personal brokerage account without the clients' consent or authorization, as described in the Settlement Agreement attached as "Schedule A•;

b. he forged copies of cheques to facilitate the unauthorized transfer of client funds into his own personal brokerage account, as described in the Settlement Agreement attached as ·Schedule A· ; and

c. he created and provided to TM and VM a fictitious account statement on NBF Ltd. letterhead showing a purchase of approximately $247,000 in TM and VM's NBF account, as described in the Settlement Agreement attached as "Schedule A·.

Dated at Toronto, this fl.;.., day of March, 2017.

H FTON, CPA, CA, DEPUTY CHAIR SIONAL CONDUCT COMMITTEE

2

SCHEDULE A

INVESTMENT INDUSTRY REGULATORY ORGANIZATION OF CANADA

IN TilE l\IATTER OF:

THE RULES OF THE INVESTMENT INDUSTRY REGULATORY

ORGANIZATION OF CANADA (IIROC)

AND

BRIAN ANISH KUMAR

SETTLEMENT AGREEMENT

I . INTRODUCTION

I. II ROC Enforcement Staff("Starr·) and Brian Anish Kumar (the "Respondent"), consent

and agree to the settlement of this matter by way of this agreement (the "Settlement

Agreement").

2. The Enforcement Department of II ROC has conducted an investigation ("the

Investigation") in the conduct of the Respondent.

J . The Investigation discloses matters for which the Respondent may be disciplined by a

hearing panel appointed pursuant to II ROC Transitional Rule No. I. Schedule C. I, Part C

(the "Hearing Panel").

II. JOINT SETTLEMENT RECOMMENDATION

4. Staff and the Respondent jointly recommend that the Hearing Panel accept this

Settlement AuresroenL.

5. The Respondent admits to the following contraventions of II ROC Dealer Member Rules,

Guidelines, Regulations or Policies:

I

a) Bcl\\ccn February 2013 and April 2014. the Respondent made improper usc of

$1.450.980 in diem fi.uH.b b) trans ferring these funds from the brokerage accounts of

lour clients into his own personal brokerage account'' ithout the clients' consent or

authorization. contrary to IIROC Dcaler Member Rule 29.1.

h) Between February 2013 and /\pril2014. the Respondent forged copies ofchequcs

mul client signatures to Htcilitutc the unauthori~cd transfer of client funds into his

personal brokerage account. contrary to II ROC Dealer Member Rule 29.1.

6. StaiT and the Respondent agrees to the li.liiO\\ ing terms of settlement:

a) 1\ permanent prohibition: and

b) 1\ fine in the amount of$50.000.

7. The Respondent agrees to pay costs to IIROC in the sum of$5.000.

II I. ST \TE\11:'1/T OF FACTS

(i) Aclmowlcdgmcnt

X. StaiT and the Respondent ugn:e with the Htcts set out in this Scction Ill and acknowledge

that the terms of the settlement contained in this Settlement Agreement arc bused upon

those <>pl!ci lie lltcts.

(ii) F~tctlml Background

9. lkginning in February 2013. the Re~pondcnt transferred u total of$1.450.9SO from the

brokerage accounts of ltlur of hi s dicnts without the clients· consent or authorizution. I Jc

- 3 -

used Iorge<.! cheques and Htlsilied lcllcrs of authorization ( .. LOAs .. ) to transfer the clients·

funds from their brokerage accounts into his personal bank accounts. The amounts

translcrrcd from e<tch client represented a signi licant portion of the amounts held in the

clients· accounts.

I 0. lie transferred the vastnH~jority or the funds into his personal brokcmge account and used

the funds to invest in a trading strategy involving the usc of options. exchange traded

funds mul IC.1reign currency contracts. In at least one insl<.lnce. he created a falsi lied

portfolio statement which he provided to one of his clients.

II . 'I he last unauthori1.ed transfer from a client account took place in April 2014. In May

20 1-t. and prior to the commencement or any investigmion of his misconduct in

September 20 1-L the Respondent began repaying his clients l\.1r the monies taken. By

May 2015.the Respondent has repaid tltotal of$1.60S.902to the lour clients. These

repayments represented the full mnount ofthe funds translcrrcd from the client accounts

along with returns ranging from 2% to 351Yo. which the Respondent advises were

generated hy trading in hi!-. personal hrokerugc account.

l~cgistn1tion and ()isciplinan· 1-listur\'

12. From November 20 II to September 20 1-t. the Respondent \\'as registered tis a Registered

Representative with an Oakville. Ontario branch of National Bank Financial Ltd.

( .. NBF""). an IIROC Dealer Member. All ofthc misconduct took place while the

Respondent was registered with NBF.

13. From September 2014 to January 20 15. the Respondent was registered as a Regi!.tered

Representative with mt Ottkville. Ontario bmnch of Aligned Capital Partners Inc .. mt

IIROC Dealer Me!nber. lie hus not been register~ ill the securities indU!>Irv since that

time.

1-4. The Respondent had previously been registered in the securities industry since 2003.

+ ~ •

15. The Respondent has no prior disciplinary history.

The Unmathorized Transfer of Client Funds into the l~CS!lOIIdent's Pcrsoautl Account

16. OA "as a client of the Respondent. On or around February I I. 2013. the Respondent

ammged lor the withdrawal of$355.000 li·om OA ·s NBF account" ithout OA ·s

kno\\ ledge or consent.

17. I he Respondent submitted a copy of a void cheque lor OA ·s bank account to which the

proceeds of the withdrawal were to be deposited. The Respondent lorged a copy of a

legitimate void cheque provided by OA by replacing the true account number at the

bottom of the cheque with the number lor one ofhis personal bank accounts. As •• result.

the funds were deposited into the Respondent's personal bm1k account instead of into

OA ·s bank account. OA did not consent to this'' ithdrawal.

I!L The Respondent then tmnslcrred a m<~jority of these funds fi·om his personal bank

account into his personal brokemgc account \vhkh he held m lntcmctivc Brokers Group

Inc. ("IB"). an IIROC Dealer Member linn .

.lull' 20 I 3 ( luauflmrb.>d Trwrs/a.\·

19. TM and VM were clients of thc Respondent. On or around .lui) 2. 2013. the Respondent

submitted a LOA purportedly signed by TM and VM fi.1r the withdrawal of$244.000

from TM and VM's NBF uccount. The Respondent Jorged TM and VM's signatures on

the LOA.

:!0. A long with the forged LOA. the Respondent submitted a copy of a void cheque lor TM

and VM's account to ''hich the proceeds of the withdrawal were to be deposited. The

• 5 •

R~spondent forged u copy of a legitimate void che{1ue provided by TM ;,md VM by

replacing the true account numb~r ut the bouom of the cheque with the number for one of

his personal bank accounts. As a result. the funds were deposited imo the Respondenrs

personal bunk uccount instead of into TM ;.md VM's bank uccount. TM and VM did not

consent to this withdnn\al.

21. The Respondent then transferred a tm~jority of these funds from his personal bank

<~ccount into his per!>onal brokemge <tccoulll at lB.

2:2 . CF "as a client of the R~spond~nt. On or <~round July 31. 20 13 th~ Respond~nt arranged

l'l)r the\\ ithdra\\al of$33.000 from CF's NBF uccount without cF·s knowledge or

con~~nt.

23 . The Respondent submitted a copy ofn void cheque for cF·s account to which the

proceeds of the withdmwul were to be deposited. The RespotH.Ient fbrged n copy of a

legitimate void cheque prm ided by CF by replacing the true account number at the

bottom of the cheque with the number ll.)r one of his personal bank i.tccounts. As a result.

the funds were deposited into the Respondent's personal bank account instead of into

(T' s bank account. CF did not consent to this" ithdra\\·al.

24. The Respondent then translcrred a majority of these funds from his personal bank

account into his p~:rsonal brokerage account at lB.

A II!! liS/ 1013 l 'nalltlmrb:d 1imts{et.\'

25. JN and DN were clients of the Respondent. On or around August 2. 2013. th~: Respondent

!-uhmitted a LOA purportedly signed by .IN and DN lor the withdri.l\\al of$164.980 from

JN ;,md DN 's N13F account. ·1 he Rcspondentfi.)rged JN and DN·s signatures on the LOA.

26. Along with the l'lwged LOA. the Respondent submitted a cop) ofn void cheque lor JN

<llld DN's account to which the proceeds of the withdrawal were to be deposited. The

• (> .

R~:spondcnl lorg~:d a copy or a l~:gitimat~: void chequ~: provided by JN and ON by

r~:plucing the true account number at the bottom of the cheque with the number lor one of

his personal bank accounts. As a result. the funds \\'ere deposited into the Respomhmt's

p~.:rsom•l hank account instead of imo .IN and DN. s bank account. .IN and ON did not

consent to this withdrawal.

'27. The Respondent thentmnslcrred a nu~jority of these li.mds Ji·om his personal bank

account into his personal brokerage account at lB.

2M. On or <~round August 30. '20 13 the Respondent armnged lor the withdr4l\\ al of $21 .000

li·om CF'!> NBF account \\·ithout cF·~ J..no\\ ledge or consent.

29. The Respondent httd previously submitted <1 copy of<~ void cheque lor CF's account to

"hich the proceeds of the withdnl\\ al were to be deposited. The Respondent had lorged <1

copy of a legitinwte void cheque provided by CF by replacing the true account number at

the bottom of the cheque with the number for one of his personal bank uccounts. As a

result. the li.mds \\ere ucposited into the Respondent's personal bank account instead or

into CF' s bank ac<.:ount. CF did not consent to this \\ithdr<mal.

30. The Respondent th~:n tmnslcrrcd a majority of these fund~ li·om his personal bank

account into hb per~onal brokerage account m lB.

31 . On or mound Odob~:r 15. 2013. the Respondent submitted a LOA purportedly signed by

.IN ~uH.I DN 14.lr the witlulnmal of$351.000 from JN and DN·s NBF account. The

Respondent lorg~:d .IN and DN's signatures on the LOA.

0\:'! . 'Fhl! ltcs(xllltfcnt httujifcVIOUSl) suhm1 lfc(] a copy o( a votd chcquc ror ]N anJ IJN"'~s

t~ccount to '' hich the proceeds of the withdrm' <tl ''ere to be deposited. The R~:spondent

had lixged a copy of a legitimate void ch~.:que rrovided by JN and DN by replacing the

• 7 •

tru~ account number at the bottom of the ch~quc with the number lor one of his personal

bunk account~. As a resull. th~ funds w~rc deposited into the Respondent's personal bank

account instead of into .IN and DN's bank account. .IN tmd DN did not consent to this

,,. ithdnl\\ a I.

33. The Respondent then transferred a majority of these funds li·om his personal bunk

account into his personal brokerage account at lB.

3~. On or around October I 0. 2013 the Respondent submitted a LOA purportedly signed by

CF t<.)r the withdrawal of$35.000 fi·om CF's NBF account. The Respondent forged C'F's

signature on the LOA.

35. 'I he Respondent had previously submitted u cop) ofu void cheque l(x CF's account to

\\·hich the proceeus ofthe \\"ithdnmal ''ere to be deposited. The Respondent hud lorgcd a

copy or a h.:gitimate void ch~:qu~: provided by CF by replacing the true account number m the bottom of the cheque'' ith the number lor one or his pcrson<tl bank accounts. As a

re:.uh. the funds \\·ere depositetl into the Respondent"s personal hank uccount instead or

into CF's lxmk ttccount. CF did not consent to this witlulrawal.

36. ·1 he Respondent th~:n trunsiCrn:d" majority of these funds from his personal bank

account into his personal brokcmge account at lB .

. ·lf)J'il 20 I 4 U11alllhori=<!cl7i·amdcrs

3 7. On or around April 15. 20 I 4. th~: Re:.pondcnt urrangcd l<.w the withdrawal of$24 7.000

from TM and Vl\tl"s NBF account without TM und VM·s knowledge or consent.

3X. ·1 he R~:spon<.lcnt had previously submitted a cop) ora voi<.l cheque for TM an<.l VM"s

.ictOdillln ~hich the JltCICcCd~ nr the \\·trhdrttwm wcr~:· rn {)C deposileJ. I he i{c~pondcnl

had ll.wged a copy of a legilimat~: voi<.l cheque provided by TM and VM by replacing the

tn1~ uccount num her ut the bottom of the cheque with the number J~)r one or his personul

• X •

hank accounts. As a result. the funds were deposited into the Respondent's personal bank

account instead of into TM and VM's hank account. TM and VM did not consent to this

'' ithdrawal.

39. The Respondent then transferred a majority of these funds li·om his personal bank

account into his personal brokerage account m I B .

..tO. In or mound April :!0 14. the Respondent provided TM and VM "ith a lictitious account

statement on NBF letterhead ~hawing the purchase of approximately $247.000 in TM and

vrvrs NBF account. The Respondent created this lictitious account statement to mislead

TM and V M about the status of their account.

-II. In or arouml September :!0 14. TM and VM questioned the April 2014 withdrawal and

provided a cop~ or the lictitious account ~tatement to NBF. N Bl· subsequently opened an

investigation into the Respondent's conduct and identilicd the additional unauthorized

translcrs or client funds set out above.

Trading in the Rcs!)ondcnt's JB account

-4:!. As noted. a majority or the funds "ere translcrred from the Respondent's bank accounts

into his pcrsom1l brokemge account at lB. The funds were then used to trade a variety of

securities. including options. exchange traded funds and foreign exchange contracts. In

some cases. these potentially higher risk securities could not be trnded in the clients·

accounts at NBF .

. n . Becau~e these securities were traded outside the clients· accounts at NBF. NBF was

tuwble to supervise the transactions to ensure that they" ere suitable for the clients.

Rcpanucnts tn the Clients

4-L Between May 2014 mH.I/\pril2015. the Respondent repaid a totul of~l.608.902 to the

llHir clients. Thc~c rcp<tyments represente<.lthe full mnount or the funds transferred

without authorizution ulong '' ith returns ranging from 2'Yc• to 35%. which the Respondent

auvbe~ \\ere generateu by the trading in the Respondent's 18 account.

Additiun.tl l~eJ)rcsentations of the Respondent

45. 'I he Respondent mukes the following udditionul representation~ on \\"hich StaiTtuke no

position :

u) /\lthough it affords the Respondent no del'i!nce to the contraventions admitted to

herein. the Respon<.lent advise<.! the II ROC investigators that his clients \\ere

dissutis lied with the returno; generated in their brokerage accounts. lie wanted to

impnl\c their returns in investments through hb persom1l accounts that he wao; not

pro!Cssionally qualilicu to place them in which is '"hY he mude the transl'i!r:>. lie

ahvuys intendeu to repa) them the~e monies. together'' ith enhanced returns on their

monies.

h) ·1 he Respondent admitted responsibility ft)r his actions at the outset of the

in vestigation. thereb) shortcning the length of time require hy IIROC to complete a

full investigation of this matter.

Sumnt:tn'

4(•. The Rcspondenttranslerrcd a totul of$1 .450.980 li·om the brokerage accounts of lour

dienh into hi~ own personal brokerage a..:count \\ ithout the dient'i. consent or

·•<etlim iJ .ttithi . '' I( hough he sub:;cquemly tool::: sh!l,~ ru rl!p'hS th l! ..:hcnts iii Jull. fi 1s

conuuct "a.-, J~:ccitl tll •md Jeccpli Vl!.

• I 0.

IV. TEHMS OF SE'ITLEI\IENT

-t7. This settlement is agre~:d upon in m:wrdancc \\ith II ROC Dealer Memb~:r Rules 20.35 to

20.-W. inclusive and Rule 15 of the Dealer Memb~:r Rules of Practic<.: and Procedur<.:.

-IH. Th~: Settlement Agreement is subject to acceptance by the llcaring Panel.

49. The Sclllement Agreement shall become efli:ctive and binding upon the Respondent and

Stalf us or the date of its acccptunce by the llcaring Panel.

50. The Sculement Agreement will be presented to the I !caring Panel at a hearing ( .. the

Settlement I !caring .. ) lor approval. FoliO\\ ing the conclusion of the Settlement llearing.

the I leming Panel may either uccept or reject the Settlement Agreement.

51. If the llcaring Panel accepts the Selllement Agreement. the Respondent W<lives his/her/its

right under IIROC rule-. ••nd any applicable legislation to a disciplinary hearing. review or

<IPJ)Cal.

52 . If the llearing P<mel rejects the Selllement Agreement. StaiT and the Respondent may

enter into another !>Clllement agreement: or Staff may proceed to a disciplinar) hearing in

relation to the rmllters disclosed in the lnve~tigation .

53. The Settlement Agreement" ill become mailable to the public upon its acceptunce by the

I leming Panel.

5-t . StaiT und the Respondent agree that if the lleuring Puncl uccepts the Seulement

Agreement. they. or· anyone on their behul[ \\ill not muke any public st<ltements

inconsistent \\'ith the Settlement Agreem~:nt.

55. l 'nics-. othen' ise !>ltlted. uny moncwr~ pen<~lties and cost!> imposed upon the Respondent

arc pa~ able immed iutcl) upon the cl'll!ct i w date or the Settlement Agreement.

• I I •

56. llnle!>!> otherwise stated. any suspensions. bars. expulsions. restrictions or other terms of

the Settlement Agreement shall commence on the eflcctive date of the Settlement

Agreement.

~\ AGttEI·:J>TO b~ the Respondent at the Cit) of _{ 0< v-~- in the Province or

Ontario. this J_q .th Jay of _ _&~ ~.1 Y 2015.

a~ \\-itncss Rcspcmdcnt

/" AGREEU TO h) Staff at the Cit) of /t)!..o tJJ'{j in the Province orOntario.

this /Cf Ja) of /Ju.v. v<)'~_ 2015 .

t:o!K Witness

Acn:t>TI~I> at the City or

this Ja) or

Per: Panel Chair

Pcr: Panel l'vlem her

l~ob DciFratc Senior Enlhrcement Counsel on behalfofStallofthe Investment lndustr) Regulator) Organinttion of Om ada

in the Province of Ontario.

2015 . by the f(.)llowing llearing Panel:

• 12 •

l'and Mcmb~r