MFDA publishes new sanction guidelines

By Staff | October 31, 2018 | Last updated on October 31, 2018
2 min read
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The Mutual Fund Dealers Association has revised and published its sanction guidelines, which are effective Nov. 15.

The guidelines list key factors for hearing panels to consider when imposing sanctions, which include fines, suspensions, terminations or other remedies.

Earlier this year, the SRO published for comment its proposed changes to penalty guidelines that have been in effect since 2006. The SRO says in a bulletin that it received five comment letters, which “generally expressed support” for its move toward a principles-based approach to sanctions.

The new guidelines are neither mandatory nor provide an exhaustive list of key factors for hearing panels to consider, says the MFDA in the guidelines.

Rather, “The determination of the appropriate sanction in any given case is discretionary and a fact-specific process,” the SRO says. “The appropriate sanction depends on the facts of a particular case and the circumstances of the conduct.”

That said, the guidelines list 14 key factors for consideration, including the seriousness of allegations. For example, distinction should be drawn between intentional and unintentional conduct, as well as between isolated and repeated violations. Associated aggravating factors include conduct that affects vulnerable investors and/or is premeditated.

Other factors listed include whether the member or approved person benefited from the misconduct and whether they recognize its seriousness. Attempts to “improperly frustrate, delay or undermine the investigation or hearing, such as concealing information or intentionally providing inaccurate or misleading information, should be considered an aggravating factor,” say the guidelines.

Another factor is harm suffered by investors, which may be quantifiable or subjective, including the impact on an investor emotionally, physically or mentally. A further potential factor is the risk of harm to which an investor is exposed, “even if actual harm did not result,” say the guidelines.

For more, read the MFDA’s final sanction guidelines.

Advisor.ca staff

Staff

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