Global Maxfin reaches settlement with MFDA

• Global Maxfin failed to have and maintain risk adjusted capital (RAC) greater than zero between May 2004 to September 2009 except for the months of April, May, July and August 2007, contrary to MFDA Rule 3.1.1(a).
• Global Maxfin and Bouji did not immediately notify MFDA staff in October 2009 that the dealer’s risk adjusted capital was less than zero, contrary to MFDA Rule 3.1.2.
• From October 30, 2009 to November 3, 2009, Global Maxfin did not file the Financial Questionnaire and Report (FQR) within 20 business days of the month end of September 2009, which included a capital deficiency, contrary to MFDA Rule 3.5.1(a).
• Bouji failed in his role as the ultimate designated person to make sure the dealer established, implemented, maintained and communicated a sufficient compliance program for the timely and accurate monitoring and reporting of Global Maxfin’s capital position, contrary to MFDA Rule 2.5.1 and MFDA Policy 2.

The MFDA hearing panel found that in April 2004, Bouji signed a guarantee given to the Toronto-based Bank of Nova Scotia (Scotiabank) making Global Maxfin the guarantor of a loan taken out by Global RESP Corp., a scholarship plan dealer under the Global Group of which Global Maxfin is also a part. In May 2004, Global Maxfin submitted a FQR stating that its RAC was zero when in fact it was negative due to the outstanding loan to Scotiabank.

In 2008, Bouji signed a second guarantee with Scotiabank for Global Maxfin to be the guarantor of a mortgage by another sister company — Global Maxfin Developments Inc. According to MFDA documents “at no point from May 2004 to September 2009, did Global Maxfin report either the 2004 Guarantee or the 2008 Guarantee as contingent liabilities on its monthly FQRs filed with the MFDA.”

Global Maxfin was made a guarantor once again in 2009 of a loan from Roynat for its purchase of Professional Investment Services (Canada) Inc. The acquisition was approved by the MFDA that same year in part based on Global Maxfin’s representations that it had sufficient capital to acquire shares of PIS. The regulator was not aware at the time of any deficiencies in the FQRs. Global was removed as a guarantor for Global Developments in 2009.

During this time, Global Maxfin’s president was not aware of the 2004 and 2008 guarantees given to Scotiabank. It was not until November 2009, that the president contacted the MFDA to say that he had learned of the RAC deficiencies and that the FQR for September 2009 would show that Global was in a negative RAC position at that time. According to MFDA documents, the president’s communication with the regulator stated that Global had rectified the deficiencies.

The MFDA also notes that both Global Maxfin and Bouji cooperated fully with its investigation into this matter.

As part of the settlement agreement, Bouji paid a fine of $25,000 and is prohibited from acting as a branch manager or supervisor of Global Maxfix for two years. Bouji must also sign the “Certificate of Partners or Directors” on all Form 1’s filed by Global Maxfin with the MFDA for as long as he is an officer, director, partner or owner directly or indirectly of Global Maxfin and will comply with MFDA Rules 3.1.2 and 2.51 and MFDA Policy 2. Bouji also paid $10,000 in costs.

Bouji was previously ordered by the Ontario Securities Commission (OSC) to disgorge almost $2 million in a settlement agreement in April 2014 between the OSC and Bouji, Global RESP Corp., Global Growth Assets Inc. and the Global Educational Trust Foundation.

See: OSC settles with Global RESP and officers

Global Maxfin, for its part, paid $50,000 in fines as part of Wednesday’s settlement agreement and agreed to comply with MFDA Rules 3.1.1(a), 3.1.2 and 3.51(a) and to have two individuals sign the “Certificate of Partners or Directors” that is part of Form 1. Global Maxfin also paid $15,000 in costs.