A hearing panel of the Mutual Fund Dealers Association of Canada (MFDA) has rejected a branch manager’s bid to have an enforcement case against him dismissed.
After a hearing last month to consider a motion brought by the respondent, Gabriele Gentile, a hearing panel of the MFDA’s Atlantic Regional Council handed down its decision on Thursday, dismissing the motion. That means that case can now proceed to a hearing.
Back in December 2011, the MFDA launched an enforcement action against Gentile, a branch manager in the Halifax office of Desjardins Financial Security Investments Inc., accusing him of supervisory failures. Those allegations have not been proven, and Gentile was seeking to have the case dismissed before it went to hearing on the basis that his supervisory obligations only extended to employees of the fund dealer. The person he’s accused of not properly supervising was an insurance agent; not an employee of the dealer.
MFDA enforcement staff argued that the regulator has jurisdiction in the case, and that the case merits a full hearing.
On Thursday, the panel released its decision, siding with the regulator. In its decision, the panel indicates that a full hearing in the case is necessary to determine the scope of a branch manager’s supervisory obligations, and whether, in this case, he complied with those obligations.
It also notes that MFDA staff is not alleging that Gentile “failed to supervise” the insurance agent, but that he failed to escalate information about potential financial harm to clients, to the dealer’s compliance staff. At this stage, it’s not clear that such an obligation could not exist, the panel says.
“The nature and extent of these obligations and whether the respondent complied with them are only matters which can be determined after a full hearing on the merits,” the panel says in its decision.
The panel gave Gentile another 20 days to file an amended reply to the original allegations, in light of its decision on Thursday.