A former mutual fund rep has been fined and suspended for two years, after a regulatory hearing panel found that he engaged in discretionary trading in connection with several bulk trades for clients, and failed to keep proper records.
A hearing panel of the Mutual Fund Dealers Association of Canada (MFDA) ordered that Joel Henry Attis — a former rep with Investia Financial Services Inc. and later IPC Investment Corp. in New Brunswick — is prohibited for two years, must pay a $50,000 fine and $15,000 in costs.
The sanctions follow the panel’s finding back in July that Attis violated MFDA rules by executing several bulk trades for clients without properly obtaining consent from clients — including trades to facilitate his transfer from Investia to IPC in 2015 — and not properly documenting those trades.
Among other things, the MFDA alleged that Attis didn’t obtain instructions from clients about the timing of trades and didn’t adequately inform them that trades could be delayed for several months. Instead, MFDA alleged, he used his discretion to determine the timing of the bulk trades for clients.
MFDA staff didn’t make any allegations about the rep’s motives for the violations, didn’t allege that suitability violations occurred, or that clients’ suffered losses as a result of the trades.
However, the panel noted that “good intentions and financial loss or gain are irrelevant” when it comes to the requirement to obtain and document client consent for reps’ recommendations.
Similarly, when it comes to record keeping, the panel noted that the requirements to document clients’ trading instructions are “crystal clear.”
“In the case before us, the respondent’s records of client instructions, such as they were, were completely inadequate,” the panel said in its decision on the merits. “He sought to use the same template note to record the specific instructions of up to 100 different clients.”