Settlement Agreement: In the Matter of David Barnsdale et al. - Mark Miller
R.S.O. 1990, c. S.5, AS AMENDED
AND
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.
SETTLEMENT AGREEMENT
RE: MARK MILLER
I INTRODUCTION
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 Mark Miller be suspended for suchperiod 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 Mark Miller ("Miller")commenced by Notice of Hearing dated October 31, 1997 in accordance with the terms and conditions set out hereinafter. Miller agrees to the settlement on thebasis of the facts hereinafter set out.
3. Staff and Miller 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
(I) Introduction
4. Miller 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.
(ii) Parties
6. Miller is registered with the Commission to sell securities. At all material times, Miller was employed by Fortune Financial Corp. ("Fortune").
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. Miller was first introduced to Albrecht in the spring of 1996 by his colleague at Fortune, Ahsan Khan who had first contacted Albrecht in late 1995 in responseto a magazine advertisment wherein Albrecht offered advice to financial planners to market their services to potential clients. Several months later, Albrechtadvised Miller that he was assembling a book on financial planning and asked if Miller wished to participate. Albrecht presented the book as educational andmarketing material which Miller could give to prospects and clients.
9. In or about June 1996, after reviewing a proposed table of contents for a book to be entitled "Financial Independence Through Superior Planning" forwardedby Albrecht, Miller agreed to participate in the book project offered by Albrecht. At this time, Miller was aware that ten other financial advisors had also agreedto participate in the book. Miller understood that he and the other participants would make revisions to a manuscript provided by Albrecht and that all suchparticipants would be identified in the book. Miller understood that although the other contributors would be named, his contributing role would be givenprominence in some fashion in the books he ordered.
10. Miller reviewed a manuscript sent by Albrecht in June 1996. Miller drafted revisions to the chapter on Borrowing to Invest and made wording changes tothe draft manuscript. The material drafted by Miller was subsequently changed by others in the editing process.
11. At Albrecht's request, Miller drafted a biography to be included in the book and sent a picture to Albrecht to be included with his biography in the book.
12. Prior to the printing of the book, Albrecht advised Miller that the contributors would be described as co-authors in the book given the collective nature oftheir contributions. As Miller believed Albrecht was an expert in publishing matters, he mistakenly relied on Albrecht's advice and did not seek another opinionas to whether the co-author designation was appropriate in his case. Miller understood that his version of the book would name Albrecht as author and Miller asco-author and include his biographical information with the other contributors being included by name in the book.
13. Miller ordered 250 copies of the book from Albrecht and paid approximately $2,750 for those copies.
14. At the end of November 1996, Miller accepted delivery at Fortune's branch office in Brampton, Ontario of 265 copies of the book. Upon reviewing thebook, Miller discovered that the other contributors were not listed in his book. At the same time, Miller's colleague at Fortune, Ahsan Khan (who Miller workedwith) made the same discovery respecting his version of the book and together they expressed their concern about this omission to Albrecht who advised themthat this omission would be corrected in the next printing. At this time, Miller ought to have known that an identical copy of the book would be distributed byother participants which named each of them as the sole co-author along with Albrecht without giving attribution to the other contributors.
15. Despite his discomfort with the omission of the names of other contributors, Miller distributed approximately 100 copies of the book to existing clients at aclient appreciation dinner and 130 copies to potential clients at the offices of Fortune. At the client appreciation dinner, Miller and Ahsan Khan ("Khan")distributed each of their versions of the book together and verbally advised the recipients that there were other contributors to the book.
16. All of Miller's prospective clients initially attended client development seminars at which Khan and Miller introduced the book by noting they were two of anumber of contributors to it and that it would be given to them as an information piece when they met Khan and/or Miller privately. The book was part of apackage Miller gave to his prospective clients at such private consultations.
17. The version of the book distributed by Miller named Miller as "the co-author" at page v. No other co-author was named in Miller's version of the book.Another page 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 onthe back cover. The foreword to the book acknowledged that a number of unnamed financial advisors had contributed to the book by reading, critiquing,modifying and editing the manuscript.
18. Miller did not consider it necessary to obtain approval from the compliance department of Fortune prior to distributing copies of the book to the public as heconsidered it to be primarily educational and no such approval was sought or obtained. Such conduct was contrary to the policy of Fortune concerning the use ofadvertising and marketing materials.
(iv) Mitigating Factors
19. Miller has co-operated fully with Staff during this investigation. Upon receipt of the first inquiry letter from Staff in respect of the book, Miller ceaseddistributing it.
20. At a client appreciation dinner and at client development seminars, Miller advised those to whom he gave the book that there were other contributors to thebook.
(v) Conduct Contrary to the Public Interest
21. The conduct of Miller was contrary to the public interest in that Miller:
(a) agreed to participate in a marketing tool which could have misled existing and potential clients;
(b) distributed to existing and potential clients a book which could have misrepresented his status as the sole co-author along with Albrecht; and
(c) in regard to the preceding facts engaged in conduct unbecoming a registrant with the Commission.
IV TERMS OF SETTLEMENT
22. Miller 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 Miller's registration be suspended for a period of 10 days commencing onWednesday, April 1, 1998;
(b) that Miller pay $1,500 towards the costs of Staff's investigation; and
(c) that Miller undertakes not to distribute further copies of the book.
V CONSENT
23. Miller hereby consents to an order of the Commission incorporating the provisions of Part IV above in the form of an order annexed hereto as Appendix "A".
VI STAFF COMMITMENT
24. 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 Miller 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
25. The approval of the Settlement Agreement shall be sought at a public hearing of the Commission scheduled for March 31, 1998.
26. Staff and Miller agree that if the Settlement Agreement is approved by the Commission, it will constitute the entirety of the evidence to be submittedrespecting Miller in this matter and he agrees to waive his rights to a full hearing and appeal of this matter under the Act.
27. Staff and Miller agree that if the Settlement Agreement is approved by the Commission, he will not make further statements which are inconsistent with theSettlement Agreement.
28. If, for any reason whatsoever, the Settlement Agreement is not approved by the Commission or the order set forth in Appendix "A" is not made by theCommission:
(a) Staff and Miller 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 Miller andStaff or otherwise as may be required by law; and
(c) Miller further agrees that he 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.
29. 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 Miller inwriting. In the event of such notice being given, the provisions of paragraph 28 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
30. 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.
31. Any obligation as to confidentiality shall terminate upon the approval of this Settlement Agreement by the Commission.
IX EXECUTION OF SETTLEMENT AGREEMENT
32. 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 30th, 1998.
SIGNED IN THE PRESENCE OF:
"Mark Miller"
"Larry Waite"
Director of Enforcement on Behalf of Staff
of the Ontario Securities Commission