SRO panel laments remote hearing challenges

A former mutual fund representative has been fined and permanently banned in a case that a regulatory hearing panel described as a “cautionary tale” of the pitfalls of remote disciplinary hearings.

In September 2022, a hearing panel of the Mutual Fund Dealers Association of Canada (MFDA) ruled that Amin Mohammad Ali, a former rep with Quadrus Investment Services Inc. in Burlington, Ont., should be banned and fined $50,000 and ordered to pay $10,000 in costs after it found he violated several MFDA rules, including engaging in unapproved outside business activities, misleading his dealer, and failing to cooperate with a regulatory investigation.

That panel has now released its reasons for finding he violated MFDA rules, and confirming its sanctions — a proceeding that took 12 hearing dates over more than two years to finally bring to a conclusion.

“All of these were remote,” the panel said in its reasons. “It was, it is fair to say, a cautionary tale with respect to the effectiveness of remote only proceedings.”

Among other things, the panel noted that the proceedings involved several changes in counsel, requests for adjournments, and claims that the respondent was dealing with mental health issues that prevented him from participating in the proceedings.

It said Ali didn’t provide any evidence at the hearing, and no cross examinations took place, as he claimed to be unfit to participate.

However, the panel concluded that he did seem to be involved with his defence.

“Electronic hearings facilitate parties being able to attend anonymously if one chooses to do so, as Mr. Ali seemed to have done regularly,” the panel said in its decision.

“The panel concluded that the respondent was actively directing his counsel and other representatives in the conduct of his case, and his representatives made it clear to the panel that they were acting on his instructions,” it said.

The sanctions portion of the hearing also included a change in counsel, a request for an adjournment, and claims about mental health issues.

However, the panel said it “saw nothing to suggest the respondent was in any way incompetent.”

“To the contrary, Mr. Ali was, as members of the panel noted, fully in control and was the directing mind of his defence, in all its aspects,” it said. “Clearly, the lawyers who appeared on his behalf looked to him, and to him alone, for their instructions. It was notable that a number of delays were occasioned by the lawyers asking for time in order to obtain instructions during the hearings.”

The panel concluded that Ali “did not discharge the burden of demonstrating mental incompetence of any kind,” and it was not persuaded that these claims should be considered in determining sanctions.

Last year, Ali also applied to the Ontario Securities Commission for a review of the panel’s decision that he violated MFDA rules. That proceeding was adjourned, pending the sanctions hearing by the self-regulatory organization panel.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.