MFDA fines two firms over supervision failures

The hearing panel accepted the settlement agreement between Staff of the MFDA and the respondent, as a consequence of which the following penalties and costs were imposed:

• a fine in the amount of $60,000; and
• costs in the amount of $10,000.

In the settlement agreement, the respondent admitted that:

a) between February 2009 and March 2010, it failed to adequately supervise the activities of its former Approved Person to ensure that the Respondent was aware of and had approved all outside business activities that the Approved Person was engaged in and to ensure that all securities related business that the Approved Person engaged in was being conducted for the account of the Respondent and through the facilities of the Respondent, contrary to MFDA Rules 1.1.5, 2.5, 2.1.1 and MFDA Policy No. 2; and

b) between May 2009 and April 2013, it failed to conduct a reasonable supervisory investigation after receiving information that ought to have raised concerns that an Approved Person or a former Approved Person was engaged in unapproved outside business activities and had engaged in securities related business that was not carried on for the account of the Respondent or processed through the facilities of the Respondent, contrary to MFDA Rules 1.1.5, 2.5 and 2.1.1.

Read the settlement agreement.

Quadrus Investment Services Ltd.

A settlement hearing in the matter of Quadrus Investment Services Ltd. was held on January 20, 2017 in Toronto, Ontario before a three-member hearing panel of the Central Regional Council of the Mutual Fund Dealers Association of Canada (“MFDA”).

The hearing panel accepted the settlement agreement between Staff of the MFDA and the respondent, as a consequence of which the following penalties and costs were imposed:

• a fine in the amount of $75,000;
• costs in the amount of $20,000; and
• shall in future comply with MFDA Rules 2.1.1, 2.1.4, 2.3.1 and 2.5.1, and MFDA Policy No. 6.

In the settlement agreement, the respondent admitted that:

a) between March 2009 and July 2015, it failed to employ adequate supervision to prevent Approved Person RM from engaging in discretionary trading, engaging in personal financial dealings with clients, and using pre-signed account forms, contrary to MFDA Rules 2.1.1, 2.1.4, 2.3.1 and 2.5.1;

b) it failed to report to the MFDA, within five (5) business days or at all:

• the Respondent’s discoveries in March 2009 and September 2010, that Approved Person RM had, or may have, engaged in discretionary trading; and
• ii) the Respondent’s discovery in September 2010, that Approved Person RM had, or may have, engaged in personal financial dealings with clients, contrary to MFDA Policy No. 6, subsections 6.1(b)(i) and (v).

Read the settlement agreement.