Investigating allegations of pre-signed client forms continues to be a major focus of the Mutual Fund Dealers Association of Canada’s (MFDA) enforcement efforts.
According to the MFDA’s 2019 Annual Enforcement Report, the self-regulatory organization opened 94 cases involving pre-signed forms in 2019, up from 70 cases in 2018. Pre-signed forms have been the most common allegation investigated by the MFDA in each of the past five years.
The MFDA launched only 78 formal proceedings in 2019 — down from a record-setting 136 proceedings in 2018 — but allegations of pre-signed forms accounted for 47% of those proceedings.
In its report, the MFDA acknowledged that most cases of pre-signed forms were done “for the purposes of client or advisor convenience,” but added that some of the proceedings launched in 2019 involved additional violations, such as discretionary trading, unauthorized trading or misappropriation.
Other problem areas for the MFDA in 2019 included allegations of unsuitable investment advice (38 cases opened) and breaches of MFDA business standards (also 38 cases opened).
Throughout 2019, the MFDA completed 120 disciplinary proceedings, resulting in 22 permanent prohibitions, 56 suspensions and total fines of $9.3 million. About one-third (32%) of the proceedings involved seniors or vulnerable persons.
By comparison, the MFDA completed 132 disciplinary proceedings in 2018, but those proceedings resulted in fewer sanctions — just over $6 million in fines, 19 permanent bans and 41 suspensions.