On May 8, 2012, an MFDA Hearing Panel of the Atlantic Regional
Counsel (the "Panel") released its reasons on what was
essentially a motion to strike a Notice of Hearing issued by the
Mutual Fund Dealers Association ("MFDA") against the
respondent, Gabriele Gentile (the "Respondent"). In the
Notice of Hearing, MFDA Staff alleged that the Respondent, as
branch manager, had failed to adequately supervise the activities
within the branch when he failed to advise his head office
compliance department of information that he had that an insurance
agent working from the branch location (the "Insurance
Agent") had borrowed money from clients that had not been
repaid. The Respondent's position on the motion was that he had
no obligation to escalate the reports he had received because the
Insurance Agent was not an MFDA Approved Person.
At the hearing, MFDA Staff took the primary position that it was
inappropriate to decide the issue raised by the Respondent on a
preliminary motion and that argument on the matter should be left
to the end of a full hearing of the merits.
In the alternative Staff argued that the test applicable on
motions to strike in civil litigation was equally applicable to
this motion, with which the Respondent took no issue. Based on the
submissions of the parties, the Panel determined that the question
it had to answer on the motion was: "... is it plain and
obvious that [the Respondent] had no obligation to escalate [the
information he had about the Insurance Agent]?"
The Panel determined that it was unable to answer this question
at this stage in the proceedings, even assuming that the facts
alleged in the Notice of Hearing were true. For instance, the Panel
considered that it had no information as to whether the Respondent
was acting in his capacity as Branch Manager, or in some other
capacity on the insurance side of the business, when he began
monitoring the Insurance Agent. It also had no evidence as to
whether the Member had communicated to the Respondent the nature
and extent of his duties and obligations as Branch Manager. The
In our view, it is clear that Staff is not alleging that the
Respondent "failed to supervise" [the Insurance Agent].
The allegation is that the Respondent, in his capacity as Branch
Manger, failed to escalate to the Member's Compliance Staff
information acquired concerning potential financial harm to clients
and other individuals occasioned by the activity of an unregistered
individual ... who was operating within the Branch.
Rule 2.5.3 ... required the Branch Manager to "supervise
the trading activities at the branch office." If, as was the
case here on the assumed facts, the Respondent became aware of
matters which either did or could have had a deleterious effect on
this activity, did he have an obligation to make further inquiries
even though the impugned conduct was by a person in the position of
[the Insurance Agent]? In our view, it is not "plain and
obvious" that such an obligation could not exist.
As such, the Respondent failed to meet the test to strike the
Notice of Hearing. In the circumstances, the Panel felt that
evidence and submissions that would be made at a full hearing was
needed for a full analysis of the nature and extent of the
obligations of the Respondent and whether he had complied with
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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