RE: WARREN J. McCAFFREY NOTICE OF HEARING

Transcription

1 IN THE MATTER OF A DISCIPLINE HEARING PURSUANT TO BY-LAW 20 OF THE INVESTMENT DEALERS ASSOCIATION OF CANADA Quebec District Council RE: WARREN J. McCAFFREY NOTICE OF HEARING NOTICE is hereby given that a hearing will be held before the Quebec District Council («the District Council») of the Investment Dealers Association of Canada («the Association»), on January 22, 2003 at 1, Place Ville-Marie, Suite 2802, Montreal (Quebec), at 10:00 a.m., or so soon thereafter as the hearing can be held, concerning a disciplinary action brought by the Association Staff concerning Warren J. McCaffrey («the Respondent»). NOTICE is further given that the staff of the Association allege the following violations of the By-laws, Regulations or Policies of the Association by the Respondent being at all relevant time a Registered Representative employed with Leduc & Associés Valeurs mobilières ( Leduc ) : N o 1 On or around October 31, 2000, the Respondent falsified a letter on which he forged the signature of his client, S.W., in order to transfer an amount of $1, from the client s account to the account of another client, thereby engaging in business conduct unbecoming or detrimental to the public interest, contrary to By-law N o 2 In November 2000, the Respondent attempted to fraudulently misappropriate an amount of $13,000 by depositing in his own personal bank account a cheque received from a client, B.F., for her account at the Member firm, thereby engaging in business conduct unbecoming or detrimental to the public interest, contrary to By-law N o 3 On or around November 6, 2000, the Respondent fraudulently misappropriated an amount of $24, by depositing in his own personal bank account a cheque issued by the Member firm in the name of his client, N.H., thereby engaging in business conduct unbecoming or detrimental to the public interest, contrary to By-law 29.1.

2 2 N o 4 On or around December 7, 2000, the Respondent falsified a Request to the Member firm, on which he forged the signature of his client, H.G., for the issuance of a cheque of $25,000 payable to a third party from the client s account, thereby engaging in business conduct unbecoming or detrimental to the public interest, contrary to By-law N o 5 On December 2000, the Respondent fraudulently converted an amount of $145,000 by depositing in his spouse s account a bank draft he had received from his client, N.H., for the purchase of securities in her account at the Member firm, thereby engaging in business conduct unbecoming or detrimental to the public interest, contrary to By-law N o 6 During the period from January 2001 to May 2001, the Respondent misled his client, N.H., by bringing her to believe that he had followed her instruction to execute a purchase for which she had given him an amount of $145,000, by depositing every month in her account an amount representing the revenue she would have received on the securities she was erroneously believing to own, thereby engaging in business conduct unbecoming or detrimental to the public interest, contrary to By-law N o 7 On or around January 30, 2001, the Respondent provided the Member firm with a letter he had falsified and on which he forged the signature of his client, P.S., in order to request the issuance from the client s account of a cheque payable to another client, thereby engaging in business conduct unbecoming or detrimental to the public interest, contrary to By-law N o 8 On or around May 2, 2001, the Respondent provided the Member firm with a letter he had falsified and on which he forged the signature of his client, P.S., in order to request the issuance from the client s account of a cheque payable to another client, thereby engaging in business conduct unbecoming or detrimental to the public interest, contrary to By-law 29.1 N o 9 On or around February 6, 2001, the Respondent fraudulently converted an amount of $29, by depositing in his spouse s account a cheque payable to the Member firm for the credit of [A.F.], his client, that he received in the course of the client s transfer of her RRSP from another financial institution, thereby engaging in business conduct unbecoming or detrimental to the public interest, contrary to By-law 29.1.

3 3 PARTICULARS NOTICE is further given that the following is a summary of the facts alleged and intended to be relied upon by the Association at the said hearing: 1. The Association initiated an investigation into the conduct of the Respondent following allegations of conduct unbecoming contained in the Uniform Termination Notice of the Respondent filed on May 25, 2001 by Leduc & Associés Valeurs mobilières inc. ( Leduc ), a Member of the Association. i) The Respondent 2. At all relevant time, the Respondent was a Registered Representative employed with Leduc at its sub-branch in Hudson in the Province of Quebec. 3. The Respondent has been a registered in the industry as Registered Representative since January of 1998 and has been employed with Leduc from November 1998 to May The Respondent is not registered with a Member of the Association since his dismissal on May 18, ii) Fraudulent activities ACCOUNT OF S.W. ACCOUNT OF S.T. Conversion of funds 5. At all relevant time, S.W. and S.T. were both clients of the Respondent at Leduc. 6. On or around October 31, 2000, the Respondent fraudulently falsified a request for transfer, on which he forged the signature of his client, S.W., in order to transfer from the client s account (No.4NHBBIA) an amount of $1, into the account (No. 4NHBA9E) of another client, S.T. 7. The clients S.W. and S.T. were in no way related to each other and the transfer was made without their knowledge and consent.

4 4 ACCOUNT OF B.F. Misappropriation 8. At all relevant time, B. F. was a client of the Respondent at Leduc. 9. During the month of November 2000, B. F. gave to the Respondent a cheque in the amount of $13,000, payable to Leduc, for deposit in her account at Leduc. 10. The Respondent misappropriated the cheque of $13,000 by depositing it in his own personal bank account. 11. According to the Respondent, the Bank returned the cheque for the reason that it was not drafted in the name of the Respondent. ACCOUNT OF N.H. Misappropriation 12. At all relevant time, N.H. was a client of the Respondent at Leduc. 13. On or around November 6, 2000, all the positions in the account No. 4NHAW69 of the client, N.H., were sold. The Respondent would have explained that the client wanted to liquidate her account because she was leaving on vacation. 14. The Respondent asked for the issuance of a cheque in the name of the client, N.H. and on or around November 6, 2000, a cheque of de $24 205,37 was sent by Leduc to the Respondent s sub-branch to be picked-up by the client. 15. On or around November 16, 2000, the Respondent misappropriated the cheque payable to N.H. by depositing it in his own personal bank account. 16. When the client requested her cheque, the Respondent would have then borrowed $25,000 from a third party, R.O., to cover the amount fraudulently misappropriated from N.H. ACCOUNT OF H.G. Conversion of funds 17. At all relevant time, H.G. was a client of the Respondent at Leduc. 18. On or around December 7, 2000, the Respondent falsified a request addressed to the Member on which he fraudulently forged the signature of his client, H.G., asking for the issuance of a cheque of $25,000 from the client s account no. 4NHO39A, payable to a third party, R.O., the same one from whom the Respondent had borrowed $25,000, as detailed in paragraph 16.

5 5 19. On or around December 7, 2000, the cheque of $25,000 was issued by Leduc from the account of H.G., payable to R.O. according to the written request. 20. The third party, R.O., and the client, H.G., were in no way related to each other and the withdrawal in the account of H.G. was made without her knowledge and consent. ACCOUNT OF M.R. Misappropriation 21. At all relevant time, M.R. was a client of the Respondent at Leduc. 22. On December 2000, the Respondent received from his client, M.R., a bank draft in the amount of $145,000, payable to Leduc, to invest in «Triax Carts», an investment generating interests payable on a monthly basis. 23. On or around December 20, 2000, the Respondent fraudulently misappropriated the bank draft of $145,000 by depositing it in the account of the Respondent s wife at Leduc, instead of depositing it in the client s account. 24. The Respondent did not purchase the Triax Carts» in M.R. account. 25. In order to avoid the discovery of the fact that her investment had not been purchased, the Respondent deposited in her bank account on a monthly basis starting on January 2001, an amount of $1,000 representing the interests that her investment would have generated in her account. ACCOUNT OF P.S. Conversion of funds 26. At all relevant time, P. S. was a client of the Respondent at Leduc. 27. In order to obtain the monthly payments of $1,000 that he was depositing in the account of M.R., as detailed in paragraph 25, the Respondent fraudulently arranged for having cheques for same amounts issued on the name of the client, M.R., from the account of another client, P.S., without his knowledge. 28. More specifically, on or around January 30, 2001, the Respondent falsified a letter by which P.S. was giving instruction to Leduc to issue from his account no. 4NHBAOA a cheque payable to M.R. in the amount of $1,000, on which letter the Respondent had fraudulently imitated the signature of M.R.

6 6 29. On or around May 2, 2001, to make another deposit in the account of M.R., the Respondent falsified another written request of P.S. asking for the issuance of a cheque of $1,000 payable to M.R., on which he imitated the signature of P.S. once again. 30. The clients M.R. and P.S. were not related to each other in any way and the movements of funds in their respective accounts were made without their knowledge and consent. ACCOUNT OF A.F. Misappropriation 31. At all relevant time, A.F. was a client of the Respondent at Leduc. 32. While transferring the RRSP of a client, A.F., the Respondent directly sent the T2033 form to the Sun Life of Canada Insurance Company, without going through the intermediary of his firm, and successfully obtained that the cheque be made payable to «Warren McCaffrey Leduc & Associates for the credit of [A.F.]». 33. In early February of 2001, the Respondent directly received the cheque in the amount of $29 583,56 for the account of A.F. 34. On or around February 2001, the Respondent fraudulently deposited the cheque of $ ,56 in his wife s account no. 4NHE68E at Leduc, instead of depositing it in the client s account. 35. On or around Fevruary 6, 2001, an amount totalling $ was transferred from the account of the Respondent s wife at Leduc to the Respondent s own account at Leduc.

7 7 NOTICE is further given that the Respondent shall be entitled to appear and be heard and be accompanied by counsel or agent at the hearing and to call, examine and cross-examine witnesses. NOTICE is further given that the Association By-laws provide that if, in the opinion of the District Council, the Respondent has failed to comply with or carry our the provisions of any federal or provincial statute relating to trading or advising in respect of securities or commodities or of any regulation or policy made pursuant thereto; failed to comply with the provisions of any of the By-laws, Regulations, Rulings or Policies of the Association; engaged in any business conduct or practice which such District Council in its discretion considers unbecoming or not in the public interest; or is otherwise not qualified whether by integrity, solvency, training or experience, the District Council has the power to impose any one or more of the following penalties : 1) a reprimand; 2) a fine not exceeding the greater of : 1) $1,000,000. per offence; and 2) an amount equal to three times the pecuniary benefit which accrued to such person as a result of committing the violation; 3) suspension of approval of the person for such specified period and upon such terms as the District Council may determine; 4) revocation of approval of such person; 5) prohibition of approval of the person in any capacity for any period of time; 6) such conditions of approval or continued approval as may be considered appropriate by the District Council. NOTICE is further given that the District Council may, in its discretion, require that the Respondent pay the whole or part of the costs of the proceedings before the District council and any investigation relating thereto. NOTICE is further given that the District Council may accept as having been proven any facts alleged or conclusions drawn by the Association in the Notice of Hearing and Particulars that are not specifically denied, with a summary of the facts alleged and conclusions drawn based on those alleged facts, in a REPLY.

8 8 NOTICE is further given that the Respondent has ten (10) days from the date on which this Notice of Hearing and Particulars was served, to serve a REPLY upon: Investment Dealers Association of Canada 1, Place Ville-Marie Suite 2802 Montréal, Québec H3B 4R4 Attention : Sylvie Poirier, Enforcement Counsel A REPLY may either: i) specifically deny (with a summary of the facts alleged and intended to be relied upon by the Respondent, and the conclusions drawn by the Respondent based on all the alleged facts) any or all of the facts alleged or the conclusions drawn by the Association in the Notice of Hearing and Particulars; or ii) admit the facts alleged and conclusions drawn by the Association in the notice of Hearing and Particulars and plead circumstances in mitigation of any penalty to be assessed. NOTICE is further given that, if the Respondent fails to serve a Reply or attend at the hearing, notwithstanding that a Reply may have been served, the District Council may proceed with the hearing of the matter on the date and at the time and place set out in this Notice, or on any subsequent date, at any time and place, without further notice to and in the absence of the Respondent, and the District Council may accept the facts alleged or the conclusions drawn by the association in this Notice of Particulars as having been proven, and may impose any of the penalties prescribed by the By-laws of the Association. DATED at Montreal, Province of Quebec, this day of CARMEN CRÉPIN Vice-President, Quebec INVESTMENT DEALERS ASSOCIATION OF CANADA 1, Place Ville-Marie, Suite 2802 Montreal, Quebec H3B 4R4