R.S.O. 1990, c. S.5, AS AMENDED
IN THE MATTER OF
DAVID BARNSDALE, ROCH BEAULIEU,
MARY DAWN DAVY, AHSAN KHAN, MARK MILLER,
JAMES SCHOFIELD, ASHTON SO,
WAYNE STEPHENSON, IAN YEO and TD SECURITIES INC.
RE: MARY DAWN DAVY
1. By Notice of Hearing dated October 31, 1997, the Ontario Securities Commission (the "Commission") announced that it proposed to hold a hearing toconsider, inter alia;
(a) whether it is in the public interest to order, pursuant to clause 1 of subsection 127(1) of the Act, that the registration of Mary Dawn Davy be suspended forsuch period of time as is ordered by the Commission; and
(b) such further and other orders or directions as the Commission may consider to be in the public interest to make.
II JOINT SETTLEMENT RECOMMENDATION
2. The staff of the Enforcement Branch of the Commission ("Staff") agrees to recommend the settlement of the proceedings against Mary Dawn Davy ("Davy")commenced by Notice of Hearing dated October 31, 1997 in accordance with the terms and conditions set out hereinafter. Davy agrees to the settlement on thebasis of the facts hereinafter set out.
3. Staff and Davy agree that only if, as and when the settlement is approved by the Commission, may this settlement agreement be released to the public.
III STATEMENT OF FACTS
4. Davy agrees with the facts set out in this section of the Settlement Agreement.
5. Staff acknowledges that the facts contained in this section of the Settlement Agreement are consistent with its investigation.
6. Davy is registered with the Commission to sell mutual fund securities and limited market products. At all material times, Davy was employed by Multi MutualInc. ("Multi Mutual") and was the manager of the branch of Multi Mutual located in Brantford, Ontario.
7. Dean Albrecht ("Albrecht") is a financial marketing consultant who currently resides in the state of Florida in the United States of America.
(iii) "Financial Independence Through Superior Planning"
8. On or about June 6, 1996, Davy met Albrecht who was a sponsored guest at a seminar hosted by Multi Mutual. Davy had not met Albrecht prior to thisconference.
9. At this seminar, Albrecht advised Davy and other sales representatives of her company that he was assembling a book on financial planning. Albrechtpresented a draft outline of the book and invited the participation in the book of those in attendance at the seminar. Albrecht presented the book as aneducational and marketing tool which Davy and the other sales representatives could give to prospects and clients.
10. Davy left her business card with Albrecht following the seminar to express her interest in the book project. In mid June 1996, Albrecht contacted Davy andsent to her a copy of the manuscript of a book entitled "Financial Independence Through Superior Planning" (the "Book"). The manuscript contained a draft ofeach chapter found in the final version of the Book.
11. Davy made revisions to the manuscript forwarded by Albrecht. Davy understood that numerous other salespersons in the industry were also contributing tothe text and making revisions to the portion of the text she had revised. Initially, Davy understood that she and the other participants would be named as co-contributors to the Book and listed together by name on an introductory page in the Book.
12. Prior to finalizing the Book, Albrecht contacted Davy for the purpose of having Davy draft a statement identifying Davy, along with a photograph, to beincluded in a co-author page in the Book. Davy advised Albrecht that she simply wanted her name listed as a co-contributor. As a result, she did not provide thesummary requested by Albrecht or a photograph. Instead, Albrecht drafted a biography of Davy to be included in her version of the Book.
13. Davy ordered 250 copies of the Book from Albrecht for which she paid three instalments of $1,000 for a total price of $3,000. At the end of November,1996, Davy received 265 Books at her office in Brantford, Ontario.
14. The version of the Book received by Davy named her as "the co-author" at page v. No other co-author was named in Davy's version of the Book. Anotherpage at the end of the Book named Albrecht as "the author". Only Albrecht's name appeared on the front cover of the Book and his picture appeared on theback cover. The foreword to the Book acknowledged that a number of unnamed financial advisors had contributed to the Book by reading, critiquing, modifyingand editing the manuscript.
15. When Davy examined the completed version of the Book following receipt of her shipment, she noted that, contrary to her expectations, she alone wasnamed as the co-author and that the other contributors were not listed in her version.
16. Davy was uncomfortable with the manner in which the Book had been finalized regarding authorship, and expressed her concern to the president of MultiMutual, Brian Hurlburt. Davy advised Hurlburt that she did not intend to distribute the Books to her clients or use the Book as a marketing tool as had beenadvocated by Albrecht.
17. In or about late February or early March, several months after receiving the Books, Davy distributed approximately 6 copies of the Book to longstanding,existing clients as an educational reference. At this time, Davy had more than 500 clients.
18. As a result of later inquiries, it was established that another employee of Multi Mutual took approximately eleven copies of the Book from Davy's officewithout her knowledge and distributed it to his clients.
19. Although Davy was aware that others had contributed to the content of the Book but were not given attribution in her copy, she does recall advising herclients when providing them with a copy of the Book that there were several co-contributors. Independent inquiries made by the firm of Lindquist Avey haveconfirmed that three clients and one employee who received books recall being advised that there were other contributors. Two clients had no recollectionwhether Davy had advised them of other contributors and two of the clients recall being advised by Davy after receiving the Book and making an inquiry of Davyregarding the Book.
20. Although Davy discussed the Book with the president of Multi Mutual, she did not seek approval from Multi Mutual prior to distributing the Book to herclients. Given the Multi Mutual sponsorship of Albrecht, Davy wrongly assumed that compliance approval for the project had been given.
(iv) Mitigating Factors
21. Upon being contacted by Staff of the OSC regarding the concerns about the Book, Davy co-operated fully. She attended at a voluntary interview at therequest of Staff and answered all questions asked of her.
22. As a result of concerns raised, Davy made extensive inquiries for the purpose of recovering any Books that had been given out. To this end, Ms. Davy madeinquiries with staff at the Branch Office where she works, reviewed her Daytimer and other similar records and, to the extent possible, made inquiries of allclients that she had contact with after receipt of the Books. As a result of her efforts, all but one of the Books distributed by Davy has been recovered. It hasnot been possible to recover the Books distributed by the other Multi Mutual employee as he has since left the company.
23. Davy engaged the firm of Linquist Avey at her expense to inquire into the matter and provided the report to Staff.
24. Davy distributed a small number of Books to existing clients.
25. Davy advised three clients and one employee to whom she gave the Book that she was not the only contributor.
26. The inquiries made by Lindquist Avey indicate that the clients and employee who received the Book and were advised by Davy of other contributors, werenot misled that she was the sole co-author along with Albrecht.
(v) Conduct Contrary to the Public Interest
27. The conduct of Davy was contrary to the public interest in that Davy agreed to participate in a book project:
(a) wherein the book, as published, could have, in the absence of further information, been misleading by omitting to expressly name other co-authors;
(b) and distributed to clients a book which named her as the sole co-author along with Albrecht when she was aware others were named as co-authors indifferent versions of the same book; and
(c) as a result, the public interest warrants a sanction to be applied by the Commission.
IV TERMS OF SETTLEMENT
28. Davy agrees to the following terms of settlement:
(a) that an order be made pursuant to clause 1 of subsection 127(1) of the Act that Davy's registration be suspended for a period of 10 days commencing onMonday, April 6, 1998;
(b) that Davy pay $1,500 towards the costs of Staff's investigation; and
(c) that Davy undertakes not to distribute any additional copies of the Book.
29. Davy hereby consents to an order of the Commission incorporating the provisions of Part IV above in the form of an order annexed hereto as Schedule "A".
VI STAFF COMMITMENT
30. If this Settlement Agreement is approved by the Commission, Staff will not initiate any complaint to the Commission or request the Commission to hold ahearing or issue an order in respect of any conduct or alleged conduct of Davy in relation to the facts set out in Part III of this Settlement Agreement in respectof which the Notice of Hearing was issued on October 31, 1997 against the Respondents.
VII PROCEDURE FOR APPROVAL OF SETTLEMENT
31. The approval of the Settlement Agreement shall be sought at a public hearing of the Commission scheduled for March 31, 1998.
32. Staff and Davy agree that if the Settlement Agreement is approved by the Commission, it will constitute the entirety of the evidence to be submittedrespecting Davy in this matter and she agrees to waive her rights to a full hearing and appeal of this matter under the Act.
33. Staff and Davy agree that if the Settlement Agreement is approved by the Commission, she will not make further statements which are inconsistent with theSettlement Agreement.
34. If, for any reason whatsoever, the Settlement Agreement is not approved by the Commission or the order set forth in Schedule "A" is not made by theCommission:
(a) Staff and Davy will each be entitled to proceed with a hearing of the allegations in the Notice of Hearing, unaffected by the Settlement Agreement or thesettlement negotiations;
(b) the terms of the Settlement Agreement will not be raised in any other proceeding or disclosed to any person except with the written consent of Davy andStaff or otherwise as may be required by law; and
(c) Davy further agrees that she will not raise in any proceeding the Settlement Agreement or the negotiation or the process of approval thereof as the basis forany attack on the Commission's jurisdiction, alleged bias, alleged unfairness or any other challenge that may otherwise be available.
35. If, prior to the approval of this settlement by the Commission, there are new facts or issues of substantial concern to Staff regarding the facts set out in PartIII of the Settlement Agreement, Staff will be at liberty to withdraw from the Settlement Agreement. Notice of such intention will be provided to Davy inwriting. In the event of such notice being given, the provisions of paragraph 34 of this part will apply as if the Settlement Agreement had not been approved inaccordance with the procedures set out herein.
VIII DISCLOSURE OF SETTLEMENT AGREEMENT
36. The terms of the Settlement Agreement will be treated as confidential by both parties hereto until approved by the Commission, and forever if, for any reasonwhatsoever, the Settlement Agreement is not approved by the Commission.
37. Any obligation as to confidentiality shall terminate upon the approval of this Settlement Agreement by the Commission.
IX EXECUTION OF SETTLEMENT AGREEMENT
38. The Settlement Agreement may be signed in one or more counterparts which shall constitute a binding agreement and a facsimile copy of any signature shallbe as effective as an original signature.
March 27th, 1998.
SIGNED IN THE PRESENCE OF:
"Mary Dawn Davy"
Director of Enforcement on Behalf of Staff
of the Ontario Securities Commission