MFDA fines dealer $35,000

A hearing panel of the Prairie Regional Council of the MFDA has issued reasons and decisions in connection with a settlement hearing held in Alberta in the matter of Portfolio Strategies Corporation.

The agreement says the company was registered as a mutual fund dealer in the provinces of BC, Alberta, Saskatchewan, Manitoba, and Ontario. It had been an MFDA member since February 8, 2002.

The MFDA’s findings are based on a compliance examination that was commenced on May 19, 2009. It was conducted “to assess the respondent’s compliance with MFDA by-laws, rules and policies during the period December 1, 2006 to April 2009…The results of the 2009 Examination were summarized and delivered to the respondent in a report dated September 22, 2009, [which] identified a number of compliance deficiencies in respect of supervision of trades by its approved persons.”

Specifically, it finds the company:

• failed to maintain evidence of the review of some trades;

• failed to review some trades in a timely manner;

• failed to maintain a complete record of queries made, responses received from approved persons, and resolutions achieved as a result of supervisory queries of some trades; and

• reviewed trades based on potentially inaccurate information, as Know Your Client information contained on the respondent’s back office system did not correspond in some instances to the KYC information contained in clients’ files.

The MFDA adds the company has been cooperative and says it has “revised and…will continue to revise its policies and procedures with regard to supervision of trades and leveraging, and has provided a copy of those policies and procedures to MFDA Staff. The respondent asserts that it has implemented, and will continue to implement those revised policies and procedures.”

Still, the MFDA has handed down a fine of $35,000 and costs of $5,000 based on its findings.

Read the Reasons for Decision.

Staff

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