Legal Issues

A settlement hearing in the matter of Joseph Daniel Laurie was held today in Halifax, Nova Scotia before a three-person hearing panel of the Atlantic Regional Council of the Mutual Fund Dealers Association of Canada.

The panel approved the settlement agreement between Staff of the MFDA and the respondent, as a consequence of which the respondent:

  • shall be suspended from conducting securities related business in any capacity while in the employ of or associated with any MFDA Member for a period of 2½ years (30 months) commencing from the date of the final order;
  • shall be permanently prohibited from engaging in any leveraging activities with clients, including recommending or applying for investment loans for clients;
  • has paid a fine in the amount of $40,000;
  • has paid costs in the amount of $10,000; and
  • shall in the future comply with MFDA Rules 2.2.1 and 2.1.1.

In the settlement agreement, the respondent admitted that:

  • between 2005 and 2011, he misrepresented the know-your-client information on the account opening and loan application documents of 25 clients, thereby engaging in conduct unbecoming an Approved Person and failing to observe high standards of ethics and practice in the conduct of business, contrary to MFDA Rules 2.2.1 and 2.1.1;
  • between 2005 and 2011, he misrepresented, failed to fully and adequately explain, or omitted to explain, the risks, benefits, material assumptions, costs and features of a leveraged investment strategy that he recommended and implemented in the accounts of 25 clients, including the risks that:

a)     the underlying investments might decline in value such that the clients might incur investment losses and would be unable to rely on the sale proceeds of the investments to pay back their investment loans; and

b)    the underlying investments might reduce, suspend or cancel altogether the distributions paid to investors upon which the clients were relying to make the payments on their investment loans (thereby failing to ensure that the leveraged investment strategy was suitable and appropriate for the clients and in keeping with their investment objectives, contrary to MFDA Rules 2.2.1 and 2.1.1); and

  • between 2005 and 2011, he recommended and facilitated the implementation of a leveraged investment strategy in the accounts of 25 clients without performing the necessary due diligence to learn the essential facts relative to the clients and without ensuring that the leveraged investment strategy was suitable for the clients and in keeping with their investment objectives, contrary to MFDA Rules 2.2.1 and 2.1.1.

Read the settlement agreement.

Originally published on Advisor.ca

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