MFDA sanctions company after it admits compliance deficiencies with regards to suitability of trades
Portfolio Strategies Corporation (PSC) has been fined $100,000 by the MFDA for Know-Your-Client (KYC) failings.
At a settlement hearing, the Calgary-based investment firm admitted failing to establish, implement and maintain adequate KYC policies with regards to the suitability of trades, including: their consistency with KYC information; concentration in sector mutual funds and exempt market securities; and the sale of DSC mutual funds to clients.
PSC also failed to maintain a branch review program that ensured an on-site compliance review of all of its branches and sub-branches was conducted at least once every three years, and that it failed to maintain evidence of any nominee name reconciliations that were completed.
PSC is registered as a mutual fund dealer and exempt market dealer in the provinces of Alberta, British Columbia, Saskatchewan, Manitoba, Ontario, Quebec and the Northwest Territories. It has been a member of the MFDA since 2002.
In two instances, portfolio managers had client accounts heavily invested in precious metals mutual funds – in one case up to 98% - which was inconsistent with KYC information. One advisor was terminated by PSC while the other voluntarily resigned.
On July 15, 2018, the firm implemented a revised version of its policies and procedures in order to address its compliance deficiencies. There is no evidence of client harm resulting from PSC’s conduct.
PSC must also pay $10,000 costs.
