Sentinel Financial Management fined $75k by MFDA

By Staff | September 6, 2018 | Last updated on September 6, 2018
2 min read
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Saskatoon-based Sentinel Financial Management has been fined $75,000 by an MFDA hearing panel for failing to adequately carry out Tier 1 trade supervision, including supervising two client-facing employees.

In 2016, the MFDA conducted a sales compliance examination of the mutual fund and exempt market dealer for the period between July 2012 and January 2016. In a July 2016 report, the agreement says, the MFDA told the firm it had found multiple deficiencies, including inadequate supervision, failure to supervise two reps under close supervision, and “failure to conduct sub-branch and Approved Person reviews, either adequately or at all.”

The two employees, who worked at Sentinel’s Saskatoon branches, had been under close supervision (since 2013 and 2015, respectively) due to clients holding investments inconsistent with their KYC information, the agreement says. Both had been found to have altered a client’s KYC information “with no evidence the alterations were authorized or initialed by the client.”

The MFDA found in the audit that the firm had failed to conduct a supervisory inquiry into cases where client accounts held investments that were inconsistent with KYC information.

Sentinel’s supervisory staff not only failed to identify issues in some instances, but also failed to follow up on requests to approved persons that weren’t answered adequately or at all, and where clients’ accounts remained inconsistent with KYC information, the agreement says.

MFDA staff also found deficiencies in how the firm reviewed, marketed and used exempt market products in client portfolios.

In addition to the $75,000 fine, the firm must pay costs of $10,000.

Sentinel is currently the subject of an investigation by the Financial and Consumer Affairs Authority of Saskatchewan and has agreed to conditions placed on the its registration in the province, the agreement says.

The agreement notes the firm hasn’t sold exempt-market products since 2016, and that it hired a new ultimate designated person in 2016 and a new chief compliance officer in 2017. The two employees who were under close supervision were terminated as of June 2018. The firm also took additional corrective steps, such as retaining a monitor who reports to the MFDA.

Both this MFDA agreement and the investigation follows a 2011 MFDA agreement, in which the firm was fined $35,000 and had to pay costs of $2,500 over inadequate Tier 2 trade supervision deficiencies found in 2007 and 2009 audits.

Prior to its 2016 review, MFDA staff had also conducted a compliance examination in 2012 and found the firm had failed to ensure that orders and recommendations for a client were suitable and reflected KYC information. The firm also failed to follow-up on issues identified during reviews of approved persons, the agreement says.

Read the settlement agreement. staff


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