MFDA sets record for enforcement proceedings

The Mutual Fund Dealers Association of Canada (MFDA) brought a record number of enforcement cases in 2018, the self-regulatory organization (SRO) reported on Wednesday.

The industry SRO has released its latest annual enforcement report, which shows that it commenced a record 136 disciplinary proceedings last year. This is up from its previous high of 121 cases in 2017.

Over half of those proceedings were “bulk track” cases, which address relatively minor violations in consolidated hearings, where the allegations are not disputed.

The report also shows that the MFDA opened 458 cases last year, down slightly from 469 in 2017; that it closed 535 cases, up significantly from the previous year; and that it issued more warning letters (127, up from 111) and cautionary letters (114, up from 73) during the year.

In particular, the report indicates that the MFDA “continues to investigate sales incentives practices” at fund dealers that may create conflicts of interest, and could violate the sales practices rules.

In terms of sanctions, the MFDA concluded a total of 132 disciplinary hearings in 2018 (which is flat from the previous year), resulting in over $6 million worth of fines being imposed, $592,000 in costs ordered, 19 permanent bans and 41 suspensions.

The total monetary sanctions ordered in 2018 is down from the previous year, when SRO hearing panels imposed almost $8.5 million in fines, but the MFDA also reported that it has collected almost half ($2.94 million) of the penalties ordered in 2018, compared with a historical collection rate of just 14%.

MFDA president and CEO, Mark Gordon, said the report “highlights a significant increase in enforcement activity over the past year and demonstrates the MFDA’s continued commitment to protect investors and hold those who breach MFDA rules accountable for their misconduct.”

Read the full report here.

Staff

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