An Ontario-based mutual fund dealer has been fined $25,000 by the Mutual Fund Dealers Association of Canada for a variety of supervision failures.
The MFDA announced on Wednesday that Listowel, Ont.-based Independent Accountants’ Investment Group Inc. has paid the fine, along with costs of $2,500, as set out in a settlement agreement.
The penalties were the result of compliance deficiencies that the MFDA identified in a compliance examination conducted in May 2010.
In particular, the MFDA found that Independent Accounts Investment Group failed to ensure that individuals responsible for trade supervision at both the branch and head office levels maintained proper records.
The regulator also found that the dealer failed to establish, implement and maintain adequate policies and procedures and designate appropriately qualified and accountable individuals to fulfill its supervisory obligations. This was particularly evident at three branches which the dealer acquired from another fund dealer between late 2009 and early 2010: one in Oakville, Ont., one in Kelowna, B.C. and one in Edmonton.
For instance, the MFDA found that the dealer designated an individual to conduct account supervision for these three branches who had not satisfied the proficiency requirements to be a branch manager or a compliance officer. In addition, the individuals designated to conduct head office supervision for the Kelowna and Edmonton branches were not employees of the dealer who were supervised by or accountable to the firm, contrary to MFDA rules.
At the Oakville branch, the dealer failed to designate an individual to act as a branch manager; failed to designate an individual to conduct head office account supervision for the branch; and failed to designate an individual to conduct branch level trade supervision who was an employee and who had satisfied the proficiency requirements.
The MFDA noted in the settlement agreement that the three branches, which previously operated in affiliation with Canada Loyal Investment Services, have since been shut down by Independent Accounts Investment Group. The dealer currently operates 13 sub-branch offices located in cities and towns throughout Ontario.
“The integration of these new geographically dispersed branches posed a significant operational challenge for the [dealer],” the MFDA said in the settlement agreement.
The regulator also pointed out that in the fall of 2011, the firm hired a new chief compliance officer, and it has made changes to its policies and procedures to ensure they’re compliant with the rules.