TORONTO, July 18, 2012 /CNW/ - A Settlement Hearing in the matter of
David George Rounthwaite (the "Respondent") was held July 16, 2012 in
Toronto, Ontario before a Hearing Panel of the MFDA's Central Regional
The Hearing Panel accepted the Settlement Agreement between MFDA Staff
and the Respondent, as a consequence of which the Respondent has paid a
fine in the amount of $20,000 and costs in the amount of $5,000.
In the Settlement Agreement, the Respondent admitted that he:
(a) engaged in discretionary trading as part of his general
practice; and specifically, from 2006 to 2009, engaged in discretionary
trading in 29 instances in the accounts of 14 clients, seven of whom
had provided the Respondent with a Limited Trading Authorization,
contrary to MFDA Rule 2.3 and Rule 2.1.1, and the terms of his
registration as a mutual fund salesperson; and
(b) facilitated an investment by a client in 2008 in a charitable
donation program which had not been approved for sale by Worldsource
Financial Management Inc. and after the Canada Revenue Agency had
disallowed the charitable donation program in 2007, contrary to MFDA
Rules 2.1.4, 1.2.1(d), and Rule 2.1.1.
According to paragraphs 16-19 of the Settlement Agreement, the
discretionary trading was authorized by the clients:
16. The Respondent's general practice was to meet with a client and
determine their general investing intentions and have the client sign a
trade form without the particulars of the trade(s) indicated on the
form. Once the client had left his office, the Respondent would decide
on the particulars of the trade(s) and populate the appropriate fund
codes, number of units and names of the mutual funds to be traded on
the form. Alternatively, in some instances, the Respondent obtained a
Limited Trading Authorization ("LTA") from the client with respect to
their account, and then decided on the particulars of the trade and
populated the details of the trade on the trade processing form. In
both cases, the Respondent would then submit the trade for processing.
In both cases, the client did not determine the specific elements of
17. Following the processing and confirmation of the trades, the
Respondent would send the client a follow-up letter setting out the
details of the completed transactions.
18. Twenty-nine specific instances of this form of 'authorized'
discretionary trading were identified in accounts serviced by the
Respondent during the period 2006 to 2009. These instances occurred in
the accounts of 14 clients, seven of whom had provided the Respondent
with a Limited Trading Authorization.
19. There have been no client complaints and no known client losses
concerning the authorized discretionary trading engaged in by the
The Hearing Panel advised that it will issue written reasons for its
decision in due course. A copy of the Settlement Agreement 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 121 Members and their approximately 75,000 Approved
Persons with a mandate to protect investors and the public interest.
SOURCE Mutual Fund Dealers Association of Canada
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