The Mutual Fund Dealers Association of Canada (MFDA) stepped up its enforcement activity in 2013, according to a report released Thursday by the self-regulatory organization.
The MFDA’s second annual enforcement shows an increase in investigations, hearings and sanctions handed down against violators.
According to the report, the MFDA referred 113 cases to its investigators in 2013, up from 105 in 2012. It also launched 65 formal disciplinary hearings last year, up from 48 in 2012, and almost double the 36 hearings initiated in 2011.
The number of hearings concluded during the year also ticked up, with 47 cases being resolved in 2013, up from 42 in 2012. Those hearings resulted in 21 permanent prohibitions, 11 suspensions, $10.85 million in total fines, and costs of $243,500 ordered against both reps and dealers. Back in 2012, it levied just $3.6 million in fines, and about $253,500 in total costs.
The report notes that the MFDA continued to focus on complaints involving seniors and other vulnerable groups, in 2013, and that it expects this to continue this year. Suitability, the inappropriate use of leverage, falsified client signatures and the use of blank signed forms, and undisclosed outside business interests are also ongoing enforcement priorities for the SRO.
Indeed, the report notes that the MFDA intends to provide additional guidance on the issue of signature irregularities in 2014. And, it stresses that dealers are expected to take “reasonable measures” to detect undisclosed outside business activities before any issues arise. “The enforcement department will be paying particular attention to the adequacy of member supervision in ongoing and future cases involving outside business activities,” it says.
MFDA president & CEO, Mark Gordon, notes that “The results presented in this report are the culmination of our continued execution of the MFDA Strategic Plan and its goals of increased operational efficiencies while promoting [dealer and rep] compliance and increasing investor confidence.”