In a settlement with the Mutual Fund Dealers Association of Canada (MFDA), Wealthsimple Advisor Services Inc. agreed to pay a $100,000 fine and $20,000 in costs to resolve allegations that it failed to properly protect client privacy when bringing new reps onto its platform.
The firm admitted that, in 2019, its process for bringing reps from other MFDA dealers and investment dealers onto its platform failed to ensure that potential clients had consented to having their confidential information shared with a related company, Wealthsimple Technologies Inc. (WSTI), which provided technology services (such as cloud-based storage and data management) to the firm.
According to the settlement, when reps sought to transfer their businesses to Wealthsimple Advisor, their client data was provided to WSTI and entered into its database, and then the reps sought consent from clients to share the information.
“However, neither WSTI nor the [firm] independently verified that the [rep] had obtained the consent and authorization of the clients to transfer the client information to WSTI,” the settlement noted.
As a result, the firm admitted that it didn’t have adequate controls over its onboarding processes.
Additionally, when one rep had trouble accessing the firm’s system, they shared their login info to their existing dealer’s client relationship management system with another rep and with WSTI staff so they could get help with the transfer — an activity that also compromised client data.
With the conclusion of the settlement agreement, Wealthsimple Advisor will also complete its resignation from the MFDA, which it began in 2020. It has since wound up its operations and its membership status in the SRO.