MFDA reports fewer prohibitions, monetary penalties in 2020

The enforcement department of the Mutual Fund Dealers Association of Canada (MFDA) concluded fewer cases last year, leading to a decrease in prohibitions and fines ordered by the regulator.

According to the regulator’s latest enforcement report, the MFDA commenced 79 disciplinary proceedings last year, compared to 78 in 2019, and concluded 77 hearings, down from 120 in 2019.

The MFDA ordered 16 permanent prohibitions against members and approved persons (down from 22 last year) and 24 suspensions (down from 56 last year). Monetary penalties were also down: the MFDA ordered just under $3.4 million in fines last year, down from $9.3 million in 2019.

The MFDA said it concluded fewer hearings last year due to a decrease in cases involving signatures and forms, and fewer cases involving serious misconduct, such as frauds and personal financial dealings that cause significant harm to clients.

In the 77 hearings that were concluded last year, pre-signed forms were the most common allegation, appearing in 34 cases. Other common allegations included violations of policy and procedures (28), falsification/misrepresentation (16), active signature falsification (16) and personal financial dealings (11).

Due to the pandemic, the MFDA used videoconferencing for enforcement investigations and hearings last year — measures that proved cost-effective and efficient, the report noted.

“Given this positive experience, it is likely that the use of videoconferencing will remain part of MFDA processes going forward and will be employed in a manner that is flexible and facilitates access to justice for respondents, clients and other stakeholders,” wrote Mark Gordon, president and CEO of the MFDA.

The MFDA highlighted several successful enforcement cases against member firms in the report, including cases involving complaint-handling at Keybase Financial Group Inc., supervisory failings at PEAK Investment Services Inc. and compliance failures at Portfolio Strategies Corporation.

For further details, see the MFDA’s enforcement report.

Staff

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