A Mutual Fund Dealers Association of Canada hearing panel has accepted the terms of a settlement reached between MFDA staff and Toronto-based HollisWealth Advisory Services Inc. that will see the dealer pay a fine of $130,000 and costs of $20,000 for failing to supervise certain advisors who had concentrated clients’ investments in precious metals sector funds.
Specifically, HollisWealth admitted that it failed to adequately supervise former advisors BY, who was also a branch manager, and SW to ensure that accurate know-your-client (KYC) information was recorded for clients between Nov. 5, 2004 and May 20, 2014. The firm also failed to ensure that trades BY and SW recommended, which concentrated clients’ investments in precious metals sector funds, were suitable for clients.
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“In the course of recommending the gold strategy to clients, BY and SW represented that the price of gold and other precious metals was poised to increase dramatically as a result of government monetary and debt policies in Canada and the U.S.,” the settlement states. “BY and SW also represented, in the course of recommending the gold strategy, that investing in gold and precious metals was a low investment risk strategy.”
In addition, the firm arranged for BY and SW to have clients sign an acknowledgement and release form between Nov. 7, 2010 and May 20, 2014 that released the firm from any claims or losses arising from the investment strategy BY and SW had recommended.
Furthermore, the firm failed to adequately supervise former advisor RL between Feb. 27, 2007 and April 30, 2013 to ensure that accurate KYC information was recorded for each client and that the trades RL recommended, which also concentrated clients’ investments in precious metals sector funds, were suitable.
For more, see the settlement on the MFDA’s website.
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