerning its
                           financial circumstances, contrary to s. 22 of MFDA
                           By-law No. 1 (the "By-law").
                       (d) Since May 5, 2008 when ASL was informed by MFDA
                           Staff of its increased insurance requirements
                           because ASL was holding nominee name assets, ASL
                           has failed to rectify the deficiency, contrary to
                           MFDA Rule 4.5(b).

    Allegation No. 2:      Commencing in July 2006, the Respondents failed to
    -----------------      deal fairly honestly and in good faith with
                           clients of ASL by operating a trailer fee rebate
                           program for which clients were charged monthly
                           fees and failing to pay or re-invest trailer fee
                           rebates owed to clients in the program or to
                           maintain adequate records or take sufficient
                           action to administer the program effectively,
                           contrary to MFDA Rules 2.1.1 and 5;

    Allegation No. 3:      Between March 2004 and April 2008, Leemhuis
    -----------------      conducted securities related business that was not
                           carried out for the account of ASL, contrary to
                           MFDA Rule 1.1.1(a);

    Allegation No. 4:      Between February 2004 and April 2008, Leemhuis was
    -----------------      engaged in outside business activities that were
                           not disclosed in Form 33-109F4 or on the National
                           Registration Database ("NRD") as required,
                           contrary to MFDA Rules 1.2.1(d), 2.1.1(c) and
                           National Instrument 33-109;

    Allegation No. 5:      Between May 2006 and April 2008, in response to
    -----------------      direct inquiries from MFDA Staff, the Respondents:

                           (a) withheld relevant information;

                           (b) provided false or misleading information to
                               the MFDA;

                           (c) failed to produce certain documents and
                               information requested by MFDA investigators
                               which the Respondents undertook to produce;
                               and

                           (d) failed to comply with the requests of MFDA
                               Staff for production of an up to date client
                               list and client account statements,
                               contrary to s. 22 of MFDA By-law No. 1 (the
                               "By-law") and MFDA Rules 2.1.1 and 5. Such
                               information was relevant to, among other
                               things, Leemhuis's involvement with off-shore
                               mutual funds and other companies and ASL's
                               compliance with its regulatory obligations.

    Allegation No. 6:          The Respondents have failed to operate ASL in
    -----------------          a compliant manner in accordance with its
                               regulatory obligations, as particularized
                               below:

                           (a) The Respondents failed to maintain adequate
                               records of trade supervision, contrary to MFDA
                               Rules 2.5 and 5 and MFDA Policy No. 2;
                           (b) The Respondents permitted trading by mutual
                               fund clients of ASL without first obtaining
                               appropriately completed and approved New
                               Account Application Forms ("NAAF") for such
                               clients, contrary to MFDA Rule 2.2;
                           (c) Between the summer of 2004 and September 2007,
                               the Respondents permitted an unregistered
                               individual named Anil Jain to conduct
                               securities related business for clients of
                               ASL, contrary to MFDA Rule 1.1.5(a);
                           (d) The Respondents failed to implement a system
                               to properly distribute on a cash basis,
                               interest earned in the Member's mutual fund
                               trust account contrary to MFDA Rule 3.3.2(h),
                               MFDA Policy No. 4 and National Instrument 81-
                               102;
                           (e) A referral arrangement engaged in by the
                               Respondents did not comply with MFDA Rule
                               2.4.2(b); and
                           (f) The Respondents failed to process trade orders
                               on a timely basis, contrary to National
                               Instrument 81-102 and MFDA Policy No. 2.
    

    The first appearance in this matter will take place by teleconference
before a Hearing Panel of the MFDA Central Regional Council in the Hearing
Room located at the offices of the MFDA, 121 King Street West, Suite 1000,
Toronto, Ontario on Monday, November 24, 2008 at 10:00 a.m. (Eastern) or as
soon thereafter as can be held.
    The purpose of the first appearance is to schedule the date for the
commencement of the hearing on its merits and to address any other procedural
matters.
    The first appearance is open to the public, except as may be required for
the protection of confidential matters. Members of the public attending the
first appearance will be able to listen to the proceeding by teleconference.
    A copy of the Notice of Hearing is available on the MFDA website at
www.mfda.ca.

    The Mutual Fund Dealers Association of Canada is the self-regulatory
organization for Canadian mutual fund dealers. The MFDA regulates the
operations, standards of practice and business conduct of its 157 Members and
their approximately 75,000 Approved Persons with a mandate to protect
investors and the public interest.





For further information:

For further information: Shaun Devlin, Vice-President, Enforcement,
(416) 943-4672, or sdevlin@mfda.ca


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