The Mutual Fund Dealers Association of Canada (MFDA) on Wednesday issued for comment proposed MFDA sanction guidelines in order to solicit comment from mutual fund dealers, advisors and other interested parties.
The guidelines are used in disciplinary hearings and settlement negotiations to help determine appropriate penalties for rule violations.
The proposed guidelines would replace the MFDA’s existing guidance in this area.
The proposals, “reflect industry trends away from recommended fine amounts and penalties for specific violations … and toward a principles-based approach to sanctioning,” the MFDA says in bulletin published on Wednesday.
Against that background, the proposed sanction guidelines, “are intended to promote consistency, fairness and transparency by providing a framework to guide the exercise of discretion in determining sanctions which meet the general sanctioning objectives.”
Among other things, the guidelines cover:
- factors that should be considered in determining sanctions such as deterrence;
- industry expectations;
- the harm caused by misconduct; and
- whether efforts have been made to make amends and to prevent future misconduct.
The sanction guidelines are not mandatory, the MFDA says, and that determining penalties in any given case would be based on the particular facts of the case.
The proposals are out for comment until Aug. 20.