Settlement Agreement: In the Matter of David Barnsdale et al. - Wayne Stephenson
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: WAYNE STEPHENSON
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 Wayne Stephenson 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 Wayne Stephenson("Stephenson") commenced by Notice of Hearing dated October 31, 1997 in accordance with the terms and conditions set out hereinafter. Stephenson agrees tothe settlement on the basis of the facts hereinafter set out.
3. Staff and Stephenson 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. Stephenson 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. Stephenson is registered with the Commission to sell mutual fund securities and limited market products. At all material times, Stephenson was employed byBerkshire Investment Group Inc. ("Berkshire Investment") and was the manager of the branch of Berkshire Investment located in Barrie, Ontario.
7. Dean Albrecht ("Albrecht") is a financial marketing consultant who currently resides in the state of Florida in the United States of America.
- "Financial Independence Through Superior Planning"
8. In or about September 1996, Albrecht advised Stephenson that he was assembling a book on financial planning and asked if Stephenson wished to participate.Albrecht presented the book as an educational and marketing tool which Stephenson could give to prospects and clients.
9. At the end of September 1996 Stephenson agreed to participate in the book project offered by Albrecht to be entitled "Financial Independence ThroughSuperior Planning". At this time, Stephenson was aware that two others in the industry had also agreed to participate in the book. Initially, Stephensonunderstood that the other participants would make revisions to the copy of the book which identified Stephenson as a "co-editor".
10. Stephenson did not draft any text of the manuscript. He did, however, review a copy of the manuscript, provide ideas for expansion of the book's content andedit for spelling and grammar.
11. Stephenson approved his biography as drafted by Albrecht to be included in the book and sent a picture to Albrecht to be included with his biography in thebook. Shortly thereafter, Albrecht sent Stephenson a completed version of the biography which identified Stephenson as a "co-author". Stephenson questionedAlbrecht on his designation as a co-author and was told that his involvement warranted this designation. Stephenson made no independent inquiries tosubstantiate Albrecht's assurances.
12. Stephenson ordered 300 copies of the book from Albrecht and paid $12.50 per book for those copies.
13. At the end of November 1996, Stephenson accepted delivery at Berkshire Investment's branch office in Barrie, Ontario of 315 copies of the book naminghimself and Albrecht as the sole co-authors. Upon receipt of the book, Stephenson then ought to have known but did not advert to the fact that an identical copyof the book would be distributed by other participants which named each of them as the sole co-author along with Albrecht.
14. Despite Stephenson's knowledge that others had contributed to the content of the book and were not given attribution in his copy, Stephenson distributednearly all copies of the book to existing and potential clients from the offices of Berkshire Investment except for 50 copies sent back to Albrecht for a seminar inOwen Sound.
15. Stephenson did not seek or obtain approval from the compliance department of Berkshire Investment prior to issuing copies of the book to the public as hewas under the mistaken belief that approval was not necessary to distribute the book. In fact, such conduct was contrary to the policy of Berkshire Investmentconcerning the use of advertising and marketing materials.
(iv) Mitigating Factors
16. Stephenson has co-operated fully with Staff during this investigation.
17. Stephenson had initially agreed to be a co-editor due to his limited involvement in the content of the book, and relied, mistakenly, on the assurance ofAlbrecht that his attribution as a co-author was warranted.
- Conduct Contrary to the Public Interest
18. The conduct of Stephenson was contrary to the public interest in that Stephenson:
(a) agreed to participate in a marketing tool which may have misled existing and potential clients;
(b) distributed to existing and potential clients a book which misrepresented his status as the sole co-author along with Albrecht; and
(c) engaged in conduct unbecoming a registrant with the Commission.
IV TERMS OF SETTLEMENT
19. Stephenson 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 Stephenson's registration be suspended for a period of 15 days commencingon Monday, December 1, 1997.
V CONSENT
20. Stephenson hereby consents to an order of the Commission incorporating the provisions of Part IV above in the form of an order annexed hereto asAppendix "A".
VI STAFF COMMITMENT
21. 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 Stephenson 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
22. The approval of the Settlement Agreement shall be sought at a public hearing of the Commission scheduled for November 6, 1997.
23. Staff and Stephenson agree that if the Settlement Agreement is approved by the Commission, it will constitute the entirety of the evidence to be submittedrespecting Stephenson in this matter and he agrees to waive his rights to a full hearing and appeal of this matter under the Act.
24. Staff and Stephenson agree that if the Settlement Agreement is approved by the Commission, he will not make further statements which are inconsistent withthe Settlement Agreement.
25. 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 Stephenson will each be entitled to proceed with a hearing of the allegations in the Notice of Hearing, unaffected by the Settlement Agreement orthe settlement 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 Stephensonand Staff or otherwise as may be required by law; and
(c) Stephenson 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.
26. 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 Stephenson inwriting. In the event of such notice being given, the provisions of paragraph 25 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
27. 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.
28. Any obligation as to confidentiality shall terminate upon the approval of this Settlement Agreement by the Commission.
IX EXECUTION OF SETTLEMENT AGREEMENT
29. 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.
November 5th, 1997.
SIGNED IN THE PRESENCE OF:
"Wayne Stephenson"
"Larry Waite"