Capital  
Tribunal  
22nd Floor  
22e étage  
Markets  
Tribunal  
des marchés  
financiers  
20 Queen Street West  
Toronto ON M5H 3S8  
20, rue Queen ouest  
Toronto ON M5H 3S8  
Citation: Marrone (Re), 2022 ONCMT 13  
Date: 2022-06-13  
File No. 2020-16  
IN THE MATTER OF  
AURELIO MARRONE  
REASONS AND DECISION  
(Subsection 127(1) of the Securities Act, RSO 1990, c S.5)  
Adjudicators: Lawrence P. Haber (chair of the panel)  
Mary Anne De Monte-Whelan  
Craig Hayman  
Hearing:  
By videoconference, May 31, 2021, June 3, 7, 9, 11, 16, 17, 2021,  
July 22, 2021, September 2, 24, 2021, October 5, 2021; final  
written submissions received December 15, 2021  
Appearances: Michael Brown  
For Staff of the Ontario Securities  
Commission  
Francis Roy  
Michelle Vaillancourt  
Murray Stieber  
For Aurelio Marrone  
Christopher Afonso  
TABLE OF CONTENTS  
1.  
2.  
OVERVIEW .............................................................................................. 1  
FACTUAL BACKGROUND ............................................................................ 2  
2.1  
Relevancy of evidence ..................................................................... 4  
3.  
ISSUES................................................................................................... 5  
3.1  
3.2  
Issues raised by Staff’s allegations .................................................... 5  
Is the Commission the proper forum for these proceedings?.................. 6  
Introduction.......................................................................... 6  
Analysis ............................................................................... 6  
Conclusion...........................................................................12  
Credibility .....................................................................................12  
Marrone ..............................................................................12  
D’Ambrosio..........................................................................13  
Bartolini ..............................................................................13  
Staff’s other witnesses ..........................................................13  
MFDA Investigation ........................................................................13  
IPC Investigation ...........................................................................14  
3.3  
3.4  
3.5  
4.  
ANALYSIS...............................................................................................16  
4.1  
Did Marrone fail to comply with MFDA Rules and IPC policies and  
procedures? ..................................................................................16  
Introduction.........................................................................16  
Did Marrone breach MFDA Rule 2.3.1(a)?.................................16  
Did Marrone breach MFDA Rule 2.1.4? .....................................28  
Did Marrone breach MFDA Rule 2.1.1? .....................................32  
Did Marrone breach MFDA Rule 1.1.2? .....................................33  
Did Marrone fail to follow IPC policies and procedures?...............34  
Conclusion...........................................................................34  
Did Marrone breach his obligation under OSC Rule 31-505 to deal with  
clients fairly, honestly and in good faith?...........................................34  
Introduction.........................................................................34  
Was MU a vulnerable client?...................................................35  
The materiality of the amounts...............................................36  
4.2  
Marrone’s failure to place his client’s interests above his own......36  
Analysis of Commission Rule 31-505 .......................................37  
Conclusion...........................................................................40  
Was Marrone’s conduct contrary to the public interest?........................40  
4.3  
5.  
CONCLUSION..........................................................................................40  
REASONS AND DECISION  
1.  
OVERVIEW  
[1]  
The duty of any registrant, including any individual registrant, to act fairly,  
honestly and in good faith to their client, is a fundamental obligation under  
Ontario securities law and is a cornerstone of the relationship between an  
individual registrant and their client. This duty is engaged and of particular  
importance when an actual conflict of interest or the potential for conflict of  
interest presents in the context of the relationship between a registrant and their  
client. When the client is a vulnerable client, the duty to act fairly, honestly and  
in good faith is of even greater importance and needs to be front and centre in  
the registrant’s thoughts and actions in relation to the client.  
[2]  
The manner in which this duty is to be addressed with respect to actual or  
potential conflicts by Mutual Fund Dealers Association of Canada (MFDA)  
members and their Approved Persons, is set forth in the MFDA Rules and  
member firm policies and procedures. These Rules, policies and procedures  
require an individual registrant to engage with their firm at the earliest moment  
when an issue arises that raises a conflict of interest or the potential for conflict  
of interest. The MFDA Rules set out a tripartite test, requiring the registrant to  
engage as soon as they know or reasonably ought to know, that there is an  
actual or potential conflict of interest. The test is well designed to ensure that  
such issues are resolved objectively in dialogue with the firm and not  
subjectively by the registrant who has an actual or potential conflict. This is to  
ensure that the firm’s resources and objectivity are brought into these  
circumstances and to ensure the client’s interests are protected in accordance  
with the duty owed to the client by the individual registrant and the firm.  
[3]  
[4]  
The respondent in this matter is Aurelio Marrone (Marrone), a mutual fund  
registrant for over 20 years, and the individual responsible for the accounts of  
client “MU” at IPC Investment Corporation (IPC), an MFDA member firm.  
During the material time, approximately March 2017 until her death on May 19,  
2017, MU was an elderly widow, inexperienced and unsophisticated financially,  
1
 
and she was dying of pancreatic cancer. Marrone was her financial adviser and  
close friend.  
[5]  
Marrone was named the sole beneficiary of MU’s estate 10 days before she  
passed away. Marrone also accepted appointments as her powers of attorney for  
personal care and property. The will and powers of attorney were executed at  
MU’s bedside in a palliative care unit in hospital.  
[6]  
[7]  
At the time of her death, MU’s estate was valued at more than $2 million,  
including approximately $1.7 million in investments that were managed by  
Marrone.  
Staff of the Ontario Securities Commission (OSC) alleges that Marrone:  
a.  
b.  
failed to comply with MFDA Rules and IPC’s policies and procedures; and  
breached his obligation under subsection 2.1(2) of OSC Rule 31-505 to  
deal with clients fairly, honestly and in good faith;  
both of which are contrary to the public interest.  
[8]  
For the reasons set out below, we find that Staff has proven its case and  
Marrone failed to comply with MFDA Rules and IPC policies and procedures and  
his obligation to deal with his client fairly, honestly, and in good faith, pursuant  
to OSC Rule 31-505.  
2.  
FACTUAL BACKGROUND  
[9]  
Marrone was registered as a mutual fund salesperson (now known as a dealing  
representative) for 20 years with IPC and its predecessor firm, Associated  
Financial Planners Limited, which amalgamated with IPC in May 2001.  
[10] On May 13, 2001, Marrone signed an Agreement of Approved Person whereby he  
submitted to the MFDA’s jurisdiction to regulate his conduct and activities as a  
registrant in the mutual fund industry. He was terminated by IPC in December  
2017 for the events at issue in this proceeding.  
[11] Marrone managed a total of approximately $6 million in mutual fund investments  
on behalf of approximately 150 clients. One of his clients was MU. MU  
immigrated to Canada from Spain in the late 1960s or early 1970s. She had a  
grade school education and worked as a housekeeper.  
2
 
[12] Marrone first met MU in 1986 after her husband responded to Marrone’s  
advertisement for tax preparation services. Marrone assisted MU and her  
husband with their personal income taxes commencing in 1986, which he  
continued to prepare up until both of their deaths. Marrone testified that he  
formed a close friendship with MU’s husband after the two bonded over sports  
and the stock market. Over the years they became close friends, and both MU  
and her husband attended Marrone’s wedding in 2003.  
[13] Marrone testified that following her husband’s death in 2004, he would speak  
with MU on a weekly basis and would assist her with activities such as driving  
her to cataract surgery and arranging her travel to Spain.  
[14] Marrone became MU’s financial advisor in April 2008 when she transferred her  
spousal RRSP valued at $373,594.50 from CIBC Wood Gundy to IPC. Later that  
year she transferred an additional $900,000 from CIBC to IPC. By December  
2017, when Marrone was terminated by IPC, the aggregate value of MU’s  
accounts with Marrone at IPC was $1,710,527.06.  
[15] In February 2017 MU was diagnosed with terminal pancreatic cancer. Following  
her diagnosis, her long-time friend MA moved into MU’s condominium to assist  
with her care. MA testified that she called Marrone on either March 10 or March  
11, 2017, and informed him that MU had pancreatic cancer and was given only  
three months to live. MA, with assistance from her daughter SC, cared for MU in  
her home until she was admitted to palliative care on May 1, 2017.  
[16] In late-March or early-April 2017, MU asked for Marrone’s assistance with her  
estate. Marrone provided her with the names of three different lawyers, and MU  
selected Romeo D’Ambrosio, an experienced wills and estates lawyer, from the  
list. Marrone arranged for D’Ambrosio to be retained, and scheduled meetings  
between D’Ambrosio and MU to enable D’Ambrosio to prepare the estate  
documents, which included a new will, and powers of attorney for personal care  
and property.  
[17] The estate documents were ultimately executed by MU on May 9, 2017. MU  
passed away ten days later, on May 19, 2017. In the estate documents, Marrone  
was named as Power of Attorney for Property and Power of Attorney for Personal  
Care, as well as alternate executor. Marrone was also named in MU’s will as the  
3
sole beneficiary of her estate. At the time of her death, the value of MU’s estate  
was over $2 million.  
[18] On September 28, 2017, IPC opened an investigation into Marrone upon  
receiving a complaint letter from MA’s son-in-law (SC’s husband) FC. FC, who is  
also a mutual fund registrant, advised IPC that Marrone had been named as a  
beneficiary under MU’s will. The MFDA subsequently began investigating Marrone  
on October 6, 2017, after IPC filed a Member Event Tracking System report in  
response to the complaint.  
[19] Marrone was terminated by IPC on December 12, 2017, on 30 days’ notice,  
effective January 11, 2018.  
[20] The Commission’s involvement in this case arose at the request of the MFDA as a  
result of the MFDA’s lack of subpoena power to compel production of records or  
attendance at regulatory interviews of individuals or entities not registered with  
or through MFDA Members. Specifically, the MFDA required the Commission’s  
assistance to compel D’Ambrosio, the estates lawyer who drafted MU’s estate  
documents, to produce MU’s client file.  
2.1  
Relevancy of evidence  
[21] There was a substantial amount of evidence put forward by the parties in this  
proceeding, some of which was relevant to the issues we are to decide, which  
are set out below, and some of which was not. MU’s legal capacity to make a will  
is not an issue before us in this proceeding, although, at least inferentially, a  
great deal of evidence was led to this effect. While we will not be deciding the  
issue of MU’s capacity to make a will, whether MU was a vulnerable investor, is a  
relevant issue for us.1 Evidence before us in this proceeding, including evidence  
relating to the making of her will and powers of attorney may be relevant to our  
determination as to her vulnerability as a client.  
[22] In these reasons for our decision, we will not address evidence that was lead  
that is not relevant to the issues that we must decide. Evidence that we did not  
find relevant to the proceeding includes:  
1
Tonnies (Re), 2005 77675 (CA MFDAC) (Tonnies).  
4
 
a.  
MU’s 2008 RRSP designation. In 2008 when MU transferred her RRSP to  
IPC Marrone was named as the beneficiary of the account on the RRSP  
application form. Although the application was approved and the RRSP account  
was opened, the designation of Marrone as beneficiary was never implemented.  
Instead, MU’s deceased husband was named as the designated beneficiary on  
the spousal RRSP account by the fund company. Marrone took no steps to  
correct this error. Staff says this is “compelling circumstantial evidence” that  
Marrone knew as early as 2008 that it was, “against IPC policies and procedures  
and the MFDA Rules for him to be named as a designated beneficiary on a client  
account.”2 We respectfully disagree and find that this incident is unrelated to the  
allegations we must decide in this proceeding.  
b.  
The extent of MU’s friendship with MA and her daughter SC. We accept  
that MA and SC supported and cared for MU in her final days. They treated her  
with kindness and acted in her best interest. We find any supposed “gaps” in  
their friendship prior to 2004 and their lack of knowledge relating to MU’s  
relationship with Marrone to be completely irrelevant to the issues before us.  
c.  
Issues relating to the custody of MU’s ashes and her funeral. MA and SC  
testified regarding the custody of MU’s ashes and the fact that MU did not have a  
funeral. While no doubt important to MU’s family and loved ones, these issues  
have no bearing on the issues we are to decide in this proceeding.  
3.  
ISSUES  
3.1  
Issues raised by Staff’s allegations  
[23] As stated above, Staff alleges that Marrone:  
a.  
b.  
failed to comply with MFDA Rules and IPC’s policies and procedures; and  
breached his obligation under subsection 2.1(2) of OSC Rule 31-505 to  
deal with clients fairly, honestly and in good faith;  
both of which are contrary to the public interest.  
[24] The issues that we must decide are:  
2
Written Submissions of Staff of the Ontario Securities Commission, dated November 8, 2021 at para  
46.  
5
   
a.  
Did Marrone fail to comply with MFDA Rules and IPC policies and  
procedures? And,  
b.  
Did Marrone breach his obligation under OSC Rule 31-505 to deal with  
clients fairly, honestly and in good faith?  
[25] In conducting our analysis of these two issues we will review the specific MFDA  
Rules and the IPC policies and procedures Marrone is alleged to have breached,  
and the aggravating factors we considered in our analysis of Commission Rule  
31-505.  
[26] Before we conduct that analysis, we will conduct an analysis of several  
preliminary issues related to the proper forum for these proceedings, witness  
credibility, the MFDA investigation, and the IPC investigation, all of which inform  
our decisions on the issues raised by Staff in the Statement of Allegations.  
3.2  
Is the Commission the proper forum for these proceedings?  
Introduction  
[27] The first preliminary issue we will address was first raised by Marrone in his  
closing submissions: is the Commission the proper forum to adjudicate this  
matter? Marrone submits that it is not.  
[28] Having reviewed Marrone’s and Staff’s submissions on this issue, including  
additional sur-reply submissions from Marrone, we conclude that the Commission  
has jurisdiction to decide this proceeding, and therefore it is the proper forum.  
Analysis  
[29] As noted above, this issue was first raised in Marrone’s closing submissions.  
Marrone argues that the MFDA is the proper forum to adjudicate his compliance  
with MFDA Rules and IPC policies and procedures. As a self-regulatory  
organization under the Securities Act3 (the Act), the MFDA is responsible for  
enforcing its own Rules, which arises from the contractual relationship between  
Marrone and the MFDA, as the MFDA Rules are not empowered by statute.  
[30] Marrone submits that the jurisdiction of the Commission is limited to enforcing  
Ontario “securities law”, which is a term defined in the Act. He submits that that  
3
Securities Act, RSO 1990, c S.5.  
6
     
definition does not include either the MFDA Rules or the policies of employers  
like IPC. Therefore, as the MFDA Rules are not included in “Ontario securities  
law” the Commission cannot properly make findings with respect to whether he  
complied with MFDA Rules or IPC Policies.  
[31] Marrone also argues that this Panel must rule on whether his conduct was  
“unfair”, “dishonest” or “bad faith” based on the meaning of those terms and it is  
insufficient to point to a breach of IPC Policies or MFDA Rules as a shortcut to  
meeting this high threshold required by section 2.1(2) of Commission Rule 31-  
505.  
[32] Staff disagrees with Marrone’s analysis of the Act and takes the position that the  
MFDA does not have exclusive jurisdiction to determine MFDA Rules. Staff  
submits that nothing in the wording of subsections 2.1(4) or 21.1(3) of the Act  
suggests that the MFDA has exclusive jurisdiction to determine breaches of  
MFDA Rules. We agree with this submission and find that the MFDA does not  
have exclusive jurisdiction to determine breaches of MFDA Rules.  
[33] Staff also submits that any assessment of the potential breach by an MFDA  
Approved Person of s. 2.1(2) of Commission Rule 31-505 must necessarily be  
made in the context of the MFDA Rules governing the Approved Person’s conduct  
in relation to their clients. Such an assessment will often require a determination  
of whether those MFDA Rules have been complied with. We agree with this  
submission and consider the breaches of MFDA Rules and IPC policies and  
procedures as one factor in our analysis of Commission Rule 31-505.  
[34] In support of their position, Staff relies on the Commission’s Order, as amended,  
recognizing the MFDA as a self-regulatory organization in accordance with ss.  
21.1(1) and (2) of the Act (the MFDA Recognition Order), which governs the  
specific regulatory functions of the MFDA.  
[35] The MFDA Recognition Order states:  
7. Compliance by Members with MFDA Rules  
(A) The MFDA shall enforce, as a matter of contract between  
itself and its members, compliance by its members and their  
Approved Persons with the rules of the MFDA and, to assist  
the Commission with carrying out its regulatory mandate,  
the MFDA shall cooperate with the Commission in ensuring  
7
compliance with applicable securities legislation relating to  
the operations, standards of practice and business conduct  
of members and Approved Persons, without prejudice to any  
action that may be taken by the Commission under  
securities legislation.  
…
8. Discipline of Members and Approved Persons  
(A) The MFDA shall, as a matter of contract, have the right  
to and shall appropriately discipline its members and their  
Approved Persons for violations of the rules of the MFDA  
and, to assist the Commission with carrying out its  
regulatory mandate, shall cooperate with the Commission in  
the enforcement of applicable securities legislation relating  
to the operations, standards of practice and business  
conduct of the members and Approved Persons, without  
prejudice to any action that may be taken by the  
Commission under securities legislation.4  
[36] Staff submits that these sections of the MFDA Recognition Order clearly  
contemplate that the MFDA and the Commission have concurrent and  
overlapping jurisdiction with respect to the MFDA’s regulatory functions. Notably,  
both s. 7(A) and s. 8(A) of the Recognition Order conclude with the words:  
“without prejudice to any action that may be taken by the Commission under  
securities legislation.”  
[37] In his sur-reply submissions Marrone interprets the MFDA Recognition Order  
differently, arguing that it does not create a concurrent jurisdiction, but rather  
sets out a bifurcated jurisdiction whereby enforcement steps may be taken by  
both regulators separately. We reject this interpretation of the MFDA Recognition  
Order and adopt Staff’s interpretation.  
3.2.2.a  
Case Law  
[38] In his submissions Marrone warns that there is no example in the past of the  
Commission ever making independent findings of breaches of the MFDA Rules  
and/or of employer policies and using such findings to satisfy Rule 31-505. Any  
findings of this nature, he submits, ought to have been before the MFDA. Any  
4
MFDA Recognition Order, April 1, 2021.  
8
findings of this nature by the Commission “would be supplanting the jurisdiction  
given to the MFDA.”5  
[39] Staff cites two cases where the Commission has independently determined  
breaches of SRO Rules: Re Argosy Securities Inc6 and Re Christopher Reaney.7  
[40] In Argosy the Commission upheld a Director’s decision that found that Argosy,  
an investment dealer, and Keybase Financial Group Inc., a mutual fund dealer  
and exempt market dealer, had failed to comply with various provisions of  
Ontario securities law. Argosy and Keybase subsequently requested a hearing  
and review of the Director's Decision.8  
[41] In reviewing the evidence gathered in review of the respondents’ conduct by the  
SROs, the OSC Hearing and Review Panel found that the respondents were in  
breach of National Instruments 31-105 and 31-505, specifically noting that they:  
failed substantially to comply with applicable SRO rules,  
thereby contravening the requirement in subsection 2.1(1)  
of NI 31-505 that the firms deal with their clients fairly,  
honestly and in good faith.9  
[42] In Reaney, another Hearing and Review of a Director’s Decision, the OSC Panel  
ruled on compliance with MFDA Rules and Member policies and procedures in a  
situation where the SRO had explicitly elected not to pursue any enforcement in  
relation to the conduct at issue.  
[43] Christopher Reaney was a mutual fund registrant who had been investigated by  
the MFDA for a breach of MFDA Rules. Although MFDA Staff was of the view that  
there was evidence to support a finding of a breach of MFDA Rule 2.1.1(b),  
MFDA Staff elected not to commence disciplinary proceedings before an MFDA  
Panel and instead sent him a warning letter, copied to Staff of the Commission10.  
OSC Staff then conducted its own investigation and decided to seek a suspension  
5
Written Submissions of the Respondent, dated November 23, 2021 at para 6.  
Argosy Securities Inc. and Keybase Financial Group Inc (Re), 2016 ONSEC 11 (Argosy).  
Reaney (Re), 2015 ONSEC 23 (Reaney).  
Argosy at paras 1, 3.  
Argosy at para 180.  
Reaney at paras 9–10.  
6
7
8
9
10  
9
of Reaney’s registration, notwithstanding the MFDA’s decision not to take any  
enforcement action.11  
[44] At a hearing attended by Reaney, the Director suspended his registration.12 He  
subsequently sought a Hearing and Review of the Directors Decision.  
[45] The OSC Hearing and Review Panel upheld the suspension imposed by the  
Director. The Hearing and Review Panel’s decision was based, in part, on its  
finding that Reaney’s conduct was a breach of MFDA Rules and his dealer’s  
policies and procedures relating to the use of pre-signed forms. The panel also  
held that Reaney’s conduct constituted a breach of Commission Rule 31-505.13  
[46] In Reaney, the Panel specifically considered the Commission’s decision-making  
authority in relation to SRO regulated conduct in circumstances where no SRO  
proceeding had been commenced and rejected his submission that the Panel  
should defer to the MFDA’s decision not to commence enforcement  
proceedings.14  
[47] We acknowledge that these decisions are not enforcement merits hearings,  
however we find that the principles articulated by the Panels in these matters are  
instructive in deciding the issue before us and we rely on them in coming to our  
decision that this panel has jurisdiction to hear this proceeding.  
3.2.2.b  
Cooperation between the MFDA and OSC  
[48] MFDA Investigator Mike Ford testified that the Commission’s involvement in this  
case arose as result of the MFDA’s lack of subpoena power to compel production  
of records or attendance at regulatory interviews of individuals or entities not  
registered with the MFDA. Specifically, the MFDA required the Commission’s  
assistance to compel D’Ambrosio, the estates lawyer who drafted MU’s will, to  
produce MU’s client file.  
[49] In this proceeding the MFDA and Commission worked together. The Commission  
“used the enforcement capability and regulatory expertise” of the MFDA as  
contemplated by subsection 2.1(4) of the Act. The investigation into Marrone’s  
11  
Reaney at paras 11-13.  
Reaney at para 16.  
Reaney at paras 155-156.  
Reaney at paras 160-161.  
12  
13  
14  
10  
conduct was commenced by the MFDA, MFDA investigators remained involved in  
the investigation throughout and MFDA senior litigation counsel acted as co-  
counsel to OSC litigation counsel.  
[50] This was clearly an efficient and effective use of both MFDA and Commission  
resources, and resulted in a more efficient investigation, which is in accordance  
with the purposes of the Act.  
3.2.2.c  
Issues in this proceeding are not a private dispute  
[51] In his submissions Marrone characterizes the case before us as a “private  
dispute” and as such, this Panel lacks the public interest jurisdiction to decide  
this matter. He relies on Committee for the Equal Treatment of Asbestos Minority  
Shareholders v Ontario (Securities Commission)15 in support of this assertion.  
[52] In Asbestos the Commission declined to exercise its public interest jurisdiction  
under s. 127(1) to impose sanctions on the Québec government and SNA, a  
crown corporation fully owned by the province, as requested by the minority  
shareholders of SNA. One of the issues considered by the Commission was  
whether the OSC should exercise its public interest jurisdiction under s. 124(1)  
(now s. 127(1), para. 3) of the Securities Act and take away Québec’s trading  
exemptions in the Ontario capital markets.  
[53] In its analysis of the Commission’s public interest jurisdiction under what is now  
section 127(1) of the Act, the Supreme Court of Canada describes the  
Commission as having “wide”16 but not “unlimited”17 discretion in the exercise of  
its public interest jurisdiction. It also recognized:  
[T]hat s. 127 is a regulatory provision. In this regard, I  
agree with Laskin J.A. that “[t]he purpose of the  
Commission’s public interest jurisdiction is neither remedial  
nor punitive; it is protective and preventive, intended to be  
exercised to prevent likely future harm to Ontario’s capital  
markets” (p. 272). This interpretation of s. 127 powers is  
consistent with the previous jurisprudence of the OSC in  
cases such as Canadian Tire … in which it was held that no  
breach of the Act is required to trigger s. 127. It is also  
15  
2001 SCC 37 (Asbestos).  
Asbestos at para 39.  
Asbestos at para 41.  
16  
17  
11  
consistent with the objective of regulatory legislation in  
general. The focus of regulatory law is on the protection of  
societal interests, not punishment of an individual’s moral  
faults: see R. v. Wholesale Travel Group Inc.  
…
Therefore, s. 127 cannot be used merely to remedy  
Securities Act misconduct alleged to have caused harm or  
damages to private parties or individuals.18  
[54] Marrone argues that the issues in this case arise from his close relationship with  
MU and that any issues regarding MU’s will are more properly the subject of civil  
litigation before the Ontario Superior Court.  
[55] We disagree. The issues we must decide in this matter are not analogous to the  
issues in Asbestos, which was a dispute between two parties relating to the price  
of shares. While Marrone may view this as dispute between himself and MU’s  
friends and family, or even between himself and MU’s lawyer D’Ambrosio, this  
proceeding relates to his alleged breaches of MFDA and Commission Rules, which  
engages the Commission’s public interest jurisdiction.  
Conclusion  
[56] We are persuaded that the Commission has jurisdiction to hear this matter based  
upon our reading of the Act, the MFDA Recognition Order and the case law put  
before us. We do not find that the MFDA and Commission cooperated  
inappropriately, nor are we persuaded by Marrone’s submission that the matters  
before us are related to a private dispute. We will now move on to consider the  
issues raised by Staff’s allegations in this proceeding.  
3.3  
Credibility  
Marrone  
[57] Broadly speaking, there are two stories in this proceeding. The one told by  
Marrone, and the one told by nearly everyone else. We do not find Marrone to be  
a credible witness regarding much of his key evidence in this proceeding. We do  
18  
Asbestos at paras 42, 45.  
12  
     
not believe the story he is telling, and the only person who could corroborate his  
evidence is MU, who is no longer with us.  
[58] Marrone attempted to support his story by having his wife MM testify. While we  
have no reason to doubt MM’s testimony about her husband’s close relationship  
with MU, it is not useful evidence to us in determining whether her husband  
breached MFDA Rules, IPC policies and procedures, and Commission Rule 31-  
505. In fact, we accept Marrone’s evidence that he had a close relationship with  
MU, but as we note below in [174], we view this as an aggravating factor and  
not as an exculpatory factor.  
D’Ambrosio  
[59] We found D’Ambrosio to be a credible and reliable witness, especially when his  
evidence was supported by contemporaneous notes or memoranda.  
Bartolini  
[60] Similarly to D’Ambrosio, we found his law clerk Nancy Bartolini to be a credible  
and reliable witness, whose evidence was supported by contemporaneous notes.  
Staff’s other witnesses  
[61] We found the MFDA Investigator Mike Ford, the IPC Compliance Officer Jens  
Scharge and MU’s employer CR to be credible and reliable witnesses. We place  
less weight on the evidence of MA and SC as it relates to the legal issues before  
us, however, we found their testimony relating to MU’s past, her character, and  
her last days to be reliable and helpful evidence to us in determining MU’s  
vulnerability.  
3.4  
MFDA Investigation  
[62] Mike Ford is a manager with the MFDA and the person responsible for  
investigating Marrone’s conduct. The MFDA investigation began on October 11,  
2017, after the MFDA was informed of IPC’s investigation. Ford has been  
employed by the MFDA since 2005, working in an investigative capacity for  
sixteen years. Staff filed an affidavit sworn by Ford in this proceeding on April  
20, 2021. Ford also testified in the Merits Hearing.  
13  
       
[63] In his submissions Marrone argued that the MFDA’s investigation and the  
evidence obtained through that investigation was tainted with procedural errors  
during the course of the investigation that resulted in the tainting of evidence  
from witnesses. Specifically, he took issue with the joint interviews of MA and  
SC.  
[64] Ford admitted under cross-examination that it is preferable to interview  
witnesses separately to avoid the possibility of collusion, and to record the  
entirety of any interviews conducted. During the joint interviews of MA and SC  
those procedures were not followed.  
[65] While it is not ideal that these interview procedures were not followed in this one  
instance, we do not find it to be a material error. We have relied very little on  
the evidence of MA and SC in coming to our decision on the legal issues in this  
case, and the minor irregularities in this aspect of the investigation do not impact  
our decision.  
3.5  
IPC Investigation  
[66] Jens Scharge is a senior complaints and investigations officer with IPC,  
responsible for resolving client complaints and conducting investigations on  
behalf of IPC. Scharge testified to the investigation he conducted of Marrone on  
behalf of IPC following a complaint it received in October 2017 with respect to  
Marrone’s conduct with MU.  
[67] In late November 2017, IPC concluded its investigation. Scharge prepared an  
investigation report dated November 20, 2017, and concluded that Marrone  
should be terminated without cause for rule violations and for becoming the sole  
beneficiary of MU’s estate.  
[68] Marrone’s submissions detail numerous issues with the IPC investigation that he  
submits should lead us to the conclusion that Scharge’s evidence and the  
conclusions reached in his November 20, 2017 report are not accurate or  
reliable. We will address several of these issues below.  
[69] First, Marrone submits that Scharge was close-minded to exculpatory  
explanations for Marrone’s behaviour, such as failing to include language in his  
report to reflect that Marrone stated that he was unaware of previous wills made  
14  
 
by MU in 2012, that Marrone’s nephew didn’t take possession of MU’s  
condominium, and that Marrone was unaware he had been named as sole  
beneficiary until after MU’s passing.  
[70] The first two issues relating to previous wills and possession of MU’s  
condominium are irrelevant to our decision in this proceeding. However, we  
heard a great deal of evidence relating to the issue of when Marrone became  
aware of his designation as sole beneficiary of MU’s estate. Scharge’s failure to  
include this information in his report does not impact our analysis of this issue,  
which is based on documentary and oral evidence put before us in this  
proceeding.  
[71] Second, Marrone submits that Scharge’s interview techniques were inconsistent.  
He failed to record a call with Marrone on October 3, 2017, and his notes were  
not verbatim. No evidence was lead that would inform us as to the required  
standard to be met for an internal compliance examination at a mutual fund  
dealer such as IPC. In our view, while some of the investigation techniques used  
by Scharge could have been improved, the evidence before us does not point to  
an ineffective or unfair investigation.  
[72] Finally, Marrone submits that Scharge’s investigation failed to consider the close  
relationship between MU and Marrone. As we conclude later on in our decision at  
[174], the personal relationship between MU and Marrone is irrelevant to the  
issue of whether Marrone breached IPC policies and MFDA and Commission rules.  
Similarly, Scharge’s failure to consider this issue was irrelevant to the issue he  
was investigating, namely, a breach of IPC policies and procedures and MFDA  
Rules.  
[73] As stated above at [61], we found Scharge to be a credible witness and his  
investigation into the issues before for us was adequate.  
15  
4.  
ANALYSIS  
4.1  
Did Marrone fail to comply with MFDA Rules and IPC policies and  
procedures?  
Introduction  
[74] Marrone has spent his entire career as a mutual fund salesperson with the same  
company, IPC, and its predecessor Associated Financial Planners Limited. During  
the material time he was also a licenced insurance agent and had a tax  
preparation business. On May 13, 2001, Marrone signed his Agreement of  
Approved Person whereby he submitted to the MFDA’s jurisdiction to regulate his  
conduct and activities as a registrant in the mutual fund industry. In particular,  
Marrone agreed to be bound by and to observe and comply with MFDA Rules as  
they are amended from time to time.  
[75] As a registrant working with IPC, Marrone was also bound to comply with IPC  
rules, policies and procedures. Each year he was registered with IPC, Marrone  
completed an IPC compliance questionnaire in which he affirmed that he had  
read and understood IPC rules, policies, and procedures, and that he agreed to  
abide by those rules, policies, and procedures. In December 2016, Marrone  
completed an IPC compliance questionnaire affirming that he had “read, fully  
understood, and will comply with” the requirements in IPC’s National Policies and  
Procedures Manual 4.2 (IPC Manual 4.2) and the Compliance Bulletins issued  
by IPC from time to time.  
[76] IPC Manual 4.2 was the governing policy manual at IPC from April 2015 through  
to June 2017, which encompassed the material time. The IPC Manual 4.2  
included policies and procedures relating to integrity, discretionary trading,  
powers of attorney, executor of a client’s estate, conflicts of interest, monetary  
or non-monetary benefits, and gratuities, all of which are relevant to this  
proceeding.  
Did Marrone breach MFDA Rule 2.3.1(a)?  
[77] Staff has alleged that Marrone failed to comply with MFDA Rule 2.3.1 (a)  
“Control or Authority” This Rule states,  
16  
       
No Member or Approved Person shall have full or partial  
control or authority over the financial affairs of a client,  
including: (i) accepting or acting upon a power of attorney  
from a client; (ii) accepting an appointment to act as a  
trustee or executor of a client; or (iii) acting as a trustee or  
executor in respect of the estate of a client.19  
[78] On consideration of the facts set out below, we find that Marrone breached MFDA  
Rule 2.3.1 (a) by accepting a power of attorney for property from his client MU  
and by failing to renounce an appointment to act as alternate executor in her  
will. We will address each of these breaches in detail below.  
4.1.2.a  
Facts  
4.1.2.a.i  
MU’s employers offer estate planning assistance  
[79] In February 2017, MA informed CR, MU’s employer, of MU’s terminal pancreatic  
cancer. CR and her husband IR (the Rs) had employed MU as their housekeeper  
for over 30 years and like MU, CR immigrated to Canada from Spain. IR, CR’s  
late husband and a former senior executive at CIBC, knew MU’s husband from  
his role as the maître-d’ at the CIBC executive dining room. After MU’s husband  
passed away in 2004, the Rs helped MU arrange his affairs, with the assistance  
of their personal financial manager, GS. They wanted to assist MU in arranging  
her affairs as well, as they were concerned MU would be unable to do it herself.  
CR testified that she felt MU did not understand how sick she was, nor the  
process involved in putting her affairs in order. The Rs contacted GS and  
arranged a meeting with MU at their home on March 10, 2017, to offer  
assistance and advice to her regarding her estate.  
[80] CR testified that at the March 10 meeting, GS recommended to MU that she have  
a will and powers of attorney prepared, but MU responded that she did not need  
her own will because she had her husband’s. GS also suggested that MA be MU’s  
power of attorney for health with CR as an alternate, which MU agreed to at the  
meeting. According to CR, MU stated that she wanted her estate to go to her  
niece who lived in New York.  
19  
MFDA Rule 2.3.1 (a) “Control or Authority”.  
17  
[81] Following the March 10 meeting, GS emailed and telephoned Marrone in relation  
to MU’s estate planning.  
[82] An email from GS to Marrone dated March 17, 2017, describes a phone call he  
had with Marrone on March 16, 2017, as well as his understanding of the “facts”.  
In the email GS mentions that during the phone call Marrone advised that  
contrary to what MU had told GS and the Rs at their meeting on March 10, he  
was under the impression that MU did have a new will and Powers of Attorney for  
Property and Personal Care drafted after her husband passed away. GS thanks  
Marrone in his email for, “agreeing to "tactfully" do some checking to see if these  
documents do exist, and that they are up to date before getting back to me. The  
most important thing that I got from the meeting last Friday was that [MU]  
wants the bulk of her Estate to go to her niece so if this is not the case, then she  
will need to give instructions for a new Will.”  
[83] Initially Marrone testified that his call with GS was in relation to a request from  
GS for information about MU’s investments, which he says MU instructed him not  
to provide to him, and not estate planning matters. Marrone later admitted on  
cross-examination that in the call with GS in March he had indicated to GS he  
thought MU had a new will and powers of property and personal care drafted  
after her husband passed away.  
[84] Ultimately Marrone did not assist GS with his request, testifying that MU  
instructed him not to respond.  
[85] CR testified that she also called Marrone after the March 10 meeting to advise  
him that MU had given her permission to ask him to relay details of her assets,  
and that MU had agreed to allow the Rs and GS to arrange her affairs. She  
testified that Marrone cut the conversation short, did not provide the requested  
information, and CR never spoke to him again.  
[86] Shortly after CR’s call with Marrone, MU advised CR that she had changed her  
mind regarding her estate planning, without providing any further details. She  
advised CR that she would rather Marrone organize her affairs.  
18  
4.1.2.a.ii  
Romeo D’Ambrosio Retained to Draft Estate Documents  
[87] According to Marrone’s testimony, sometime in April 2017 MU called Marrone to  
ask for the name of a lawyer who could prepare her will. Marrone provided three  
names for lawyers and MU selected Romeo D’Ambrosio.  
[88] Marrone and D’Ambrosio corresponded by email to set up a meeting with MU to  
discuss a new will and powers of attorney. The meeting was scheduled to take  
place on April 28 in her apartment, as she was confined to a hospital bed there  
by this time.  
[89] D’Ambrosio testified that when he attended at MU’s apartment on April 28, he  
asked her about her intentions for her will and powers of attorney. MU advised  
him that she wanted Marrone to be the sole beneficiary of her estate and hold  
powers of attorney over her personal care and property. She informed  
D’Ambrosio that she had no previous wills. MU also authorized D’Ambrosio to  
disclose details of her estate planning with Marrone.  
[90] During their meeting on April 28th, D’Ambrosio came to believe MU was not  
capable of giving him instructions on the will and powers of attorney as she was  
unable to provide him the value of her assets.  
[91] Near the end of their meeting, Marrone arrived at MU’s home. D’Ambrosio  
advised Marrone that he had determined that MU was not capable of giving  
instructions due to her inability to provide the value of her assets. In response,  
Marrone enquired about whether MU could refer to an account statement to  
improve her answers, to which D’Ambrosio agreed. However, even with this  
assistance MU was unable to provide the value of her assets to the lawyer.  
[92] After the April 28 meeting at MU’s home, D’Ambrosio informed Marrone that he  
would not be accepting MU’s retainer as she appeared either “incapable or  
unwilling” to provide him instructions  
[93] He went on to advise Marrone that he should get an Ontario Capacity  
Assessment done of MU, and if in the Ontario Capacity Assessment Officer's  
opinion she was competent, then he could proceed with the will. Ontario  
Capacity Assessment Officers are medical professionals trained in assessing  
testamentary capacity with respect to wills and powers of attorney. D’Ambrosio  
19  
memorialized his discussion with Marrone regarding the capacity assessment in a  
handwritten note dated May 1, 2017, as well as in his memo to file dated May 4,  
2017.  
[94] Subsequently, on the morning of May 1, 2017, MU was taken by ambulance to  
hospital and was admitted into the palliative care unit later that night. She  
remained there until her death on May 19, 2017.  
4.1.2.a.iii Simkovitch Capacity Letter  
[95] Marrone testified that on May 1, while he was waiting with MA for MU to be  
admitted to the hospital, Marrone and MA were approached by a woman who  
identified herself as a social worker. She asked them about their relationship to  
MU, and whether or not MU had Powers of Attorney or a will. Marrone says that  
he advised the social worker that MU was “having those done”. The social worker  
then advised him that she would prepare a letter for them to take to “who ever  
is preparing those documents.” The social worker later provided Marrone with a  
letter signed by Dr. Simkovitch, one of MU’s doctors. The letter referred to Dr.  
Simkovitch’s meeting with MU on April 13, 2017, and noted that Dr. Simkovitch  
found MU to be “lucid and capable of making decisions regarding her care” at  
that time. Marrone hand delivered the Simkovitch letter to D’Ambrosio’s office  
later that day.  
[96] Having received the Simkovitch letter, D’Ambrosio proceeded to instruct his  
assistant Nancy Bartolini to prepare drafts of MU’s will and powers of attorney,  
based on the instructions he received from MU at the April 28, 2017, meeting. It  
is worth noting that the letter did not identify Dr. Simkovitch as an Ontario  
Capacity Assessment officer, and the letter was silent as to her capacity to draft  
a will or powers of attorney, addressing only her capacity to make “decisions  
relating to her care”.  
20  
4.1.2.a.iv Draft Estate Documents emailed to Marrone  
[97] On May 3, 2017, D’Ambrosio emailed the drafts to Marrone, asking him to review  
the drafts for “spelling, etc.” and inquired as to the best time for meeting with  
MU for execution of the documents. The documents he emailed were:  
a.  
A draft Continuing Power of Attorney for Property of MU, naming Marrone  
as the attorney for property;  
b.  
A draft Continuing Power of Attorney for Personal Care of MU, naming  
Marrone as the attorney for personal care;  
c.  
A draft Last Will and Testament of MU, naming Marrone as sole  
beneficiary of the estate and as alternate executor.  
[98] Marrone replied to the email within 30 minutes of it being sent and proposed  
times for D’Ambrosio to meet with MU in the hospital the following day, May 4,  
2017. Despite this quick reply, Marrone denies having opened the attachments  
to the email at that time.  
[99] He acknowledged under cross-examination that he knew at the time that there  
were attachments to the email, and that he read the body of the email, including  
the words “Attached is a draft of her estate planning documents. Please have a  
look and review for spelling, etc.”. He also agreed that assisting MU with her will  
and powers of attorney was important to him, and he considered the estate  
documents D’Ambrosio had asked him to review to be important documents.  
[100] Marrone submits that Staff has provided no direct evidence that he opened and  
reviewed the attachments on May 3. Conversely, Marrone has provided no  
evidence that he did not open it, beyond his testimony that he did not open the  
attachments, which we do not find credible.  
4.1.2.a.v  
May 4, 2017, Meeting with MU  
[101] On May 4, 2017, D’Ambrosio and his assistant Nancy Bartolini attended at  
Mackenzie Health Centre in order for MU to sign her will and powers of attorney.  
[102] D’Ambrosio and Bartolini’s evidence in relation to this meeting, supported by  
memorandums drafted on May 4 and placed in D’Ambrosio’s client file for MU,  
differ in several important ways from Marrone’s testimony relating to the event.  
21  
[103] D’Ambrosio and Bartolini describe a meeting at the hospital, the purpose of  
which was to have MU sign her powers of attorney and will. They say they were  
met by Marrone outside of MU’s hospital room, and they allowed him to go in to  
visit with MU briefly before they visited. After Marrone exited the room, they  
entered, and advised MU that they were there for her to sign her will and powers  
of attorney. MU immediately advised them that she was not ready to sign her  
will as she wasn’t feeling well and did not want to “mess it up.” D’Ambrosio  
advised that he could return another time and would leave his card with her so  
she could call him when she felt up to it. Before leaving D’Ambrosio confirmed  
her instructions and advised how the will was drafted, leaving all of her estate to  
Marrone. Both D’Ambrosio and Bartolini stated that at this point MU seemed  
puzzled and stated, “Why would I leave everything to Aurelio if I have family?”  
[104] At that, D’Ambrosio and Bartolini left the hospital room and reconvened with  
Marrone in the hospital parking lot. D’Ambrosio advised Marrone that he was  
unable to execute the will and advised him of MU’s question regarding leaving  
her estate to Marrone. Both D’Ambrosio and Bartolini testified that in response  
Marrone said something to the effect that “she has done a complete 360.”  
[105] D’Ambrosio’s memo to file states that Marrone then asked him why he didn’t  
have MU sign the documents at the first meeting on April 28, at MU’s home.  
D’Ambrosio explained to him that he could not have already prepared the will at  
that time because he hadn’t yet received instructions from MU, which was the  
purpose of the April 28 meeting. He also stated the additional issue of his belief  
that she lacked capacity to give those instructions at that time.  
[106] Marrone gives a different account of the May 4, 2017, meeting. He testified that  
on May 4 he arrived at the hospital to visit with MU, and about an hour later  
D’Ambrosio and Bartolini showed up to have MU execute her Powers of Attorney  
and Will. He waited outside MU’s hospital room while D’Ambrosio and Bartolini  
were inside. Approximately 15-20 minutes later they exited the room and  
informed him that MU had told them that she was not prepared to sign the will.  
[107] He says the conversation took place in the hallway outside MU’s room, denied  
using the phrase, “360 degree turn” in his conversation with D’Ambrosio and  
22  
Bartolini, and denied asking D’Ambrosio why he didn’t have the will executed at  
the April meeting.  
[108] On this issue we find that D’Ambrosio and Bartolini’s account of the May 4  
meeting is more reliable and credible than Marrone’s account. Their accounts  
were consistent, and the memos were made contemporaneously to the events.  
[109] Marrone’s version of events is not supported by evidence and is in contradiction  
to the statement he provided to the MFDA in 2019, which is that he had no  
recollection of a discussion with D’Ambrosio and Bartolini on May 4, 2017.  
[110] We prefer the evidence of D’Ambrosio and Bartolini where it conflicts with the  
evidence provided by Marrone regarding the events of May 4.  
4.1.2.a.vi May 9, 2017, Signing of the Estate Documents  
[111] On May 9, 2017, D’Ambrosio attended once again at MU’s hospital room to  
execute her estate documents. This meeting was scheduled with Marrone via  
email. This time he was joined by his wife Emilia D’Ambrosio to act as witness,  
as Ms. Bartolini was unavailable.  
[112] Marrone was in the room with MU when D’Ambrosio arrived. MU wanted Marrone  
to stay in the room while the documents were being signed and executed, but  
D’Ambrosio advised her this was inappropriate. Once Marrone had left the room,  
D’Ambrosio went through the powers of attorney. MU asked for Marrone to re-  
enter the room so she could ask him to accept the power of attorney  
designations. Marrone agreed to be both the power of attorney for personal care  
and for property. After Marrone left the room once more, MU signed the powers  
of attorney and the will.  
[113] The May 9 will named Marrone as the sole beneficiary of MU’s estate, which at  
that time was worth over $2 million. D’Ambrosio was named as Executor and  
Marrone was named as the alternate executor. The powers of attorney for  
personal care and for property named Marrone as the attorney for each. MA was  
the back-up attorney for personal care and D’Ambrosio was the back-up attorney  
for property.  
[114] MU instructed D’Ambrosio to give the original copies of the will and powers of  
attorney to Marrone, which he did at that time. Marrone testified that D’Ambrosio  
23  
advised him at that time that he been named as the powers of attorney for  
health and property. He testified that D’Ambrosio never discussed the will with  
him.  
[115] We therefore conclude that Marrone was aware that he was named as power of  
attorney for property and for health on May 9, 2017.  
[116] Marrone claims he did not open the folder containing the will until after MU  
passed away, ten days later on May 19, 2017, at which point he discovered that  
he was the sole beneficiary and alternate executor.  
[117] In our view it is more likely than not, that Marrone knew he was going to be  
named as the sole beneficiary and alternate executor of MU’s estate as early as  
May 3, 2017, when Mr. D’Ambrosio emailed him the draft estate documents for  
his review. We believe he opened it and saw that he was beneficiary, and  
alternate executor at that time. By not doing anything at that time, prior to MU’s  
death, it aggravates the breach. However, and in any event, there is no doubt  
that he was aware by May 19, 2017, when MU passed.  
[118] Although Marrone admits having known about the Powers of Attorney by May 9,  
2017, and about being named sole beneficiary on May 19, 2017, Marrone did not  
report or disclose this to IPC until after an IPC internal investigation was  
commenced against him on October 3, 2017, following the complaint received  
from FC.  
4.1.2.b  
Accepting powers of attorney from a client  
[119] Until his termination from IPC became effective in January 2018, Marrone was a  
registered dealing representative with IPC, which was at all material times a  
“Member” of the MFDA. As such, Marrone was an “Approved Person” as defined  
in MFDA By-law No. 1 and was required to comply with the MFDA Rules  
governing Approved Persons and Members.20  
[120] In accordance with the MFDA Rules, Approved Persons may only engage in  
transactions on behalf of clients based on express instructions for each  
transaction. Approved Persons are similarly prohibited from having any control or  
20  
MFDA By-Law No 1, s 1.  
24  
authority over a client account, even with the client’s consent. This prohibition  
specifically includes powers of attorney and executorships. When we refer to a  
power of attorney in these reasons, unless specified, we are referring to a power  
of attorney for property. The MFDA and IPC do not have restrictions around  
Approved Persons acting as a power of attorney for personal care for clients.  
[121] The prohibition in MFDA Rule 2.3.1(a)(i) on powers of attorney is unambiguous  
and, subject to a limited exception for family members, absolute. It bars any  
Approved Person from accepting or acting on any power of attorney that would  
give the Approved Person full or partial control or authority over the financial  
affairs of a client. In a number of MFDA proceedings, MFDA Hearing Panels have  
considered the acceptance by an Approved Person of a Power of Attorney for a  
client to be a contravention of MFDA Rule 2.3.1.21  
[122] MFDA Rule 2.3.1(a)(i) on its face clearly prohibits the acceptance of a power of  
attorney by an Approved Person, whether or not it is ever acted upon. In Re  
Sukman, the Approved Person accepted and held a Power of Attorney for  
property for a client for a period of less than 10 months, and never exercised his  
authority under it. Nevertheless, the Hearing Panel found the Approved Person’s  
acceptance of the power of attorney to be “a clear and flagrant breach of Rule  
2.3.1(a).”22  
[123] IPC’s policies and procedures in 2017 also included an express prohibition on the  
acceptance of a Power of Attorney by an IPC Advisor that would allow the  
Advisor to trade on behalf of an IPC client.  
[124] The fact that Marrone did not exercise the Power of Attorney for property to  
conduct trades on MU’s behalf is not relevant. The prohibition in both the MFDA  
Rules and IPC policies and procedures applies to the acceptance of a Power of  
Attorney from a client.  
[125] Marrone submits that as MU signed her powers of attorney for property and  
health on May 9, 2017, and a power of attorney for property expires on the date  
21  
Beckford, (Re), 2015 27979 (CA MFDAC) at paras 3-4 (Beckford 27979); Brauns, (Re),  
2013 75282 (CA MFDAC) at para 72 (Brauns); Karasick, (Re), 2015 39865 (CA  
MFDAC) at para 6 (Karasick 39865); Ryan, (Re), 2011 30215 (CA MFDAC) at para 12  
(Ryan); Sukman, (Re), 2016 29420 (CA MFDAC) at para 15 (Sukman 29420).  
22  
Sukman 29420 at para 15.  
25  
the grantor dies, that Marrone had only had the theoretical ability to act as MU’s  
power for attorney for the 10 days between May 9 and her death on May 19,  
2017, which he characterizes as a “minor technical breach.”  
[126] He also submits that he did not report to IPC that he had been named as power  
of attorney for MU during the 10 days because he did not believe he would ever  
act on it. He further testified that he would have complied with IPC protocols in  
the event that a trade would have been required, while affirming his belief that  
the prospect of ever having to act on the power of attorney was “incredibly  
remote”.  
[127] We find that Marrone was aware of the prohibition on accepting Powers of  
Attorney for property on behalf of a client. He signed IPC’s Compliance  
Questionnaire in December of 2016, and he acknowledged IPC’s policy  
prohibiting such acceptance on behalf of non-family member clients in an email  
exchange with his supervisor in February 2017.  
[128] We also find that he did not advise MU that he was prohibited from accepting her  
Power of Attorney for Property, though he had the opportunity to do so when she  
called him into her hospital room before she executed the documents.  
[129] Marrone’s submissions that his conduct amounted to a technical non-compliance  
with MFDA Rules for a period of ten days and did not cause any harm is not  
relevant to the issue before us, which is whether or not he complied with MFDA  
Rule 2.3.1(a), and therefore is a submission more properly reserved for a  
sanctions and costs hearing panel.  
[130] We conclude that Marrone knew about and accepted the Power of Attorney for  
Property bestowed upon him by his client MU, and therefore breached MFDA Rule  
2.3.1(a)(i).  
4.1.2.c  
Accepting an appointment to act as alternate executor of a client’s  
estate  
[131] MFDA Rule 2.3.1(a)(ii) prohibits an Approved Person from accepting an  
appointment to act as a trustee or executor of a client. The prohibition is on the  
acceptance of the position, regardless of whether it is acted upon. A separate  
26  
sub-rule, MFDA Rule 2.3.1(a)(iii), prohibits an Approved Person from acting as  
executor or trustee for a client’s estate.  
[132] Hearing Panels in a number of MFDA proceedings have considered the  
acceptance of an executorship for a client’s will to be a breach of MFDA Rules.23  
As the prohibition is on acceptance of the position, it applies equally to all forms  
of executorships, including “back-up” or “alternate” executorships which are  
contingent on the primary executor failing or refusing to take on the role. In Re  
Lambros, the MFDA Hearing Panel found that the respondent had breached MFDA  
Rules in accepting the role as alternate executrix even though the primary  
executrix never relinquished the role.24  
[133] Marrone knew he was alternate executor, as early as May 3, but in any event no  
later than May 19 when he admits to reviewing MU’s will. MU was Marrone’s  
client until the day of her death, following which her estate became his client,  
and he continued to manage the investments held by MU’s estate after her  
death. Marrone never refused or renounced his position as back-up executor and  
he failed to notify IPC that he had been named an alternate executor of a client’s  
estate, an estate whose finances he now managed.  
[134] Marrone submits that as he did not “accept” or “act” as an alternate executor of  
MU’s estate, he cannot be in breach of MFDA Rule 2.3.1(a).  
[135] He submits that as he was not consulted about being named as alternate  
executor, he cannot be found to be in breach of the rule. And in any event, all a  
registrant could do if named as an alternate executor is renounce the  
appointment. As the executor took up the role, Marrone never even had the  
opportunity to do so as the alternate executor role was never activated.  
[136] We reject these submissions. As we found above at [117], Marrone knew of his  
appointment as alternate executor May 3, 2017, but in any event by no later  
than May 19, 2017, when MU passed away and he admitted to reviewing the will.  
Yet he failed to report the appointment to IPC and took no steps to renounce the  
appointment.  
23  
Beckford 27979 at Schedule “A”, paras 24, 32; Brauns at para 72; Taylor 96764, (Re) 2019  
96764 (CA MFDAC) at para a.  
24  
Lambros, (Re), 2011 30213 (CA MFDAC) at para 14 (Lambros).  
27  
[137] For our analysis of this breach, it does not matter that Marrone did not become  
the executor and act on the appointment.  
[138] We conclude that Marrone knew of his appointment as alternate executor in his  
client’s will by no later than May 19, 2017, and by failing to renounce the  
appointment, he was in breach of MFDA Rule 2.3.1(a)(ii).  
Did Marrone breach MFDA Rule 2.1.4?  
[139] MFDA Rule 2.1.4 mandates a multi-step process for the identification, reporting,  
assessment, and management of conflicts of interest:  
2.1.4 Conflicts of Interest  
(a) Each Member and Approved Person shall be aware of the  
possibility of conflicts of interest arising between the  
interests of the Member or Approved Person and the  
interests of the client. Where an Approved Person becomes  
aware of any conflict or potential conflict of interest, the  
Approved Person shall immediately disclose such conflict or  
potential conflict of interest to the Member.  
(b) In the event that such a conflict or potential conflict of  
interest arises, the Member and the Approved Person shall  
ensure that it is addressed by the exercise of responsible  
business judgment influenced only by the best interests of  
the client and in compliance with Rules 2.1.4(c) and (d).  
(c) Any conflict or potential conflict of interest that arises as  
referred to in Rule 2.1.4(a) shall be immediately disclosed in  
writing to the client by the Member, or by the Approved  
Person as the Member directs, prior to the Member or  
Approved Person proceeding with the proposed transaction  
giving rise to the conflict or potential conflict of interest.  
(d) Each Member shall develop and maintain written policies  
and procedures to ensure compliance with Rules 2.1.4(a),  
(b) and (c).  
[140] The steps required by the Rule are clear:  
a.  
Disclose the conflict or potential conflict to the Member when the  
Approved Person becomes aware of it;  
b.  
Work with their Member firm to ensure the conflict is addressed in the  
best interest of the client; and  
28  
 
c.  
Disclose the conflict or potential conflict to the client.  
[141] If the Approved Person fails to disclose the conflict or potential conflict to their  
Member firm, then the rest of the Rule cannot be followed or complied with, as it  
requires the Member to implement the required compliance procedures in (b)  
and (c).  
[142] IPC’s policies and procedures in 2017 relating to reporting conflicts of interest  
mirrored the reporting requirements of MFDA Rule 2.1.4(a). Pursuant to IPC  
Manual 4.2, Marrone was required to immediately disclose to IPC full and  
complete details if he was in, or could reasonably be perceived to be in, a conflict  
of interest position.  
[143] In the present case, there were at least three sources of actual or potential  
conflicts of interest that arose from Marrone’s conduct which Marrone failed to  
report or address at all, let alone in a timely fashion: (i) Marrone’s acceptance of  
a Power of Attorney for Property for MU; (ii) Marrone’s awareness and  
acceptance of the role of alternate executor for MU’s estate; and (iii) Marrone’s  
awareness and acceptance of being named sole beneficiary under MU’s will.  
[144] We find that Marrone breached MFDA Rule 2.1.4 by failing to report the three  
sources of actual or potential conflicts of interest relating to MU’s estate. We  
explain our finding in more detail below.  
4.1.3.b  
Powers of attorney  
[145] The acceptance by an Approved Person of a Power of Attorney for a client that  
authorizes the Approved Person to conduct trades in the client’s account on the  
client’s behalf puts the Approved Person in an actual or potential conflict of  
interest with the client.  
[146] MFDA Hearing Panels have held that the acceptance by an Approved Person of a  
Power of Attorney for a client gives rise to an actual or potential conflict of  
interest. In Re Ryan, the MFDA Hearing Panel found that MFDA Rule 2.3.1  
prohibiting Powers of Attorney was itself “designed to help eliminate conflicts of  
interest.”25  
25  
Brauns at para 73; Ryan at para 8.  
29  
[147] The conflict arises when the Power of Attorney is accepted and remains for as  
long as it is held, regardless of whether the Approved Person acts on the Power  
of Attorney to trade on the client’s behalf or at all.26  
[148] Marrone submits that if there were any breaches of IPC Policies or MFDA Rules  
arising from his relationship with MU, they are limited to minor, isolated,  
technical non-compliance and therefore are not sufficient to support a finding  
that Marrone breached his duties under the Act.  
[149] We disagree. By accepting MU’s appointment as power of attorney for property,  
Marrone was put into a conflict of interest with his client. The fact that Marrone  
did not act upon it is not a defence to his breach of MFDA Rule 2.1.4. The conflict  
or potential conflict arose when Marrone accepted the Power of Attorney and  
continued as long as he held it, regardless of whether he acted upon it. As an  
Approved Person with 20 years of industry experience, he should have known  
that this action put him into a conflict of interest or at least a potential conflict of  
interest with his client. Marrone did not take any of the required steps in Rule  
2.1.4 to notify IPC of the appointment, he did not disclose to MU that appointing  
him as a power of attorney for property was a conflict of interest, and he  
otherwise failed to take any steps to ensure the conflict was addressed. In fact,  
he did not disclose the existence of the Power of Attorney for Property to his  
Member until after the investigation into his conduct was commenced in October  
2017. In failing to disclose he also breached IPC’s policies and procedures.  
4.1.3.c  
Alternate executor of a client’s estate  
[150] The role of executor for a client raises similar conflicts of interest to that of  
power of attorney for property. The primary difference is that with an executor,  
the conflict or potential conflict exists between the Approved Person and the  
client’s estate. As with a power of attorney for property, an Approved Person as  
executor is able to conduct trading in the client estate’s account.  
[151] A number of MFDA decisions have considered the acceptance of an executorship  
of a client’s estate as an actual or potential conflict of interest, including some  
cases in which the executorship was never acted upon because the Approved  
26  
Karasick 39865 at para 15; Karasick (Re), 2015 39881 (CA MFDAC) at para i; Ryan at paras  
11-12; Sukman 29420 at paras 6(29), 15.  
30  
Person was the alternate executor or because the client was still alive at the time  
of the hearing.27  
[152] As an experienced Approved Person, he should have known that his appointment  
put him into a conflict of interest his client, MU, and later on, with her estate,  
which continued to be his client. Marrone did not take any of the required steps  
in Rule 2.1.4 to notify IPC of the appointment, he did not disclose the conflict to  
MU before her death and he otherwise failed to take any steps to ensure the  
conflict was addressed. He did not renounce his role as alternate executor, and  
at the time of this hearing, retained that role. Similarly to the Power of Attorney  
for Property, he did not disclose the existence of the appointment as alternate  
executor to his Member until after the investigation into his conduct was  
commenced in October 2017. In failing to disclose he also breached IPC’s policies  
and procedures.  
4.1.3.d  
Being named sole beneficiary of a client’s estate  
[153] An Approved Person who is named as a beneficiary of a client’s estate or on a  
client’s account is in an actual or potential conflict of interest, particularly when  
the beneficial entitlement includes the investment assets being managed by the  
Approved Person.  
[154] MFDA Hearing Panels have found that an Approved Person who becomes a  
named beneficiary of a client’s estate or account is in a conflict of interest that  
must be reported and addressed in accordance with MFDA Rule 2.1.4.28  
[155] In addition to Rule 2.1.4 the MFDA has released guidance on accepting monetary  
benefits from clients in the form of a Member Regulation Notice issued on  
October 3, 2005. The Notice stated, among other things:  
All monetary and non-monetary benefits provided directly or  
indirectly to or from clients must flow through the Member.  
The Member must be notified of any such arrangements, so  
that the Member is in a position to determine the  
significance of the benefit and to monitor the activity.  
27  
Brauns at para 73; Beckford (Re), 2015 27963 (CA MFDAC) at para a; Lambros at para 14;  
Sukman 29420 at para 6(11); Sukman (Re), 2016 29418 (CA MFDAC) at para a.  
28  
Beckford 27979 at paras 3-4, 11; Taylor (Re), 2019 96741 (CA MFDAC) at paras 16, 21, 42;  
Taylor 96764 at para b; Levine (Re), 2013 27372 (CA MFDAC) at para c.  
31  
[156] Although MFDA Member Regulation Notices are not binding, they do provide  
guidance to the industry, and equally important, place Members and Approved  
Persons on notice respecting the issues which they must direct their attention to  
and appropriately address.  
[157] Marrone submits that being a beneficiary of a client’s estate is not a breach of  
MFDA Rules or IPC Policies and Procedures. He argues that since he has yet to  
receive any monetary benefit from MU’s estate, and the IPC manual states that  
monetary benefits provided from clients are not banned, but must, “flow through  
IPC” he is not in contravention of IPC policies.  
[158] We earlier found that Marrone was more likely than not aware of his  
appointment as alternate executor as early as May 3, 2017, but in any event no  
later than May 19, 2017. The same analysis applies to his becoming aware of the  
testamentary gift in MU’s will. We find that he was aware of the gift on May 3,  
2017, but in any event, by no later than May 19, 2017, and he took no steps to  
advise IPC of the gift until after IPC had commenced the investigation into his  
conduct in October 2017.  
[159] By failing to report to his Member firm that he was named as the sole beneficiary  
of his client’s estate, Marrone breached MFDA Rule 2.1.4. His simultaneous roles  
as the Approved Person managing MU’s estate, and the sole beneficiary of that  
estate put him into a conflict of interest with his client. As an experienced  
Approved Person, he should have known that he was at least in a potential  
conflict of interest with his client (the estate), and he should have reported this  
to IPC in accordance with MFDA Rule 2.1.4.  
Did Marrone breach MFDA Rule 2.1.1?  
[160] MFDA Rule 2.1.1 set out the general standard of conduct required by Approved  
Persons:  
Standard of Conduct - Each Member and each Approved  
Person of a Member shall:  
(a) deal fairly, honestly and in good faith with its clients;  
(b) observe high standards of ethics and conduct in the  
transaction of business;  
32  
 
(c) not engage in any business conduct or practice which is  
unbecoming or detrimental to the public interest; and  
(d) be of such character and business repute and have such  
experience and training as is consistent with the standards  
described in this Rule 2.1.1, or as may be prescribed by the  
Corporation.  
[161] The language in MFDA Rule 2.1.1(a) mirrors that in OSC Rule 31-505, which we  
review in depth in section 4.2 below. For the reasons articulated below, We find  
that Marrone breached MFDA Rule 2.1.1.by failing to deal fairly, honestly and in  
good faith with his client MU.  
Did Marrone breach MFDA Rule 1.1.2?  
[162] MFDA Rule 1.1.2 provides that:  
Each Approved Person who conducts or participates in any  
securities related business in respect of a Member in  
accordance with Rule 1.1.1.(c)(i) or (ii) shall comply with  
the By-laws and Rules as they relate to the Member or such  
Approved Person.  
[163] MFDA Hearing Panels have clarified that MFDA Rule 1.1.2 should be read in  
conjunction with MFDA Rule 2.5.1. As the MFDA Hearing Panel in Frank (Re) held  
with respect to the interaction between MFDA Rules 2.5.1 and 1.1.2, the  
requirements in Rule 2.5.1 that Members establish policies and procedures:  
…are meaningless and cannot achieve their intended  
objectives if Approved Persons are not required to comply  
with them. MFDA Rule 1.1.2 is clear that Approved Persons  
share the responsibility of ensuring that obligations set out  
in the MFDA Rules are followed and must do their part to  
support the Member’s obligations to be compliant with its  
regulatory obligations.  
In the context of policies and procedures of a Member, and  
especially policies designed to facilitate regulatory  
supervision by the Member, the failure of an Approved  
Person to comply with the Member’s policies constitutes a  
regulatory violation.29  
29  
Frank (Re), 2015 57851 (CA MFDAC) at paras 57-58.  
33  
 
[164] Our analysis below addresses whether Marrone failed to follow IPC policies and  
procedures. Our finding in that regard that Marrone failed to follow IPC policies  
and procedures necessarily leads us to conclude that Marrone has also breached  
MFDA Rule 1.1.2.  
Did Marrone fail to follow IPC policies and procedures?  
[165] As a registrant working with IPC, Marrone was bound to comply with IPC rules,  
policies and procedures. Each year he was with IPC, Marrone completed an IPC  
compliance questionnaire in which he affirmed that he had read and understood  
IPC rules, policies, and procedures, and that he agreed to abide by those rules,  
policies, and procedures.  
[166] In December 2016, Marrone completed an IPC compliance questionnaire  
affirming that he had “read, fully understood, and will comply with” the  
requirements in IPC’s National Policies and Procedures Manual 4.2 and the  
Compliance Bulletins issued by IPC from time to time.  
[167] We find that Marrone was aware of the IPC policies and procedures throughout  
his many years as an IPC approved person. As demonstrated in our analysis  
above of the corresponding MFDA Rules, Marrone failed to follow IPC policies and  
procedures .  
Conclusion  
[168] We conclude that Staff has successfully proved on a balance of probabilities that  
Marrone failed to comply with MFDA Rules and IPC policies and procedures.  
4.2  
Did Marrone breach his obligation under OSC Rule 31-505 to deal with  
clients fairly, honestly and in good faith?  
Introduction  
[169] As an MFDA registrant, Marrone was at all material times bound by the statutory  
obligation under Rule 31-505 to deal fairly, honestly and in good faith with his  
clients. Staff submits that as an Approved Person regulated by the MFDA, his  
obligations under Rule 31-505 are informed by the MFDA Rules and IPC’s policies  
and procedures designed to give effect to the MFDA Rules. As we stated above in  
[33], it is our view that it is appropriate to consider Marrone’s breaches of MFDA  
and IPC Rules in our determination of this issue.  
34  
       
[170] We have already determined that Marrone breached the MFDA Rules relating to  
powers of attorney, executorship and conflicts of interest, but we agree with  
Marrone’s submission that that finding alone is not sufficient to also amount to a  
breach of Commission Rule 31-505. The circumstances of any particular non-  
compliance must be examined to determine whether the standards set out in  
Rule 31-505 have been breached.  
[171] In considering the vulnerability of MU, the materiality of the amounts at stake,  
Marrone’s failure to place his client’s interests above his own and the seriousness  
of the breaches of the MFDA Rules and IPC policies and procedures, we find that  
Marrone has failed to act fairly, honestly, and in good faith in his actions towards  
his client, MU.  
Was MU a vulnerable client?  
[172] On the evidence before us we have no difficulty concluding that MU was a  
vulnerable client throughout the material time.  
[173] MU was diagnosed with terminal cancer in February of 2017. We heard from  
witnesses about her inconsistent memory, that she had “good days and bad  
days”, and that she was unable to identify or quantify her investments when  
presented with her account statement. We also heard that it was MU’s late  
husband who managed their financial affairs, and when he passed the Rs  
assisted her with managing his estate. We heard about how MU relied on  
Marrone to assist her with her finances, as well as other tasks like booking her  
travel and driving her to the airport. We also consider MU’s age (74), lack of  
formal education, the fact that she advised the Rs that she didn’t need a will  
because she could use her deceased husband’s will and the fact that D’Ambrosio  
wanted a capacity assessment performed, and yet a formal capacity assessment  
was never obtained, to be factors that point to MU’s vulnerability.  
[174] Much evidence was led relating to the close relationship between Marrone and  
MU. We are not here to comment on that friendship. We must view Marrone’s  
actions through the lens of the relationship between a registrant and his client.  
She relied on him as a trusted advisor and close friend, and never appeared to  
question that he put her best interests first. Having said that, we accept  
Marrone’s evidence that he was a close friend of MU, but it is our view that their  
35  
 
close friendship actually increased her vulnerability. This is why the MFDA and  
IPC have rules against accepting the designations at issue in this proceeding.  
[175] It is also an important consideration for us in determining MU’s vulnerability that  
the conduct at issue in this proceeding occurred during the last few weeks of her  
life when she was bedridden and in palliative care with terminal cancer.  
The materiality of the amounts  
[176] The materiality of the amounts at issue is an aggravating factor. The funds  
managed by Marrone at IPC, approximately $1.7 million, were all of MU’s  
financial assets, with the exception of her condominium, and it was  
approximately one third of Marrone’s entire book of business, which was  
approximately $6 million. These were material amounts to both MU and Marrone.  
Marrone’s failure to place his client’s interests above his own  
[177] IPC Manual 4.2, which was in place at the material time, included the following  
requirement:  
Integrity: We act with the highest level of integrity and in  
the best interests of our clients, placing their interests above  
our own.  
[178] We agree with Staff’s submission that if Marrone was truly placing his client’s  
interests above his own, he could have reported the power of attorney for  
property, the alternate executorship, and his designation as sole beneficiary to  
IPC. If he was solely concerned with MU’s interests, there would have been no  
reason for him not to report this to IPC. Indeed, the purpose of reporting a  
conflict of interest is to allow the conflict to be addressed by the Member in a  
manner that is consistent with the interests of the client.  
[179] However, reporting these designations to IPC would have disclosed the fact that  
Marrone was the sole beneficiary under MU’s will, which may have put his  
significant inheritance at risk. In failing to report the designations to IPC Marrone  
placed his own interests above those of his client. We find that to be an  
aggravating factor when conducting our analysis of Commission Rule 31-505  
below.  
36  
   
Analysis of Commission Rule 31-505  
[180] Section 2.1 of OSC Rule 31-505 provides that every registered dealer or adviser,  
or a representative of such, has a statutory obligation to deal fairly, honestly and  
in good faith with clients.  
[181] In Re Norshield Asset Management (Canada) Ltd, the Commission held that  
“[t]he duty to deal fairly, honestly and in good faith goes to the heart of what  
securities regulation is about and a breach of this obligation is especially  
serious.”30  
[182] In Re Phillips the Commission noted this obligation was key to a registrant’s role  
as a gatekeeper of integrity of the capital markets.31  
[183] The Commission has applied the lay meanings of “fairly”, “honestly”, and “good  
faith” when determining whether conduct amounts to breaches of section 2.1 of  
Rule 31-505:  
a.  
b.  
Fairly: in a just and equitable manner  
Honest: never deceiving, stealing or taking advantage of the trust of  
others; sincere, truthful; and  
c. Good Faith: a state of mind consisting in (1) honesty in belief or purpose;  
(2) faithfulness to one’s duty or obligation, (3) observance of reasonable  
commercial standards of fair dealing in a given trade or business, or (4) absence  
of intent to defraud or to seek unconscionable advantage.32  
[184] We adopt these definitions of the terms for the purpose of our analysis.  
[185] Marrone submits that the evidence demonstrates that he acted fairly, honestly,  
and in MU’s best interests from the time she first asked him to help her find an  
estates lawyer, until the day of her death, and that there is no evidence of undue  
influence or coercion on his part.  
30  
2010 ONSEC 16 at para 79 (Norshield).  
2015 ONSEC 24 at para 252.  
Quadrexx (Re), 2017 ONSEC 3 at paras 359, 364, 366.  
31  
32  
37  
 
[186] We disagree. In Argosy Securities the Commission held that firms or  
representatives who fail to substantially comply with their SRO rules cannot be  
said it to be dealing “fairly” with their clients.33  
[187] In addition, Commission hearing panels have found that compliance with rules  
relating to the management and prevention of conflicts of interest is also  
essential to fulfilling the obligations under Rule 31-505. A failure to appropriately  
identify and disclose conflicts of interest amounts to a failure to deal fairly,  
honestly and in good faith with clients.34  
[188] Marrone submits that Staff must prove more than a technical non-compliance  
with MFDA Rules or IPC Policies in order for the Commission to find a breach of  
Commission Rule 31-505. He relied on Norshield for the premise that breaches of  
Rule 31-505 must be “especially serious”, which would not include a “technical”  
breach, which is how he characterizes the breaches alleged in this matter.35 The  
panel in Norshield stated that,  
The seriousness of a breach of securities law depends on the  
context and the consequences of that breach. An inability to  
properly account for funds undermines confidence in the  
market. This was not merely a technical breach.36  
[189] Marrone goes on to give an example of a technical breach, such as a failure to  
include the telephone number of the Member on a financial account statement,  
which is a breach of MFDA Rule 5.3.2(a). He says that Staff’s submission that  
any breach of MFDA Rules amounts to bad faith would mean that an advisor who  
has failed to include their telephone number on an account statement would  
have engaged in conduct that was unfair, dishonest, and acting in bad faith  
towards their client.  
[190] We agree that the example given by Marrone is a proper example of a technical  
breach, and a finding that an advisor who failed to include their telephone  
33  
Argosy at para 53.  
34  
Sterling Grace & Co, (Re), 2014 ONSEC 24 at para 188 ; Acker Finley Asset Management Inc, (Re),  
2017 CarswellOnt 15313 at paras 80-84.  
35  
Norshield at paras 79, 82.  
Norshield at para 82.  
36  
38  
number on an account statement would not likely meet the standard for a finding  
of unfair, dishonest and bad faith conduct towards a client under Rule 31-505.  
[191] However, this is not that situation. The breaches of the MFDA Rules and IPC  
policies and procedures that we have found are serious issues, relating to  
conflicts of interest, a vulnerable client, and the failure of Marrone, over a  
protracted period of time, to report these issues to IPC, all of which go to the  
heart of the relationship with a client, which is fundamental to the purpose of 31-  
505. We follow the reasoning in Norshield and conclude that the context and  
consequences of Marrone’s breaches of MFDA Rules and IPC Policies and  
Procedures are significant. This was not a technical breach.  
[192] In Tonnies, the MFDA hearing Panel held that exercise of “responsible business  
judgment” required to address conflicts of interest in accordance with MFDA Rule  
2.1.4 will vary depending not only on the nature of the conflict but also on the  
characteristics of the client, including the client’s level of sophistication. Staff  
submits, and we agree, that the assessment of whether a registrant such as  
Marrone has fulfilled his obligation to deal with a client fairly, honestly and in  
good faith must take into account the characteristics and circumstances of the  
client, including whether they are a vulnerable client.37  
[193] Marrone’s failure to identify the conflicts or potential conflicts of interest in being  
named power of attorney for property over his vulnerable client’s affairs, being  
named alternate executor of his client’s estate, and being named as the sole  
beneficiary of her account are significant breaches of his responsibilities as a  
registrant.  
[194] As we explained above, the conflict of interest analysis that must be undertaken  
by a Member pursuant to MFDA Rule 2.1.4 relies on the Approved Person  
reporting conflicts or potential conflicts to their Member “immediately”. If the  
Approved Person does not report the conflict, there is no opportunity for the  
Member to “ensure that it is addressed by the exercise of responsible business  
judgment influenced only by the best interests of the client.” In failing to report  
37  
Tonnies.  
39  
the appointments and the testamentary gift to IPC Marrone acted unfairly,  
dishonestly, and in bad faith.  
Conclusion  
[195] During the material time we conclude that Marrone acted unfairly, dishonestly  
and in bad faith towards his vulnerable client by failing to follow the required  
procedures for dealing with conflicts or potential conflicts of interest, which was a  
significant breach of the MFDA Rules and IPC policies and procedures, and this  
constituted a breach of OSC Rule 31-505.  
4.3  
Was Marrone’s conduct contrary to the public interest?  
[196] Given the findings we have made regarding a breach of MFDA Rules and IPC  
Policies and Procedures, and a breach of Commission Rule 31-505, we decline to  
make an additional finding that the conduct was contrary to the public interest.  
[197] The activities alleged by Staff for this allegation are the same activities relied  
upon for the breaches of the MFDA Rules, IPC Policies and Procedures and  
Commission Rule 31-505.  
5.  
CONCLUSION  
[198] Staff has established that:  
a.  
Marrone’s conduct was contrary to MFDA rules and IPC policies and  
procedures; and  
b.  
Marrone failed to deal fairly, honestly and in good faith with a client  
contrary to subsection 2.1(2) of Commission Rule 31-505.  
[199] The parties shall contact the Registrar on or before July 8, 2022, to arrange an  
attendance for a hearing regarding sanctions and costs. That attendance is to  
take place on a date that is mutually convenient, that is fixed by the Secretary,  
and that is no later than August 12, 2022.  
[200] If the parties are unable to present a mutually convenient date to the Registrar,  
then each party may submit to the Registrar, for consideration by a panel of the  
Commission, a one-page written submission regarding a date for an attendance.  
Any such submission shall be submitted by 4:30 pm on or before July 8, 2022.  
40  
     
Dated at Toronto this 13th day of June, 2022  
“Lawrence P. Haber”  
Lawrence P. Haber  
“Mary Anne De Monte-Whelan”  
Mary Anne De Monte-Whelan  
“Craig Hayman”  
Craig Hayman  
41  


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