Briefly: “MFDA issues reasons on KYC case” and more news

So, just how important is the know-your-client process? Well, if you’re selling exempt products, you should at least know if the client qualifies as an accredited investor. The following demonstrates that importance.

A hearing panel of the MFDA’s Central Regional Council has issued its reasons for decision in connection with the disciplinary hearing held in Toronto, Ontario on July 6, 2010 in the matter of Colin Corner, Heather Halladay, John Joseph Hanson, Richard Moore and James Rainbird.

To read a copy of the Reasons for Decision, click here.

– Steven Lamb

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Canaccord offers philanthropic service

Canaccord Wealth Management has partnered with the Benefaction Foundation to offer Complete Canaccord Philanthropic Solutions, a tax-efficient, cost-effective charitable giving program.

The program provides donors with two different options for their charitable contributions: Direct Funds, for a direct-to-recipient gift of contributions; and Donor Advised Funds, charitable giving vehicles tailored to reflect contributors’ personal philanthropic goals.

“By partnering with Benefaction, we’re able to help our clients include philanthropy into their overall wealth management strategies and amplify the impact of their generosity,” said Tanya Bird, Canaccord senior vice-president, products and services. “This program delivers fully customized giving solutions designed to complement clients’ altruistic values — values which are very important to them.”

– Steven Lamb

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IIROC announces settlement with BMO Nesbitt Burns

On August 16, 2010, a Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC) approved a Settlement Agreement between IIROC staff and BMO Nesbitt Burns Inc. (BMONB) in which the firm admitted it breached Universal Market Integrity Rules (UMIR) when it failed to make reasonable efforts to meet its best price obligations.

Under UMIR 5.2, the best price obligation is a general duty owed to the market to ensure that better priced orders are not bypassed and traded through. Its objective is to ensure fairness to all market participants and promote efficiency and transparency while maintaining investor confidence in the market. UMIR Policy 5.2 requires IIROC-regulated firms adopt policies and procedures that will ensure compliance with their best price obligations and that these policies are updated to reflect changes in the trading environment and market structure.

Notwithstanding two warnings from IIROC in December 2008 and February 2009 that it was responsible for a larger-than-average number of “trade through” alerts (which identify possible violations where investors’ orders were not executed at the best price), BMONB failed to respond in a timely manner and make reasonable efforts to connect to the Omega ATS until October, 2009.

In the agreement, BMONB admitted to the following misconduct:

• Between October 2008 and October 2009, it failed to make reasonable efforts to connect to the Omega ATS protected marketplace.

BMONB agreed as part of the agreement to pay a fine in the amount of $250,000 and costs of $15,000.

IIROC formally initiated the investigation into BMONB’s conduct on September 30, 2009. BMONB is an IIROC-regulated firm.

The panel’s decision and reasons will be made available to the public by clicking here.

– Steven Lamb

(08/25/10)