The Mutual Fund Dealers Association has fined W.H. Stuart Mutuals Ltd. $45,000 for trade supervision and recordkeeping failings.

On Thursday, an MFDA hearing panel accepted the settlement agreement between the Unionville, Ont.-based firm and MFDA staff.

In the settlement agreement, the company admitted that prior to Feb. 28, 2009, it failed to establish, implement, maintain and adhere to adequate policies and procedures to ensure:

  • that branch managers and head office compliance staff conducted adequate trade supervision;
  • that adequate records were maintained of trade supervision that was conducted; and
  • the suitability of leveraged trades and leveraging recommendations that approved persons made to W.H. Stuart’s clients.

The firm also admitted that while it was designated in early warning from Feb. 12, 2009 to Sept. 28, 2009, it breached early warning restrictions by paying a bonus to a W.H. Stuart officer in February 2009 and by making a payment to a related party in July 2009 without the prior written consent of MFDA staff.

W.H. Stuart was fined $45,000 and ordered to pay $2,500 in costs. $20,000 of the fine and $2,500 in costs are payable immediately; and the remaining $25,000 of the fine will be paid by 10 monthly installments.

In addition, W.H. Stuart must fully implement the Leverage Review Action Plan referenced in the settlement agreement.