Settlement Agreement: In the Matter of David Barnsdale et al. - James Schofield
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: JAMES SCHOFIELD
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 James Schofield be suspended forsuch period 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 James Schofield("Schofield") commenced by Notice of Hearing dated October 31, 1997 in accordance with the terms and conditions set out hereinafter. Schofield agrees to thesettlement on the basis of the facts hereinafter set out.
3. Staff and Schofield 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. Schofield 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. Schofield is registered with the Commission to sell mutual fund securities and limited market products. At all material times, Schofield was employed byPlanvest Financial Corporation ("Planvest") and was the manager of the branch of Planvest located in Ajax, Ontario.
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. In or about mid 1996, Albrecht advised Schofield that he was assembling a book on financial planning and asked if Schofield wished to participate. Albrechtpresented the book as an educational and marketing tool which Schofield could give to prospects and clients.
9. In or about November 1996 Schofield agreed to participate in the book project offered by Albrecht to be entitled "Financial Independence Through SuperiorPlanning" (the "book"). At this time, Schofield was advised by Albrecht that due to his reputation he was one of 24 other advisors in Canada out ofapproximately 20,000 financial professionals who had been invited to participate as a co-author of the book.
10. Schofield understood that the book would name him as the sole co-author along with Albrecht. Schofield further understood that other participants wouldreceive a similar or identical version of the book naming each participant as the sole co-author along with Albrecht.
11. Schofield provided ideas for the book's content in numerous conversations with Albrecht but he did not draft any text of the manuscript. Upon receipt of thebook, Schofield reviewed its contents and was satisfied that some of his ideas and comments were incorporated.
12. Schofield was asked by Albrecht to draft a biography to be included in the book and to send a picture to Albrecht to be included with his biography on aco-author page in the book. Schofield complied with Albrecht's request.
13. Schofield questioned Albrecht on his designation as a co-author and was told that his involvement warranted such a designation. Schofield relied on thisassurance by Albrecht. In addition, Schofield reviewed the "Foreward" of the book which referred to other unnamed contributors and mistakenly concluded thathis contribution was not overstated. Schofield made no independent inquiries to substantiate these assurances and conclusions.
14. At the end of March 1997, Schofield accepted delivery at Planvest's branch office in Ajax, Ontario of 250 free copies of the book naming himself andAlbrecht as the sole co-authors. Thereafter, despite Schofield's knowledge that others had contributed to the book and were not expressly named in his copy, hedistributed 135 copies of the book to existing clients in a mailing from the offices of Planvest.
15. These books were sent to Schofield free of charge and no payment was ever requested by Albrecht or paid by Schofield. This fact was relied on by Schofieldto warrant his designation as a co-author.
16. Schofield did not consider it necessary to obtain approval from the compliance department of Planvest prior to distributing 135 copies of the book to thepublic and no such approval was sought or obtained. Such conduct was contrary to the compliance policies of Planvest.
(iv) Mitigating Factors
17. Schofield has been employed in the financial services industry for 14 years and has no disciplinary record with the Commission.
18. Schofield has co-operated fully with Staff during this investigation. At the time of being advised of Staff's concerns regarding the book, Schofield had notdistributed any copies of the book for over a month and did not distribute any further copies.
19. Schofield distributed the book to approximately 135 of his 850 existing clients and distributed no copies to prospective clients. Schofield did not disclose hisinvolvement in the Book to anyone other than the 135 clients.
20. Schofield did not follow up the distribution of the book to 135 of his clients with any further communication regarding his participation.
21. Schofield relied mistakenly on Albrecht's assurance that his attribution as a co-author was warranted.
22. Schofield did not pay Albrecht to participate in the project.
(v) Conduct Contrary to the Public Interest
23. The conduct of Schofield was contrary to the public interest in that Schofield:
(a) agreed to participate in a book project which could have been misleading by omitting to expressly name other co-authors;
(b) distributed to clients a book which named him as as the sole co-author along with Albrecht when he was aware others were named as co-authors in otherversions of the same book; and
(c) as a result engaged in conduct unbecoming a registrant with the Commission.
IV TERMS OF SETTLEMENT
24. Schofield 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 Schofield's registration be suspended for a period of 10 days commencing onWednesday, December 10, 1997.
V CONSENT
25. Schofield 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
26. 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 Schofield in relation to the facts set out in Part III of this Settlement Agreement inrespect of which the Notice of Hearing was issued on October 31, 1997 against the Respondents.
VII PROCEDURE FOR APPROVAL OF SETTLEMENT
27. The approval of the Settlement Agreement shall be sought at a public hearing of the Commission scheduled for December 10, 1997.
28. Staff and Schofield agree that if the Settlement Agreement is approved by the Commission, it will constitute the entirety of the evidence to be submittedrespecting Schofield in this matter and he agrees to waive his rights to a full hearing and appeal of this matter under the Act but does not waive his right to anapplication under section 144 of the Act.
29. Staff and Schofield agree that if the Settlement Agreement is approved by the Commission, he will not make further statements which are inconsistent withthe Settlement Agreement.
30. 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 Schofield 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 Schofield andStaff or otherwise as may be required by law; and
(c) Schofield further agrees that he will not raise in any proceeding the Settlement Agreement or the negotiation or the process of approval thereof as the basisfor any attack on the Commission's jurisdiction, alleged bias, alleged unfairness or any other challenge that may otherwise be available.
31. 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 Schofield inwriting. In the event of such notice being given, the provisions of paragraph 30 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
32. 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.
33. Any obligation as to confidentiality shall terminate upon the approval of this Settlement Agreement by the Commission.
IX EXECUTION OF SETTLEMENT AGREEMENT
34. 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.
December 9th, 1997.
SIGNED IN THE PRESENCE OF:
"James Schofield"
"Larry Waite"