MFDA cracking down on supervision failure, falsifications: CSA review

For the period between August 1, 2015 and January 31, 2017, the MFDA passed CSA’s test.

The Canadian Securities Administrators has released its Oversight Review Report of the Mutual Fund Dealers Association of Canada, which finds the MFDA is operating effectively aside from a few issues.

In a release, CSA says the MFDA “made sufficient progress in resolving specific issues raised in previous oversight review reports. In the current review, CSA staff identified one medium priority finding in the financial compliance department and one low priority finding in the enforcement department. There were no findings in the policy department.”

The medium-priority finding related to “a lack of policies and procedures for handling repeat deficiencies,” says CSA in its report, while the low-priority finding related to the adequacy of documentation in case files. CSA can identify high-, medium- and low-risk issues, with high-risk issues being those that could “result in the MFDA not meeting its mandate” and that require an immediate action plan.

CSA notes in the report that the MFDA has achieved the following results, among others, since CSA released its 2015 review:

• The SRO commenced almost twice the number of signature falsification proceedings as were done during the 2015 oversight review period.
• It also increased the penalties for signature falsification activity, and published guidance on supervising, investigating and internal disciplinary action regarding this activity.
• It opened more than twice the number of supervision cases against members as were done during the 2015 oversight review period.
• It significantly improved the timeliness of NRD postings, and implemented enhanced case tracking reports since the last oversight review.
• It increased enforcement staff from 54 to 56 during the review period to address increased workload, and formalized an annual review of the risk model in its policies and procedures.

CSA’s review of the the MFDA was jointly conducted by six of the provincial securities regulators from across Canada — the regulators in Alberta, B.C., Ontario, Saskatchewan, Manitoba and Nova Scotia. It looked at areas such as enforcement, financial compliance and policy. The regulators considered whether or not previously flagged issues had been resolved as well as issues and market conditions that could affect the MFDA.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.