A settlement hearing in the matter of Hugh Blair Smilestone was recently held before a panel of the MFDA’s Atlantic Regional Council.

The MFDA says the panel accepted the settlement agreement between MFDA Staff and Smilestone, as a consequence of which he has:

  • been prohibited from conducting securities related business for two years;
  • paid a fine of $10,000; and
  • paid costs of $5,000.

It adds that if Smilestone wishes to conduct securities related business with an MFDA member after his two-year prohibition, he must: complete an ethics course acceptable to the MFDA; be subject to 12 months of close supervision by the member with whom he is employed or associated; and comply with all MFDA by-laws, rules and policies and all applicable securities legislation and regulations.

Read:

The MFDA says he admitted that between June 1, 2004 and March 10, 2010, he falsified client signatures and initials on account documents and falsified the content of certain other documents in order to:

(a) complete new client application forms;

(b) update Know-Your-Client and banking information;

(c) implement changes to pre-authorized contributions and systematic withdrawal plans; and

(d) execute trades in client accounts, contrary to MFDA Rules.

It says he also admitted that in November 2009, he falsely provided signature guarantees on trade tickets processed for the account of client MH after he had falsified the signature of client MH on the trade tickets, contrary to MFDA Rules.

In addition, the MFDA says he admitted that between January 2008 and March 10, 2010 he engaged in authorized and unauthorized discretionary trading by determining one or more of the following elements of trades that were executed in client accounts: the timing of the trade; the amount of the trade; and in some cases the securities to be traded.

Smilestone further conceded to regulators that between January 2007 and March 10, 2010, he failed to comply with conditions imposed on him by the member with respect to the approval of his outside business activity, and that on December 17 and 18, 2009, he provided false responses to the member’s compliance staff during the course of a branch review, contrary to MFDA Rules.

Read: Are outside business activities worth the risk?

Read the settlement agreement.