An MFDA hearing panel approved a settlement agreement between MFDA staff and TeamMax Investment Corporation.
In its decision and reasons, dated July 7, 2017, the hearing panel imposed the following sanctions on TeamMax for compliance failures over multiple years:
- a fine of $60,000, with $10,000 payable on acceptance of the settlement agreement and the balance payable in five monthly instalments of $10,000; and
- costs of $10,000.
Further, because the firm didn’t have an adequate two-tier supervision structure for trades, its ultimate designated person (UDP) can’t be appointed as chief compliance officer (CCO), perform the day-to-day compliance duties and functions of CCO or perform other day-to-day compliance functions and duties (beyond fulfilling UDP functions and duties) without prior written consent of MFDA staff.
In the settlement agreement, TeamMax admits:
- failure to respond, or untimely, incomplete or inadequate response, to numerous requests for information and documents requested by MFDA staff during the course of compliance examinations;
- failure to establish, implement and maintain adequate policies and procedures to supervise leveraging recommendations and ensure the suitability of leveraging recommendations made by approved persons to clients;
- failure to conduct an historical leveraging review of leveraged client accounts to identify and correct deficiencies identified by MFDA staff;
- failure to implement a supervisory structure and to effectively discharge supervisory obligations;
- failure to regularly update its policies and procedures manual;
- failure to implement a branch review program;
- failure to adequately detect and query patterns in KYC information collected from clients by three approved persons; and
- failure to conduct sufficient supervisory activities of approved persons’ outside business activities (OBAs). For example, the firm hadn’t reviewed websites and social media links for such OBAs.
A mitigating factor in the case is the firm’s co-operation with enforcement since a 2014 order, which dealt with some of the same issues. “Since the terms and conditions were originally imposed in 2014,” says the settlement agreement, “TeamMax has spent approximately $425,000 implementing compliance improvements.”