IN THE MATTER OF THE SECURITIES ACT, R.S.O. 1990, c. S.5 AS AMENDED AND IN THE MATTER OF AN APPLICATION FOR REACTIVATION OF REGISTRATION BY EVA-CHRISTINE MISSULLIS
1. Prior to this application for reactivation of registration (the "Application" ), Eva-Christine Missullis ("Missullis") was registered under the Securities Act (Ontario) (the "Act") as follows:
(a) February 2002 -- March 2004: Primerica Financial Services, mutual fund dealing representative;
(b) March 2004 -- September 2010: Investors Group Financial Services Inc. ("IG"), mutual fund dealing representative and limited market dealing representative; and
(c) September 2010 -- January 2012: IG, mutual fund dealing representative.
2. On January 20, 2012, Missullis was terminated for cause by IG. The Form 33-109F1 Notice of Termination (the "Notice of Termination") delivered in connection with Missullis's termination stated that she was terminated due to her inappropriate handling of funds and servicing of clients. More particularly, the Notice of Termination stated that Missullis did not have evidence that she advised a particular client about the existence of deferred sales charges ("DSCs") when the client transferred their investments. In addition, the Notice of Termination stated that Missullis had admitted to forging a client's signature on an account application.
3. On November 25, 2013, Missullis applied to reactivate her registration under the Act with 3i Financial Investment Services Inc. ("3i") (i.e., the Application).
4. Staff reviewed the Application and on June 8, 2015, sent a letter to Missullis (the "Letter") informing her that Staff had recommended to the Director that the Application be granted subject to terms and conditions requiring the following (the "Terms and Conditions"):
(a) within six months of the date Missullis's registration was reactivated, she must successfully complete the Conduct and Practices Handbook Course;
(b) Missullis was to be subject to strict supervision by 3i for a period of at least one year;
(c) for a period of at least one year, if Missullis processes a transaction for a client using a document which is signed or initialled by a client and which is not the original version of the document, she is required to deliver the original document to 3i within one week of the transaction to permit the firm to verify the authenticity of the copied document;
(d) for a period of at least one year, Missullis may not carry out any securities transactions for clients using a limited trading authorization (i.e., she must have written instructions from her clients before she may carry out a securities transaction); and
(e) Missullis shall not be designated as a branch manager for the purposes of the Rules of the Mutual Fund Dealers Association of Canada.
5. The Letter stated that Staff's recommendation was based on the following facts which had been identified by Staff during the course of its review of the Application:
(a) HP and RP had been clients of Missullis.
(b) On May 30, 2011, HP and RP sent a written complaint to IG regarding Missullis.
(c) On June 8, 2011, IG wrote to the Ps to request particulars of their complaint.
(d) On June 23, 2011, the Ps sent IG a list of issues they requested be reviewed. This list included their concern that high-risk investments Missullis made in HP's account were inconsistent with HP's risk tolerance, and that Missullis did not disclose to the Ps the existence of DSCs associated with their investments. In their letter, the Ps sought compensation for investment losses and a rebate of their DSCs.
(e) On or around November 14, 2011, IG completed a review of the Ps' complaint. This review found that the investments Missullis made for HP were suitable for her as they were consistent with HP's risk tolerance as stated in the know-your-client ("KYC") information found in her account application, although IG did find that Missullis had not properly disclosed the DSCs to the Ps.
(f) In a letter dated November 21, 2011, IG informed the Ps of the results of the firm's review of their complaint.
(g) IG's November 21, 2011 letter enclosed HP's account application form, and according to the KYC information contained in the form, HP's risk profile was "moderate aggressive to aggressive". On the basis of this KYC information, IG determined that the funds sold to HP by Missullis, which ranged from low to high risk, were suitable for HP. In the result, IG declined the Ps' request to compensate them for investment losses in HP's account, although it did offer to refund her DSCs.
(h) On November 28, 2011, the Ps responded to IG's November 21, 2011 letter. In their response, the Ps noted that HP's signature on the application for HP's account was not signed by her. The Ps alleged that HP's signature had been forged.
(i) On January 6, 2012, IG questioned Missullis about the signature on HP's account application, and Missullis denied that she had signed HP's signature to the document.
(j) On January 13, 2012, Missullis provided IG with a written statement in which she admitted that she had, in fact, signed HP's signature to the account application.
(k) In her January 13, 2012 written statement, Missullis said that due to a delay in the opening of HP's account, a new account application form was required. Rather than contact HP to have her complete a new application, Missullis copied the KYC information from the original application to a new one, and signed HP's name to the new document. During this process, Missullis changed HP's risk tolerance to "high", and her investment profile to "moderate aggressive to aggressive".
(l) Missullis provided Staff with a written statement in which she stated that the change to HP's KYC information was inadvertent, but Missullis's statement contained no information as to what could have caused this very significant inadvertence.
(m) On January 16, 2012, Missullis was suspended by IG, and on January 20, 2012 she was terminated for cause.
(n) On or around January 20, 2012, IG completed a further review of the Ps' complaint in light of the new information received regarding Missullis's falsification of HP's account application form.
(o) IG's further review of the Ps' complaint found that on the basis of HP's actual risk tolerance, certain of HP's investments that had been sold to her by Missullis were in fact unsuitable for her, and accordingly IG offered to reimburse HP for investment losses in her account.
(p) On February 3, 2012, HP signed a full and final release in favour of IG in consideration for the payment to her of approximately $1,700 for DSCs and $2,300 for investment losses.
(q) Subsequent to Missullis's termination, IG conducted a further investigation of her practice, which included reviewing a sample of 22 client files. The findings from this internal investigation included the following:
(i) Seven of the 22 files reviewed had documents that appeared to have been altered in various ways. The alterations included the use of white out to change dates and dollar amounts, and signatures and initials that did not appear to belong to the client.
(ii) One file had a pre-signed form.
(r) Documents identified by IG as having been altered or pre-signed were from the period 2006 to 2011, however during this period Missullis also signed annual "Consultant Certificates" attesting that, among other things, she had "not arranged for any client to pre-sign any form(s) and do not maintain any pre-signed form(s) in any client file" or "forged a client's signature".
(s) One of the clients for whom irregular documentation was found by IG was SJ. It appears that SJ's signatures on two transfer authorization forms from 2011 did not match. Staff spoke with SJ's mother, EJ, who advised that she signed her daughter's signature to an investment document in Missullis' presence because SJ had been unable to attend the meeting.
(t) On December 11, 2014, Missullis attended an interview with Staff regarding this matter. When Staff asked Missullis why she changed HP's KYC information from "medium" risk to "high" risk, and from "moderate conservative to conservative" to "moderate aggressive to aggressive", Missullis answered "I don't remember". When Missullis was asked why she had originally denied falsifying HP's signature to IG, Missullis replied "I have no recollection", "I don't remember why I denied it in the first place", and "I don't remember why I denied it. I guess it was a defense." Staff was of the view that these answers represented a lack of candour on the part of Missullis, which was a signal to Staff that Missullis did not understand or appreciate the severity of her misconduct.
6. Pursuant to section 27 of the Act, in considering whether to accept an application for registration, the Director is required to consider whether the applicant possesses the requisite proficiency, solvency, and integrity for registration, and whether the applicant's registration would otherwise be objectionable. In addition, section 27 permits the Director to impose terms and conditions on a registrant's registration. In the case of Missullis, Staff was of the view that the facts described in paragraph 5 above indicated that Missullis lacked the requisite proficiency and integrity for unconditional registration, and accordingly Staff recommended to the Director that the Application be granted subject to the Terms and Conditions.
7. The fact that Missullis was terminated for cause for the conduct in question and had not been registered since January 20, 2012 (i.e., a period of approximately 3.5 years from the date of the Letter) was fundamental to Staff's recommendation. The Letter specifically informed Missullis that had IG not terminated her employment, Staff likely would have recommended to the Director that her registration be suspended for a period of at least one year.
8. The Letter informed Missullis that she could accept the Terms and Conditions or request an opportunity to be heard regarding Staff's recommendation pursuant to section 31 of the Act. Missullis accepted the Terms and Conditions on June 16, 2015, and accordingly Missullis's registration was reinstated effective June 17, 2015, subject to the Terms and Conditions.
June 17, 2015