MFDA issues Notice of Hearing regarding The Investment House of Canada Inc.,
Sanjiv Sawh and Vlad Trkulja

TORONTO, Dec. 15 /CNW/ - The Mutual Fund Dealers Association of Canada ("MFDA") today announced that it has commenced disciplinary proceedings against Investment House of Canada Inc., Sanjiv Sawh and Vlad Trkulja (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 1: Between October 2005 and February 2007, Sanjiv Sawh
    ("Sawh") and Vlad Trkulja ("Trkulja') recommended, sold or facilitated
    the sale of securities sold pursuant to exemptions under applicable
    securities legislation ("exempt securities") to clients without ensuring
    that:

        (a) the exempt securities were suitable for the clients, and in
            keeping with their investment objectives, contrary to MFDA Rules
            2.2.1 and 2.1.1; and/or
        (b) the clients qualified as accredited investors in accordance with
            Ontario Securities Commission Rule 45-501 and subsequently
            National Instrument 45-106, contrary to MFDA Rule 2.1.1, thereby
            engaging the jurisdiction of the Hearing Panel to impose a
            penalty pursuant to s. 24.1.1(h) of MFDA By-law No. 1.

    Allegation 2: Between October 2005 and February 2007, The Investment
    House of Canada Inc. ("The Investment House") approved and allowed the
    sale of exempt securities to clients without having conducted reasonable
    due diligence on the nature and the appropriate risk ranking of the
    exempt securities and without having made reasonable inquiries to
    determine whether the exempt securities were suitable for sale to its
    clients, contrary to MFDA Rule 2.2.1 and 2.1.1.

    Allegation 3: Between October 2005 and February 2007, The Investment
    House failed to establish, implement and maintain policies and procedures
    to adequately and effectively supervise the sale of exempt securities to
    its clients, contrary to MFDA Rules 2.5.1 and 2.1.1 and MFDA Policy
    No. 2.

    Allegation 4: Between October 2005 and February 2007, The Investment
    House failed to maintain adequate books, records, documentation and other
    information regarding clients of The Investment House who purchased
    exempt securities, contrary to MFDA Rule 5.6.

    Allegation 5: Commencing in or around May 2009, The Investment House
    failed to produce for inspection and provide copies of documents and
    information requested by the MFDA for the purpose of investigating a
    client complaint made against The Investment House, contrary to s. 22.1
    of MFDA By-law No. 1.

    Allegation 6: Between June 2006 and September 2006, The Investment House,
    Trkulja and Sawh failed to ensure that a conflict or potential conflict
    between their interests and those of The Investment House's clients in
    relation to the sale of exempt securities in which the Investment House
    might have a direct or indirect interest was addressed by the exercise of
    responsible business judgment influenced only by the best interests of
    the clients, contrary to MFDA Rule 2.1.4.(1)

    Allegation 7: In or about July 2007, The Investment House breached an
    Agreement and Undertaking entered into with MFDA Staff in which The
    Investment House undertook and agreed, among other things, that it would
    not increase its non-allowable assets without first receiving written
    approval from the MFDA, by advancing $60,511 to a related company without
    receiving authorization from the MFDA, thereby engaging the authority of
    the Hearing Panel to impose a penalty on The Investment House pursuant to
    s. 24.1.2 of MFDA By-law No. 1.

    Allegation 8: Between May 1, 2006 and January 31, 2009, The Investment
    House failed to establish, implement and maintain a two-tier compliance
    structure consisting of adequate supervision at the head office level of
    client account activity, contrary to MFDA Rule 2.5 and MFDA Policy No. 2.

    Allegation 9: Between May 1, 2006 and January 31, 2009, The Investment
    House failed to conduct adequate trade supervision at the branch office
    level, contrary to MFDA Rule 2.5 and MFDA Policy No. 2.

    Allegation 10: Between May 1, 2006 and January 31, 2009, The Investment
    House failed to ensure that trades in client accounts in mutual funds and
    other securities were suitable for the clients and consistent with the
    clients' documented investment objectives and KYC information, contrary
    to MFDA Rule 2.2.1.

    Allegation 11: Between May 1, 2006 and January 31, 2009, The Investment
    House failed to collect complete New Account Application Form ("NAAF")
    and Know-Your-Client ("KYC") information for client accounts, and
    permitted trading in such accounts, contrary to MFDA Rules 2.2.1, 2.2.2
    and 2.2.3.

    Allegation 12: Between May 1, 2006 and January 31, 2009, The Investment
    House failed to establish, implement and maintain an adequate branch
    review program in accordance with the requirements of MFDA Policy No. 5
    (Branch Review Requirements), contrary to MFDA Rule 2.5 and MFDA Policy
    No. 5.

    Allegation 13: Between October 2005 to January 31, 2009, Trkulja and
    Sawh, as directors and officers of The Investment House, engaged in
    business conduct or practice that was unbecoming or detrimental to the
    public interest by failing to ensure that The Investment House maintained
    a compliance program that identified and addressed material risks of non-
    compliance and that appropriate supervision and compliance procedures to
    manage those risks had been implemented, and more specifically failed to
    ensure that The Investment House complied with MFDA By-laws, Rules and
    Policies as set out in Allegations 2 to 12 inclusive, contrary to MFDA
    Rules 2.1.1(c) and 2.5.1 and MFDA Policy 2.
    

The first appearance in this matter will take place by teleconference before a Hearing Panel of the MFDA's Central Regional Council on January 14, 2010 at 10:00 a.m. (Eastern), or as soon thereafter as the appearance can be held. The purpose of the first appearance is to schedule the date for the commencement of the hearing of this matter on its 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 143 Members and their approximately 75,000 Approved Persons with a mandate to protect investors and the public interest.

    
    -------------------------
    (1) MFDA Rule 2.1.4 was amended effective February 27, 2006. It is
        alleged The Investment House, Trkulja and Sawh contravened the
        requirements of MFDA Rule 2.1.4 both pre-amendment and post-
        amendment.
    

SOURCE Mutual Fund Dealers Association of Canada

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


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