The Mutual Fund Dealers Association of Canada (MFDA) has fined Calgary-based Portfolio Strategies Corp. for failing to adequately supervise and record reviews of trades, including some leveraged trades.
The fine, totaling $35,000, is the result of a May 2009 compliance examination of the Portfolio Strategies head office and four of its branches between December 2006 and April 2009. The four branches included in the examination were located in Calgary, Regina, Markham, Ont. and Richmond, B.C.
The examination found that the head office compliance staff of Portfolio Strategies had failed to adequately supervise trades. For instance, the staff did not review some trades in a timely manner and did not properly record evidence of the reviews of some trades.
As well, as stated in the settlement agreement, the MFDA’s examination found that Portfolio Strategies failed to “establish, implement and maintain adequate written policies and procedures to supervise leveraging recommendations.” The compliance staff also failed to maintain proper records of any queries or response made by approved persons, according to the settlement document, along with the resolutions achieved by supervisory queries of leveraged trades.
Portfolio Strategies co-operated with the MFDA staff’s investigation, according to the settlement agreement, and has revised and implemented new policies and procedures for the supervision of trades and leveraging, which it will continue to uphold and, as necessary, revise.
In addition to the fine, Portfolio Strategies had to pay $5,000 in costs.
Portfolio Strategies is a registered mutual fund dealer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and New Brunswick and has been a member of the MFDA since 2002. During the 2009 examination, the company operated 21 branches and 125 sub-branches.