The Mutual Fund Dealers Association of Canada (MFDA) is warning reps that, although they may be licensed as mortgage brokers, they can’t sell syndicated mortgages outside of their MFDA dealer.
In a bulletin to its members issued Tuesday, the MFDA says that it has become aware that reps licensed as mortgage brokers “may have been advised or may be of the view” that they can rely on their mortgage broker license, along with registration and prospectus exemptions in securities legislation, to trade in syndicated mortgages outside of their mutual fund dealer.
However, it stresses that MFDA rules require all securities-related business to be carried on for the account of their dealer, and through the dealer, including exempt securities.
The MFDA maintains that syndicated mortgages are securities, and that these transactions fall under MFDA rules, so this business must be put through their fund dealer. “[Reps] cannot sell syndicated mortgages under a mortgage broker license outside [their dealer],” it stresses.
It also advises dealers that they should be aware of referral arrangements with mortgage brokers and others involved in providing mortgage or real estate services, and that they “should be particularly aware of the risk that referrals may result in the sale of a specific security.”