Two fund dealers have been fined $100,000 each by the Mutual Fund Dealers Association of Canada for supervisory and recordkeeping failings.
At separate hearings held in Toronto on Friday, January 27, the MFDA approved settlements with Markham, Ont.-based FundEX Investments Inc. and Quebec City-based Investia Financial Services Inc.
As a consequence of the settlements FundEX and Investia must each pay a $100,000 fine and costs of $15,000. The two firms were also ordered to implement revised policies and procedures and a leverage review action plan.
The settlements follow from a third round of examinations conducted in 2009 by MFDA staff at the firms’ head offices and branches.
The settlement agreement with FundEX details inadequate two-tier supervision of trades, failure to conduct adequate supervision of leveraging, inadequate supervision of new accounts, and deficiencies regarding the supervision of the outside business activities of five of the firm’s registered fund salespeople.
The settlement agreement with Investia details inadequate supervision of excessive trading, inadequate Tier 1 supervision of trades, inadequate supervision of new accounts, inadequate supervision of leveraging, and deficiencies regarding the supervision of referral arrangements and outside business activities of five of the firm’s registered fund salespeople.
Both firms have developed plans to address existing leveraged accounts, and may be subject to further disciplinary action should they fail to adequately implement those plans.